Legislature(2015 - 2016)BILL RAY CENTER 230

06/01/2016 01:00 PM Senate FINANCE


Download Mp3. <- Right click and save file as

Audio Topic
01:03:19 PM Start
01:04:20 PM HB374
01:04:53 PM Public Testimony
02:13:49 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 374 REINSURANCE PROGRAM; HEALTH INS. WAIVERS TELECONFERENCED
Heard & Held
-- Public Testimony --
1:00 pm - 2:00 pm
Please arrive 15 minutes prior to the end of the
allotted time period or testimony will close
early.
If you are a member of a group with the same
message, in the interest of time, please select
a spokesperson to testify for the entire group.
Testimony is limited to three minutes.
You may send your written testimony to the Senate
Finance Committee via:
finance.committee@akleg.gov
Bills Previously Heard/Scheduled
                 SENATE FINANCE COMMITTEE                                                                                       
                  FOURTH SPECIAL SESSION                                                                                        
                       June 1, 2016                                                                                             
                         1:03 p.m.                                                                                              
                                                                                                                                
1:03:19 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  MacKinnon  called  the  Senate  Finance  Committee                                                                    
meeting to order at 1:03 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Peter Micciche, Vice-Chair                                                                                              
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Kate Burkhart,  Alaska Mental  Health Board,  Juneau; Sheela                                                                    
Tallman, Premera  Blue Cross Blue Shield  of Alaska, Juneau;                                                                    
Fred  Parady, Deputy  Commissioner, Department  of Commerce,                                                                    
Community,  and   Economic  Development;   Lori  Wing-Heier,                                                                    
Director,  Division of  Insurance,  Department of  Commerce,                                                                    
Community  and Economic  Development; Gina  Bosnakis, Owner,                                                                    
Gina Bosnakis and Associates,  Juneau; Senator Mia Costello;                                                                    
Senator   Cathy   Giessel;  Chris   Hladick,   Commissioner,                                                                    
Department    of   Commerce,    Community,   and    Economic                                                                    
Development.                                                                                                                    
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
David  Morgan, Self,  Anchorage;  Nancy Merriman,  Executive                                                                    
Director,  Alaska   Primary  Care   Association,  Anchorage;                                                                    
Jennifer  Meyhoff, Co-Chair,  Legislative Committee,  Alaska                                                                    
Association  of  Health  Underwriters,  Anchorage;  Jennifer                                                                    
Jolliffe, Self, Anchorage.                                                                                                      
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSHB 374(FIN)                                                                                                                   
         REINSURANCE PROGRAM; HEALTH INS. WAIVERS                                                                               
                                                                                                                                
          CSHB 374(FIN) was HEARD and HELD in committee for                                                                     
          further consideration.                                                                                                
                                                                                                                                
CS FOR HOUSE BILL NO. 374(FIN)                                                                                                
                                                                                                                                
     "An  Act  relating  to  coverage  under  a  state  plan                                                                    
     provided   by   the  Comprehensive   Health   Insurance                                                                    
     Association;  establishing   the  Alaska  comprehensive                                                                    
     health  insurance  fund;   relating  to  a  reinsurance                                                                    
     program; relating  to the definition of  'residents who                                                                    
     are  high  risks'; relating  to  an  application for  a                                                                    
     waiver for state innovation  for health care insurance;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
1:04:20 PM                                                                                                                    
                                                                                                                                
^PUBLIC TESTIMONY                                                                                                             
                                                                                                                                
1:04:53 PM                                                                                                                    
                                                                                                                                
KATE   BURKHART,  ALASKA   MENTAL   HEALTH  BOARD,   JUNEAU,                                                                    
testified in support of the  legislation. She noted that she                                                                    
was the Executive Director of  both the Alaska Mental Health                                                                    
Board  and  the Department  of  Health  and Social  Services                                                                    
Advisory  Board on  Alcoholism and  Drug  Abuse. She  shared                                                                    
that  she provided  written testimony  (copy  on file).  She                                                                    
remarked that  the bill  would benefit  a unique  portion of                                                                    
the   Alaska   Mental   Health   Trust   Authority   (AMHTA)                                                                    
constituency.  She  discussed  Alaskans   who  had  mild  to                                                                    
moderate behavioral health conditions  that could be treated                                                                    
with  regular  access  to  a   counselor  or  mental  health                                                                    
professional if the necessary  resources were available. She                                                                    
shared  that working  Alaskans often  could  not afford  the                                                                    
insurance  plans  available  to  them  in  the  marketplace.                                                                    
Subsequently individuals went  without services, which could                                                                    
lead to  mental health conditions becoming  acute, which led                                                                    
to a greater  level of disability that  impaired the ability                                                                    
to work.  She thought that stabilizing  the insurance system                                                                    
and providing  the opportunity  for more  affordable options                                                                    
would benefit the aforementioned part of her constituency.                                                                      
                                                                                                                                
Ms. Burkhart stressed that there  were private mental health                                                                    
practitioners among  the AMHTA  constituency that  could not                                                                    
afford health  insurance for  themselves or  their families,                                                                    
which  made   it  very  difficult  to   recruit  and  retain                                                                    
qualified mental  health professionals. She  emphasized that                                                                    
private  practitioners were  an important  part of  Alaska's                                                                    
health  care sector,  and served  individuals  with mild  to                                                                    
moderate conditions who were not  in the Medicaid system and                                                                    
were  not among  the  acutely disabled  population that  was                                                                    
normally discussed. She thought  it was important to support                                                                    
the small  businesses and solo  practitioners, so  that they                                                                    
had  access to  more choices  and more  affordable insurance                                                                    
coverage. She remarked that the  bill was not a panacea, but                                                                    
rather  a   step  forward  to  resolving   problems  in  the                                                                    
insurance  sector. She  expressed  appreciation for  earlier                                                                    
comments  in  the  committee relating  to  a  commitment  to                                                                    
continued problem solving.                                                                                                      
                                                                                                                                
1:08:41 PM                                                                                                                    
                                                                                                                                
DAVID MORGAN,  SELF, ANCHORAGE (via  teleconference), voiced                                                                    
his  support for  the  bill.  He had  worked  in the  health                                                                    
industry  for 32  years. He  shared  that he  was a  retired                                                                    
health economist,  and had  a breadth  of experience  in the                                                                    
health care  industry. He commented on  increases to private                                                                    
insurance, and  specified that Alaska and  some other states                                                                    
had seen  an increase of  over 40 percent. He  remarked that                                                                    
there  was an  actuarial flaw  that people  had been  warned                                                                    
about,  and  many  groups  had  advocated  for  the  current                                                                    
program.                                                                                                                        
                                                                                                                                
Mr.  Morgan  continued to  address  the  bill. He  discussed                                                                    
insurance   cooperatives  (co-op).   He  thought   the  bill                                                                    
proposed to  create a  pool that was  a program  for chronic                                                                    
and  acute  medical  conditions   that  were  high-cost.  He                                                                    
commented on  other states that  had been used  as examples,                                                                    
and suggested that the cost-pools  had developed into "black                                                                    
holes  of cost"  that states  had to  pay for.  He suggested                                                                    
that  the former  Chronic  Acute  Medical Assistance  (CAMA)                                                                    
Program would be successful if  the income issues were taken                                                                    
out. He  noted that  he had six  pages of  written testimony                                                                    
(copy  on file)  which would  provide details.  He mentioned                                                                    
Centers of Medicare Quality. He  alluded to a program by the                                                                    
Alaska Health  Insurance Underwriters.  He was  worried that                                                                    
the  institutions involved  in  the bill  would not  examine                                                                    
cost  drivers.  He  discussed Medicaid  expansion,  and  the                                                                    
associated costs.  He mentioned  future taxes.  He commented                                                                    
that projections were always low  in cost, and overestimated                                                                    
savings. He  thought the bill  did not go into  great detail                                                                    
as to definitions of what was considered chronic.                                                                               
                                                                                                                                
1:17:11 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy  wondered if Mr.  Morgan would  support the                                                                    
bill if there was no amendments.                                                                                                
                                                                                                                                
Mr.  Morgan answered  in the  negative,  and considered  the                                                                    
current  bill to  be a  "blank check."  He thought  interest                                                                    
groups  could  influence  the outcome.  He  thought  general                                                                    
parameters as to  how the configuration would be  set up and                                                                    
managed would  be important.  He discussed  existing studies                                                                    
that could  inform the state  about managed  care techniques                                                                    
to  incorporate into  the bill.  He thought  the bill  would                                                                    
shift tens of millions of  dollars, and thought there should                                                                    
be cost containment.                                                                                                            
                                                                                                                                
Senator Dunleavy asked what Mr.  Morgan foresaw happening to                                                                    
healthcare in Alaska if the bill was not passed.                                                                                
                                                                                                                                
Mr.  Morgan thought  the  situation could  be  turned to  an                                                                    
advantage by  directing the Department of  Health and Social                                                                    
Services  to follow  the  processes that  were  in the  CAMA                                                                    
program in  order to  improve quality  by managing  care. He                                                                    
thought the processes  would also control cost  and make the                                                                    
funds go farther.  He discussed federal funding  and a court                                                                    
ruling regarding subsidies.                                                                                                     
                                                                                                                                
1:21:02 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon asked  about Mr.  Morgan's reference  to                                                                    
CAMA.                                                                                                                           
                                                                                                                                
Mr. Morgan  discussed the CAMA  program, which  formerly had                                                                    
income restrictions  and served those that  had pre-existing                                                                    
conditions  or  that  did  not   qualify  for  Medicaid.  He                                                                    
recalled  that the  average total  cost of  the program  was                                                                    
between  $12 million  and $15  million. He  thought that  it                                                                    
would  be more  costly  to  do an  insurance  pool, and  was                                                                    
concerned about program growth once  there was access to the                                                                    
general  fund (GF).  He added  that CAMA  defined "chronic,"                                                                    
which was  important, and controlled  costs. He  opined that                                                                    
the CAMA program encouraged quality.                                                                                            
                                                                                                                                
Co-Chair  MacKinnon  asked about  the  Nuka  program at  the                                                                    
Southcentral Foundation.                                                                                                        
                                                                                                                                
Mr. Morgan conveyed that he  had done some financial work on                                                                    
the  Nuka   program.  The  program  managed   chronic  acute                                                                    
patients,  and  it had  lowered  the  cost per  member,  per                                                                    
month.  The program  had  certified  Medicare dieticians  to                                                                    
work with  acute diabetes. The program  managed pharmacology                                                                    
and  emergency  room visits.  He  suggested  that the  state                                                                    
utilize a solution in Alaska that was working.                                                                                  
                                                                                                                                
1:24:27 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  relayed that  the Division  of Insurance                                                                    
had expressed it did not  manage healthcare. Rather, it paid                                                                    
providers  to  do so,  and  it  was processing  claims.  She                                                                    
referred  to managed  care  as  she had  discussed  it in  a                                                                    
meeting earlier in  the day. She considered  her thoughts to                                                                    
be  aligned  with  those  of Mr.  Morgan.  She  referred  to                                                                    
insurance companies  leaving the state. She  wondered if Mr.                                                                    
Morgan had a quick comment on the matter.                                                                                       
                                                                                                                                
Mr.  Morgan estimated  that there  was possibly  200 to  300                                                                    
individuals for whom there would  be a waiver. The state was                                                                    
asking to develop  a pool with the  insurance program, which                                                                    
the  state would  pay for.  He did  not know  why the  state                                                                    
could  not set  certain parameters  to manage  the care.  He                                                                    
thought if the state was  processing payments it would be in                                                                    
control  of  where the  payments  went  and what  was  being                                                                    
purchased. He  clarified that the  configuration was  not an                                                                    
insurance  program,  but  rather  a  state-funded  pool.  He                                                                    
suggested that  the state could  get Mutual of Omaha  or the                                                                    
Kaiser Foundation to  take up the program and  manage it, or                                                                    
even perhaps the Nuka program.  He emphasized the importance                                                                    
of getting the most quality for the state's dollars.                                                                            
                                                                                                                                
Co-Chair MacKinnon clarified that  the number of people were                                                                    
being considered was  495. She asked if Mr.  Morgan had read                                                                    
the most recent version of the bill.                                                                                            
                                                                                                                                
Mr. Morgan answered in the negative.                                                                                            
                                                                                                                                
Co-Chair MacKinnon  explained that  version "P" of  the bill                                                                    
came from the  House. She thought Mr.  Morgan was indicating                                                                    
that the  state should include  managed care in  the portion                                                                    
of the bill that applied a waiver for state innovation.                                                                         
                                                                                                                                
Mr. Morgan replied in the affirmative.                                                                                          
                                                                                                                                
Co-Chair MacKinnon  hoped that Mr. Morgan  would contact her                                                                    
office with his notes and  ideas as quickly as possible. She                                                                    
communicated  that   the  committee  would   be  considering                                                                    
amendments to the bill the following day.                                                                                       
                                                                                                                                
Mr. Morgan thanked the committee.                                                                                               
                                                                                                                                
1:29:58 PM                                                                                                                    
                                                                                                                                
NANCY  MERRIMAN,  EXECUTIVE  DIRECTOR, ALASKA  PRIMARY  CARE                                                                    
ASSOCIATION,  ANCHORAGE   (via  teleconference),   spoke  in                                                                    
support  of the  legislation.  She relayed  that the  Alaska                                                                    
Primary Care  Association (APCA) supported  community health                                                                    
centers throughout Alaska  and served as one  of the state's                                                                    
two  navigator  organizations  that performed  outreach  and                                                                    
enrollment  for  Alaska's federally  facilitated  healthcare                                                                    
marketplace. Since  the previous year, APCA  and partners in                                                                    
the  state  had reported  an  increase  in patients  of  all                                                                    
income  levels choosing  to forego  insurance due  to price.                                                                    
She pointed  out that unaffordable insurance  resulted in an                                                                    
individual  market that  became full  of sicker  people that                                                                    
needed  insurance. Additionally,  it  resulted in  increased                                                                    
utilization of  emergency services, poorer  health outcomes,                                                                    
and personal financial instability.                                                                                             
                                                                                                                                
Ms. Merriman  continued to discuss  the bill.  She supported                                                                    
the legislation  because it would  ease the  existing Alaska                                                                    
Comprehensive    Health   Insurance    Association   (ACHIA)                                                                    
mechanism  to   reinsure  the   most  expensive   claims  by                                                                    
individual  policy  holders.  She  thought  the  bill  would                                                                    
lessen  the rate  of annual  policy inflation  and stabilize                                                                    
the individual  health insurance marketplace.  She supported                                                                    
the section of  the bill that authorized the  state to begin                                                                    
the process for applying for  a 1332 waiver. She thought the                                                                    
individual insurance market  needed reinsurance to stabilize                                                                    
costs  as well  as to  instill confidence  in potential  new                                                                    
insurers.  She believed  the cost  of not  passing the  bill                                                                    
could be  the collapse  of the individual  insurance market,                                                                    
and the  shifting of individual  costs of over  $120 million                                                                    
to  plan  holders in  the  bigger,  small, and  large  group                                                                    
market. She  looked forward  to working  on the  matter with                                                                    
other groups in the future.                                                                                                     
                                                                                                                                
1:33:10 PM                                                                                                                    
                                                                                                                                
SHEELA TALLMAN, PREMERA BLUE CROSS BLUE SHIELD OF ALASKA,                                                                       
JUNEAU, testified in support of the bill. She read from her                                                                     
written testimony (copy on file):                                                                                               
                                                                                                                                
     • The individual health insurance market is in crisis                                                                      
     • I'd like  to start by briefly describing  what got us                                                                    
     here-- With  health reform, in  2014, the  major change                                                                    
     to  the insurance  market was  guaranteed issue  to all                                                                    
     individuals  without preexisting  condition exclusions.                                                                    
     This   provided  access   to   insurance  for   several                                                                    
     thousands of individuals                                                                                                   
          And,   Premera   and  insurers   priced   products                                                                    
          estimating the impact  of the uninsured purchasing                                                                    
          coverage for the first time                                                                                           
          We  experienced   a  significant  influx   of  new                                                                    
          enrollees  with  very  high  medical  costs,  many                                                                    
          leaving the  high risk pool  (which has  shrunk by                                                                    
          half) and  the federal preexisting  condition pool                                                                    
          and Premera lost approximately  $13 million in the                                                                    
          individual market                                                                                                     
     • For 2015 and 2016,  Premera had approximately 37% and                                                                    
     39% average rate increases  for the individual metallic                                                                    
     plans, but claims continue to exceed premiums.                                                                             
          To break  even in 2015, Premera  would have needed                                                                    
          a 70% increase                                                                                                        
     •  To  say it  differently,  Premera  is taking  in  on                                                                    
     average $713 in premium PMPM  and paying claims at $919                                                                    
     PMPM, demonstrating  the very high claims  costs in the                                                                    
     individual pool                                                                                                            
     • In a  very small sized market like  Alaska, there are                                                                    
     not enough healthy individual  purchasers to offset the                                                                    
     costs of enrollees with very high medical needs                                                                            
     • Today--  Alaska's average  benchmark plan  premium is                                                                    
     the highest in  the country (over $700  per month; next                                                                    
     highest state is $468)                                                                                                     
          While states  are experiencing  similar increases,                                                                    
          impacts in Alaska are more than double                                                                                
          While subsidies help many,  Premera has over 1,200                                                                    
          individuals who do not qualify for them                                                                               
                                                                                                                                
     • We are very concerned  that premiums will continue to                                                                    
     skyrocket due to the small size of the individual pool                                                                     
          With fewer  people to spread risk  across, a small                                                                    
          number  of individuals  with high  cost conditions                                                                    
          is  destabilizing  the  pool and  impacting  costs                                                                    
          dramatically                                                                                                          
     • One solution - is  an approach other insurers already                                                                    
     took- to exit the individual market                                                                                        
     •    Alternatively,    Premera   has    been    working                                                                    
     collaboratively  with  the  DOI   to  come  up  with  a                                                                    
     sustainable   option   for    Alaskans-which   is   the                                                                    
     reinsurance  program administered  by the  state's high                                                                    
     risk pool, ACIDA                                                                                                           
     •  The  reinsurance  program would  cover/reinsure  the                                                                    
     claims for  the highest  cost medical  conditions (long                                                                    
     term,   chronic  conditions-   heart  failure,   kidney                                                                    
     disease)                                                                                                                   
     •  A  reinsurance  program   would  help  mitigate  the                                                                    
     premium  increases  for individual  policyholders,  but                                                                    
     also  stabilize   the  market  which   can  potentially                                                                    
     attract new competitors                                                                                                    
          It also provides more financial certainty to                                                                          
          customers about their health insurance                                                                                
    • Premera also supports the state innovation waiver                                                                         
          Premera  supports flexibility  at the  state level                                                                    
          to  help Alaskans  maintain  the coverage  they've                                                                    
          had  and  to tailor  reforms  to  meet the  unique                                                                    
          needs of the AK market.                                                                                               
          A waiver would allow the state to explore long                                                                        
          term ideas to help address the high cost of                                                                           
          healthcare in this state                                                                                              
     •  What Alaskans  need is  immediate relief  from these                                                                    
     year over year premium increases                                                                                           
     • HB 374 will help  mitigate these swings and on behalf                                                                    
     of the  23k individual  policyholders, we ask  for your                                                                    
     support                                                                                                                    
                                                                                                                                
1:38:34 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  recognized  Senator  Mia  Costello  and                                                                    
Senator Cathy Giessel in the gallery.                                                                                           
                                                                                                                                
JENNIFER  MEYHOFF, CO-CHAIR,  LEGISLATIVE COMMITTEE,  ALASKA                                                                    
ASSOCIATION   OF   HEALTH   UNDERWRITERS,   ANCHORAGE   (via                                                                    
teleconference), spoke  in support  of the  legislation. She                                                                    
explained that the Association  of Health Underwriters (AHU)                                                                    
represented  over  100  licensed health  insurance  brokers,                                                                    
agents,  consultants, and  benefits  specialists in  Alaska.                                                                    
She  noted that  AHU members  consulted with  individuals as                                                                    
well  as  small  and  large  Alaskan  employers  on  how  to                                                                    
purchase,  administer,  and   utilize  individual  or  group                                                                    
health insurance coverage. She  discussed the portion of the                                                                    
bill that amended ACHIA. She  noted that much focus had been                                                                    
given to the  ACA, which was supposed to help  deal with the                                                                    
high-risk population. She thought the  ACA had not worked in                                                                    
Alaska,  and if  the bill  passed, the  state could  utilize                                                                    
ACHIA.  She  expressed   understanding  of  the  challenging                                                                    
fiscal  climate, but  thought  that the  situation could  be                                                                    
much  worse  if  the  individual insurance  market  was  not                                                                    
stabilized.                                                                                                                     
                                                                                                                                
Co-Chair MacKinnon stressed that the  state did not have the                                                                    
money to fund  the bill. She asked Ms. Meyhoff  if AHU had a                                                                    
plan that had more participants than just the state.                                                                            
                                                                                                                                
Ms. Meyhoff replied that AHU  had looked at the situation in                                                                    
different  ways, and  one proposal  had included  additional                                                                    
taxation per  member per month  as a solution  for gathering                                                                    
more funds. She  stated that AHU was looking at  ways to cut                                                                    
costs for medical care, which  she thought was not addressed                                                                    
through ACA.                                                                                                                    
                                                                                                                                
Co-Chair   MacKinnon  hoped   Ms.  Meyhoff   understood  the                                                                    
position the legislature  was in, having to  draw from state                                                                    
savings.                                                                                                                        
                                                                                                                                
Ms. Meyhoff indicated understanding.                                                                                            
                                                                                                                                
1:43:26 PM                                                                                                                    
                                                                                                                                
JENNIFER  JOLLIFFE,  SELF, ANCHORAGE  (via  teleconference),                                                                    
spoke in support of the  bill. She owned a small acupuncture                                                                    
practice in  Anchorage, and  purchased her  health insurance                                                                    
on the insurance marketplace. She  did not qualify for a tax                                                                    
subsidy. She noted  that she had sent  the committee members                                                                    
a  letter earlier  in April.  She commented  that she  could                                                                    
barely afford insurance, and with  an anticipated 30 percent                                                                    
to 40 percent  rate increase, paying for  insurance would no                                                                    
longer be an option. She  calculated that with the potential                                                                    
increase, her insurance premium  and deductible would equate                                                                    
to  35  percent of  her  pay.  She expressed  gratitude  for                                                                    
health  insurance. She  discussed patients  in her  practice                                                                    
who experienced sudden health  conditions. She pondered what                                                                    
could happen to people who did not have insurance.                                                                              
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
1:47:28 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:48:21 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair Micciche  addressed the  fiscal note  attached to                                                                    
the  bill from  the  Department of  Commerce, Community  and                                                                    
Economic Development (OMB component  354). He explained that                                                                    
the  note  included  a  one-time  expense  of  $55  million,                                                                    
appropriated  under  grants  and   benefits.  The  note  had                                                                    
indeterminate fiscal  impact from  FY 18  through FY  22. He                                                                    
read an excerpt from the analysis on the second page:                                                                           
                                                                                                                                
     HB 374  amends AS  21.55.430, the  Alaska Comprehensive                                                                    
     Health   Insurance   Association  (ACHIA),   to   allow                                                                    
     legislative  appropriation  of  insurance  premium  tax                                                                    
     receipts  collected by  the  Division  of Insurance  to                                                                    
     fund the reinsurance program created in HB374.                                                                             
                                                                                                                                
Co-Chair  MacKinnon commented  that while  there was  no net                                                                    
change  to revenue  generated from  the  premium taxes,  the                                                                    
taxes would be diverted from  the GF into the insurance fund                                                                    
(ACHIA) as proposed in the bill.                                                                                                
                                                                                                                                
Vice-Chair Micciche agreed.                                                                                                     
                                                                                                                                
FRED  PARADY, DEPUTY  COMMISSIONER, DEPARTMENT  OF COMMERCE,                                                                    
COMMUNITY, AND ECONOMIC DEVELOPMENT,  echoed the comments of                                                                    
Co-Chair  MacKinnon.  He  agreed  that while  there  no  net                                                                    
change to revenue,  there was effectively a  diversion of GF                                                                    
for  the purpose.  He continued  that the  insurance premium                                                                    
tax  had been  a source  of  significant revenue  to the  GF                                                                    
heretofore.                                                                                                                     
                                                                                                                                
1:50:23 PM                                                                                                                    
                                                                                                                                
LORI   WING-HEIER,   DIRECTOR,    DIVISION   OF   INSURANCE,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
stated  that the  bill asked  that the  legislature make  an                                                                    
appropriation each  year as it  saw fit. She noted  that the                                                                    
House Labor  and Commerce Committee had  added the specified                                                                    
amount  of $55  million  to  the bill,  and  the change  had                                                                    
carried forward to  the current version of the  bill and was                                                                    
now on  the fiscal note.  She relayed that  the department's                                                                    
analysis (based  on the actuarial  analysis in  the member's                                                                    
materials) showed that the $55  million would have between a                                                                    
15  percent  and 18  percent  stabilization  on the  premium                                                                    
rates.  This signified  that the  department did  not expect                                                                    
that rates  would decrease in  the current year.  If Premera                                                                    
were  to file  for  a  40 percent  rate  increase, it  would                                                                    
effectively be  a 25  percent rate  increase because  of the                                                                    
reinsurance  program. She  continued that  the amount  to be                                                                    
appropriated  to the  reinsurance program  in further  years                                                                    
(if any) would be determined by the legislature.                                                                                
                                                                                                                                
Senator Hoffman  asked if  the dollar  amount on  the fiscal                                                                    
note  had  been  included  in  state  budget  totals  during                                                                    
Conference Committee.                                                                                                           
                                                                                                                                
Co-Chair MacKinnon  noted that  the number had  been present                                                                    
on the fiscal note earlier.                                                                                                     
                                                                                                                                
Senator  Bishop  clarified  that  the  workers  compensation                                                                    
division still had an annual assessment.                                                                                        
                                                                                                                                
Mr. Parady answered in the affirmative.                                                                                         
                                                                                                                                
Co-Chair MacKinnon  clarified that in  Conference Committee,                                                                    
the bill had been attached to  the fiscal notes. If the bill                                                                    
did  not pass,  it would  not  be included,  so the  numbers                                                                    
discussed by Co-Chair Kelly did  not reflect the $55 million                                                                    
because it  was a  fiscal note  addition that  was dependent                                                                    
upon  the passage  of  the  bill. The  number  had not  been                                                                    
included  in  the  total  the Senate  had  released  for  GF                                                                    
spending.                                                                                                                       
                                                                                                                                
Ms.  Wing-Heier   understood  that   the  fiscal   note  was                                                                    
appendant to the budget, and had been passed as such.                                                                           
                                                                                                                                
Co-Chair   MacKinnon   recalled   an  assertion   from   the                                                                    
administration   (in  a   meeting  of   the  House   Finance                                                                    
Committee) that  there would  be a  $200 million  problem if                                                                    
the  bill were  not to  pass.  She asked  Ms. Wing-Heier  to                                                                    
speak to the issue, including  how the department felt about                                                                    
federal takeover of healthcare and  the expansion to cover a                                                                    
guaranteed coverage rate.                                                                                                       
                                                                                                                                
Ms.  Wing-Heier  referred  to an  earlier  conversation,  in                                                                    
which she provided  a quick analysis of what  the cost would                                                                    
be if  the state  had to  set up an  insurance company  as a                                                                    
stand-alone corporation.  She recounted that  the department                                                                    
had   considered  its   understanding  of   claims  in   the                                                                    
individual market, an  estimate of the surplus  (a set ratio                                                                    
to expected claims  to demonstrate ability to  pay), and the                                                                    
operating  costs  to  establish  a  corporation  staff.  The                                                                    
department estimated  that the initial start-up  costs would                                                                    
be roughly  $200 million. Additionally,  the state  would be                                                                    
required  (as  any  other insurer  would)  to  maintain  the                                                                    
surplus capital at the statutorily required ratio.                                                                              
                                                                                                                                
1:55:53 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy  asked if Ms. Wing-Heirer  had any comments                                                                    
on the earlier testimony by Mr. Morgan.                                                                                         
                                                                                                                                
Ms. Wing-Heier  relayed that she  had made note of  what Mr.                                                                    
Morgan had said about CAMI.  She expressed concern about the                                                                    
income  limits  and diagnoses.  She  noted  that a  founding                                                                    
principal  of the  ACA  was guaranteed  issue.  She did  not                                                                    
think  the state  could only  look at  insuring people  with                                                                    
chronic conditions. She noted  that all illnesses were under                                                                    
the ACA.  She understood and  respected the comments  by Mr.                                                                    
Morgan,  but  did not  know  how  the state  could  restrict                                                                    
things  to  the degree  he  was  suggesting and  still  have                                                                    
guaranteed issue.                                                                                                               
                                                                                                                                
Senator Dunleavy  surmised that  the goal  for the  bill was                                                                    
that others  would come into  the insurance pool  and reduce                                                                    
the cost. He thought some  of the conditions that caused the                                                                    
existing situation  seemed to de  destined to  resurface. He                                                                    
wondered if  Ms. Wing-Heier could prognosticate  if the bill                                                                    
would entice others  to join the pool to lower  costs, or if                                                                    
the program would inherently keep  costing the state greater                                                                    
amounts of money.                                                                                                               
                                                                                                                                
Ms. Wing-Heier  thought most people recognized  that the ACA                                                                    
was in  its infancy as a  program, and was not  perfect. She                                                                    
opined that there  had to be amendments made  at the federal                                                                    
level,  and  some   leeway  given  to  states   to  make  it                                                                    
affordable.  She  considered the  bill  to  be a  short-term                                                                    
solution to  get the state through  the next year or  so, so                                                                    
that  the state  could address  the situation  and find  the                                                                    
mechanisms  to  support  itself  in  the  individual  market                                                                    
without having to make a draw from the GF.                                                                                      
                                                                                                                                
1:59:31 PM                                                                                                                    
                                                                                                                                
Senator Dunleavy thought that if  the bill were to pass, the                                                                    
legislature needed to consider  amendments that would compel                                                                    
the restructuring  to happen.  He thought  it was  easier to                                                                    
ask for more  funding than to work to  change the structure.                                                                    
He was concerned about the future of the ACA.                                                                                   
                                                                                                                                
Co-Chair  MacKinnon did  not think  the ACA  was affordable,                                                                    
and thought the  matter was complex. She  commented that the                                                                    
committee had  not been collaborated  with to  address ideas                                                                    
for  solutions, and  was now  boxed  in to  a solution  that                                                                    
included a $55 million fiscal  note. She understood from the                                                                    
testimony of Mr. Morgan that  the legislature should examine                                                                    
language under  the waiver program  that required  some kind                                                                    
of managed care effort to  control costs. She looked forward                                                                    
to reading Mr. Morgan's  written comments before the meeting                                                                    
the following day.  She wondered if the  committee had ample                                                                    
time to consider the information.                                                                                               
                                                                                                                                
Co-Chair MacKinnon  understood Ms. Wing-Heier's  estimate of                                                                    
$200 million for  the state to set up  an insurance company.                                                                    
She thought  another choice for  the state (if the  bill was                                                                    
not passed)  would put at  risk the single carrier  that was                                                                    
supporting the  individual exchange market. She  wondered if                                                                    
she   had    accurately   stated   the   concern    of   the                                                                    
administration.                                                                                                                 
                                                                                                                                
Mr.  Parady  answered in  the  affirmative.  He thought  the                                                                    
issue was  that Alaska had  seen the withdrawal of  three of                                                                    
the  four  of its  insurance  carriers  (with Moda  Health's                                                                    
departure on  May 2, 2016).  Starting in January,  2017; the                                                                    
state would have  only one carrier and 23,000  people in the                                                                    
individual marketplace.  He considered  the issue to  be how                                                                    
best  to  triage within  the  coming  12  to 15  months.  He                                                                    
thought  Medicaid  reform,   the  healthcare  authority  and                                                                    
proposed innovation waiver proposed in  the bill, as well as                                                                    
ongoing  pressure on  cost control  were necessary  tools to                                                                    
find a path forward.                                                                                                            
                                                                                                                                
Senator Olson  asked about waivers that  would be considered                                                                    
and approved  in 2017.  He understood  some states  would be                                                                    
considered  for  waivers,  and wondered  why  the  state  of                                                                    
Massachusetts was  included in  the group  with demographics                                                                    
similar to Alaska (with small population and wide areas).                                                                       
                                                                                                                                
Ms.  Wing-Heier opined  that Massachusetts  applied for  the                                                                    
waiver to  remove federal oversight,  in order to  have more                                                                    
state control.                                                                                                                  
                                                                                                                                
2:04:32 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:04:59 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon REOPENED public testimony.                                                                                   
                                                                                                                                
GINA BOSNAKIS, OWNER, GINA  BOSNAKIS AND ASSOCIATES, JUNEAU,                                                                    
testified in support  of the bill. She relayed  that she was                                                                    
a  lifelong Alaskan,  a  small business  owner,  and a  past                                                                    
president of the Alaska  Association of Health Underwriters.                                                                    
Her  firm  was based  in  Anchorage,  and her  clients  were                                                                    
individuals and  families, private businesses  in Anchorage,                                                                    
and  school districts  throughout the  state. She  recounted                                                                    
seeing many  people struggle with insurance  in the previous                                                                    
few  years. She  observed that  due to  requirements of  the                                                                    
ACA, many small  businesses had elected to  drop their group                                                                    
coverage for  their employees and their  family members; and                                                                    
steered  them to  the individual  market. She  conveyed that                                                                    
the results  were that  the workers paid  a great  deal more                                                                    
than anticipated, and noted that  most of the people she was                                                                    
describing were low-wage earners.  The individuals had hoped                                                                    
to  receive subsidies  or be  eligible  for Medicare,  which                                                                    
generally  was  not  happening.  Consequently,  people  were                                                                    
faced with  paying much  more for a  plan that  covered much                                                                    
less.                                                                                                                           
                                                                                                                                
Ms. Bosnakis  observed individuals  who were in  good health                                                                    
and  who  had  been  paying for  catastrophic  insurance  no                                                                    
longer  had the  plans available  to them.  Such individuals                                                                    
were  not able  to find  plans to  meet their  needs in  the                                                                    
marketplace. She discussed high  claimants and low claimants                                                                    
in the same insurance pool, resulting  in a 30 percent to 40                                                                    
percent  increase  each  year. She  discussed  Alaskans  who                                                                    
needed  serious and  ongoing  medical  attention, but  could                                                                    
only afford insurance that had  a very high deductible. Such                                                                    
individuals  were  faced  with  getting  penalized  for  not                                                                    
having insurance, or paying an  enormous amount for a policy                                                                    
that they could  not use after paying so much  for a premium                                                                    
and not being able to reach the deductible.                                                                                     
                                                                                                                                
Ms.  Bosnakis discussed  the ACHIA  plan, which  she thought                                                                    
was efficient and  worked well for years.  She believed that                                                                    
allowing the functionality of an  ACHIA-type program for the                                                                    
most  ill members  of  the state  would  create a  healthier                                                                    
insurance  market for  everyone. She  recognized that  there                                                                    
were many  issues to  consider, but thought  the bill  was a                                                                    
good first step.                                                                                                                
                                                                                                                                
2:09:00 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon echoed  her earlier  comments about  the                                                                    
challenge  to  the  state's finances.  She  reiterated  that                                                                    
anything  put toward  the  insurance  program came  directly                                                                    
from state savings. She wondered  how to fund the problem to                                                                    
support another industry that was  being affected by actions                                                                    
that were not of the state's doing.                                                                                             
                                                                                                                                
Ms. Bosnakis  understood the fiscal challenges  faced by the                                                                    
state,  and  hoped that  the  committee  would consider  her                                                                    
comments. She  was afraid the  problem would be worse  if it                                                                    
was not addressed by the bill.                                                                                                  
                                                                                                                                
Co-Chair MacKinnon RECLOSED public testimony.                                                                                   
                                                                                                                                
Vice-Chair Micciche stated he  would likely support the bill                                                                    
as  a one-year  stopgap,  and support  working toward  other                                                                    
solutions.  He discussed  the time  the legislature  had put                                                                    
into Medicaid reform, and thought  heavily amending the bill                                                                    
would  complicate the  process dramatically.  He thought  if                                                                    
there was an amendment that  could be executed easily, while                                                                    
still reaching the objectives of  the bill in the waiver and                                                                    
the stop-gap  funding, he  would be  in support.  He thought                                                                    
anything more  complicated would  put the  bill at  risk and                                                                    
create other challenges.                                                                                                        
                                                                                                                                
Senator Olson  echoed the  comments of  Vice-Chair Micciche.                                                                    
He discussed his constituency and  the cost of healthcare in                                                                    
his  district. He  wanted to  see some  relief given  to the                                                                    
insurance  market,  so  that  individuals  would  have  some                                                                    
protection.  He was  in favor  of  the bill  in its  current                                                                    
form.                                                                                                                           
                                                                                                                                
Co-Chair MacKinnon discussed the  schedule for the following                                                                    
day.                                                                                                                            
                                                                                                                                
CSHB 374(FIN)  was HEARD and  HELD in committee  for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
2:13:49 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:13 p.m.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
HB 374 Public Testimony ABADA-AMHB.pdf SFIN 6/1/2016 1:00:00 PM
HB 374
HB 374 Public Testimony Hawk.pdf SFIN 6/1/2016 1:00:00 PM
HB 374
HB 374 Public Testimony Mitchell.pdf SFIN 6/1/2016 1:00:00 PM
HB 374
HB 374 Public Testimony S.Tallman.pdf SFIN 6/1/2016 1:00:00 PM
HB 374
HB 374 - Public Testimony - AIIAB.pdf SFIN 6/1/2016 1:00:00 PM
HB 374
HB 374 Public Testimony David Morgan.docx SFIN 6/1/2016 1:00:00 PM
HB 374