Legislature(1997 - 1998)
05/10/1998 12:25 PM Senate FIN
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MINUTES SENATE FINANCE COMMITTEE 10 May, 1998 12:25 p.m. TAPES SFC 98 # 166, Side A (000-593) Side B (593-502) CALL TO ORDER Senator Bert Sharp, Co-Chair, convened the meeting at approximately 12:25 p.m. PRESENT In addition to Co-Chair Sharp, Senators Pearce, Donley, Torgerson, Adams, Parnell and Phillips were present when the meeting was convened. Also Attending: Representative FRED DYSON; KAREN PERDUE, Commissioner, Department of Health and Social Services; JAY LIVELY, Deputy Commissioner, DHSS; BOB LABBE, Director, Division of Medical Assistance, DHSS; JANET CLARKE, Director, Division of Administrative Services, DHSS; DAVE KOIVUNIEMI, Assistant Commissioner, Department of Administration; JANET OATS, Director, Marketing and Government Relations, Providence Health Systems; LORRAINE DERR, Representative, Alaska State Hospital and Nursing Home Association; ANGELA SALERNO, Executive Director, National Association of Social Workers, and Board of Directors Member, National Association For the Education of Young Children; MIKE GREANY, Director, Division of Legislative Finance and aides to committee members and other members of the Legislature. SUMMARY INFORMATION CS FOR HOUSE BILL NO. 369(FIN) am "An Act relating to Medicaid coverage for certain eligible children and pregnant women; relating to primary care case management and managed care services as optional services under the Medicaid program; relating to premiums and cost- sharing contributions under the Medicaid program; and providing for an effective date." JAY LIVELY, Deputy Commissioner of Department of Health and Social Services, detailed the bill to members of the committee. Senator Parnell questioned the amount needed to implement the program. Senator Pearce noted that the committee did not have fiscal notes for the latest version of the bill. Mr. Lively offered copies of a summary sheet to outline the funding requirements. Senator Parnell asked if $4 million general funds would be required the first year and also wanted to know the amount of federal funding. Mr. Lively replied that $4 million state fund expenditure would earn the program about $10.5 million in federal funds. He detailed the sources of the federal funds: Child Health Expansion, Medicaid matching funds, and 100 percent Indian Health Services. Senator Parnell wanted to know why the fiscal note for the House Health and Social Services Committee version of the bill was only $2 million. Mr. Lively responded that the earlier version covered only services for children and did not include services for pregnant women. An amendment was adopted on the floor of the House to include the pregnant women services. That doubled the amount of state funds needed for the program. Senator Parnell moved on to the issue of eligibility. This bill would change the requirements from 133 percent to 200 percent of the federal poverty level. If that were equal to an annual income of $33,000 for a family of three, what would the income requirement be if the mother were pregnant with a fourth family member, he asked? Mr. Lively answered the amount would go up to about $40,000 for a family of four. KAREN PERDUE, Commissioner of Health and Social Services, joined the conversation, saying that when they looked at the 800 women and 1000 children that would be covered by this program, they found most of those were at the lower income levels of about $25,000. Senator Parnell asked for confirmation that the intent was to cover those who worked but were uninsured. Ms. Perdue affirmed. He then wanted to know if any income was excluded from the calculations. Ms. Perdue told him the Alaska Permanent Fund was excluded. BOB LABBE, Director of the Division of Medical Assistance, explained that the PFD was counted as income but was part of a "hold harmless" consideration. If a family lost Medicaid eligibility because of PFD earnings, the State agreed to continue to provide that health care for the transition, he told the committee. That had been included in the budget since the dividend program began. Senator Parnell asked if any other income was excluded. Mr. Labbe said certain things would be excluded under federal law, but he was unable to think of anything specific. Senator Pearce asked Senator Adams if he knew if Native Corporation shareholder payments were excluded. She spoke of certain large payouts made by the Goldbelt Corporation after it had some big timber sales. Senator Adams said those earnings would be excluded, but noted that different programs used different determinations. Mr. Lively clarified that any dividend payments under $2000 were excluded, but anything over that amount was counted as income. Co-Chair Sharp noted the excluded amount for a family of four would be $8000. In his observation however, these families who were shareholders in these corporations probably already had their health care provided by a separate program. Mr. Perdue said that a positive aspect of this program was that the State didn't actually pay for any of the medical care costs. They were all federally reimbursed. Senator Parnell wanted to know if child support was included in the countable income. Mr. Lively said it was. Senator Phillips asked if that was for all recipients or just some. Mr. Lively replied that there were some individuals already in the Medicaid program, who were also eligible for the new ATAP program. Under ATAP, the child support payments went directly to the State and therefore would not be considered income. Senator Parnell stated that this program dealt with a policy choice of providing public insurance for a population based on income. He noted that a person could be earning $40,000 gross income and qualify for medical care for children and pregnancy. He asked if assets were considered in the calculations. Mr. Labbe said for children and pregnant women, assets were not looked at, only income. That was a state option and most states dropped the assets accounting to streamline the process. In most cases it was not an issue because lower income families didn't generally accumulate many assets and the process usually caused more paperwork than return, he added. Senator Parnell said it was a concern that there would be some participants with many assets and little income. However, he did not know how to make that determination without a great deal of paperwork. Senator Parnell next referred to the pregnancy related services and wanted to know if this bill would expand eligibility for public funding of abortions. Ms. Perdue said the purpose of this bill was for prenatal care. Federal Medicaid laws prohibited the kind of funding for abortions that could occur to those allowed in the Hyde Amendment. Therefore, under Medicaid itself, there were very limited situations where abortions could be preformed. These were mainly life threatening situations. Senator Parnell asked if any other programs in state government granted public funding for abortions. Ms. Perdue pointed out the great deal of activity in the budget to prohibit state funding for abortions. Nothing in the current bill would change the situation, she stated. Senator Torgerson wanted to know the department's analysis of requirement for co-pay. Mr. Labbe replied that a provision was in the bill to require co-payments. The intent was to have families earning above 150 percent of the federal poverty level share in the costs with either a premium charge or a co-payment. However, under federal Medicaid rules, there was a prohibition against these charges for pregnant women and children. He said he had worked very closely with federal officials to obtain permission, but was unsuccessful. The allowance would require a change in federal Medicaid laws. He said that in their opinion it made sense for families, as their incomes went up, to have some cost sharing. Senator Torgerson said he read the federal laws differently. In his interpretation, the law said, "the state shall come up with a program for co-payments." Mr. Labbe responded that the federal law limited the ability to charge premiums or co-payments for pregnant women and children. However, the state law directed the department to maximize co- payments whenever possible and they did charge co-payments for other populations. He offered that the confusion might be with the new child health insurance federal program, which did provide states the ability to charge co-payments and premiums if the state provided a health insurance program in addition to the Medicaid program. When his department looked at that option, they found that the most cost-effective way to implement and operate this program was through the Medicaid program. The reasons included the market in Alaska and the size of the pool, even allowing the inability to charge co- payments. Senator Torgerson referred to page 3, subsection 5; "the state plan developed shall impose deductible co-insurance and co-payments." He wondered why that was included in the bill. Mr. Labbe noted the provision, which said the charges may not exceed the maximum allowed under federal law. He replied that his department actually added the subsection to see if they could get the federal government to allow it. There were a number of states in the same position and they were hoping the matter could be revisited, he said. If in the future, states were successful in getting the federal government to change it's regulations, then the premiums and co-payments could be implemented through this existing law, he suggested. Ms. Perdue stated this was her intention. Senator Torgerson said his intention was to take care of the poorest of the poor and have a sliding scale to offset the variations of income. He felt it was irresponsible to allow the full coverage to everyone. He moved on to the hold harmless provision for the permanent fund dividend. He noted the earlier statement that the hold harmless was already in practice, but that this was a new program. He wanted to know if this increased the hold harmless that would be charged off the PFD's. Mr. Lively answered that there was no hold harmless increase in the fiscal note. Senator Torgerson asked for further clarification. Mr. Labbe explained that the PFD was counted as income. The question was if that made a person ineligible for Medicaid. If it did, the State covered the cost of Medicaid coverage for the month that the check was received. In practice, they had seen a continual decline in the hold harmless payments because the federal rules were such that in most cases, Medicaid coverage was not lost because of a one-month lump payment. He detailed the amounts charged off to the hold harmless provision over the last several years showing the drop. Senator Torgerson offered another scenario. If someone were not eligible because of his or her PFD earnings, then that amount would be covered under the hold harmless already in place. He felt the addition of the new program had to have an impact. He admitted that some of the participants in the new program would already be on Medicaid, but argued that a lot of them would not be, would receive dividends, and at some point become ineligible because of the increased income. He felt that would have a direct impact on the hold harmless. He requested a fiscal note on the hold harmless provision. Ms. Perdue told him that each federal agency had a different way of dealing with the federal hold harmless issue. The Medicaid agency had not done a person by person exchange. She thought that was why there was not a fiscal note for this area. Were it ATAP, she said it might be a different situation. Each area was complex, was negotiated and was not a dollar for dollar, person by person issue with the health care financing agency. Senator Torgerson countered that the hold harmless wasn't anticipated to be $30 million when it was started. The state had grown into that amount by not paying attention and adding different Medicare qualifications, he felt. He wanted the department to take a close look at the situation and make sure there would be no increase. Senator Phillips asked if the current number of hold harmless participants was 88,000. Mr. Lively said there were that many people receiving Medicaid assistance in the state. Senator Phillips noted that was out of a total population of 600,000 for the state. Co-Chair Sharp revisited the issue of eligible income. He looked at the $33,000 total allowable income of a single parent and compared it to another parent earning $34,000. He wanted to know if one family was living in subsidized housing for $600 per month and the other was paying the full $1000 rent, where was the $7,200 subsidy accounted? He felt that as far as purchasing power or benefits were concerned, that was a major consideration especially when PFD earnings were added. He noted that this person would be competing for services against others that didn't qualify for the housing subsidies. Ms. Perdue said that over the years, they had started making allowances for those costs along with utility costs. Co- Chair Sharp spoke of his experience with the Alaska Housing Finance Corporation and the benefits they offered to low- income families. He said that while DHSS wasn't paying for the subsidy, the participating families were getting the benefit. He realized that wasn't part of the cash income, but it still was a meaningful income to a family. Ms. Perdue replied that they looked at participants in ATAP and those who were on subsidized housing and found only a 35 percent overlap. She stated that welfare reform really changed the world and that people had only a certain amount of time to get subsidy from the government. Therefore, they would need to raise their income levels either by wages or other means. Co-Chair Sharp continued the discussion, listing the PFD's rent subsidy and other sources that could raise income substantially. He asked if there was a time limit that parents would be covered under this program. Ms. Perdue said pregnant women were covered only for the period of their pregnancy and one- month afterwards. Co-Chair Sharp announced that the committee would need to be provided with updated fiscal notes before the bill could be moved out. Senator Parnell felt the co-chair raised some interesting issues related to income and eligibility. He noted that when looking at a family of four with an income of $40,000, after adding these other benefits, the income was upwards of $50,000. The issue then became, should public insurance be used for these families. This was essentially displacing private insurance providers, he felt. He wanted to know about discussions the department held with private insurers. Ms. Perdue shared the crowd-out concern, where people would leave private insurance companies for government coverage. She had convened a group of private insurers and talked for a day on the issue. It was found that their primary market began at the $40,000 range. That was the point when an individual began to accumulate assets and would be looking for insurance to provide for their children. She told the committee that other states that had implemented similar programs had not seen erosion in the private market. The intention with this bill was to create a niche for the worker who did not have dependent coverage through their employer, was self employed, or only worked part-time or seasonal. She felt it was important to note that many of these workers themselves may be insured. Senator Parnell spoke of two small oil companies in the state, one of which offered health insurance and the other that didn't. He was concerned that with the passage of this bill, the companies would encourage their employees to seek out the public insurance. The research provided by the department stated that they really had no predictions on this. He remembered earlier discussion regarding implementing a time delay between stopping private insurance and qualifying for the public coverage. He thought that would protect from employers cutting off insurance coverage. He wanted to know if this was still included in the bill. Mr. Labbe replied that it wasn't currently written in the legislation. The intent of the federal block grant was that children who had insurance or access to insurance, would not be eligible. The department considered addressing the matter in regulations rather than statutes. This was because it would be complicated. He restated the focus of the bill was for children, not entire families. Senator Parnell spoke of a past job where his health insurance was paid by his employer, but coverage for his dependents was not included and he had to pay extra. He felt it would be an easy choice for a parent to forgo the dependent coverage and enroll the children in the public plan. He felt that was an important issue, but didn't know how it should be dealt with. Co-Chair Sharp wondered why an employer who paid low wages would ever offer a company group insurance plan if the majority of the employees would qualify for state insurance. Ms. Perdue responded that when a company offered coverage, every employee must have access to that coverage. If the president had coverage it also needed to be available for the clerk, she said as an example. Co-Chair Sharp agreed that may be true, but that the president could pay for dependent coverage out of his personal assets and not through the company. Ms. Perdue said it was very difficult to buy insurance for a child in the independent market. Co-Chair Sharp asked how many children and pregnant women were anticipated to participate in the program. Ms. Perdue estimated about 6,000 children and 800 pregnant women. Co- Chair Sharp asked if that was in addition to the 88,000 people receiving Medicare benefits already. Ms. Perdue affirmed there were about 54,000 children in the program, but they expected that number to decline as welfare reform progressed. In the long run, she thought the increase might cancel itself out. Co-Chair Sharp asked if the House amendment to add pregnant women drove the present fiscal notes, which doubled. Ms. Perdue affirmed. He wondered why only 800 new people in the program would cost twice as much. Ms. Perdue replied that coverage for children was very inexpensive, only about $500 per year. The delivery package for pregnant women was about $8000. She said the comparison was similar to apples and oranges. There was further discussion on the details of the higher fiscal notes. Co-Chair Sharp voiced concern about the sharp increase after the bill had already passed through the House Finance Committee. For that reason, he wanted to take a close look at it. Senator Torgerson referred to the children's portion of the fiscal note and the State's allocation for the federal match. The funds for this were to come from the Tobacco Tax revenues and were listed on the fiscal note as $5.6 million. On the chart showing the breakdown of all costs, the figure was listed as $6.7 million and included general funds. He wanted to know if the amount was increased above the minimum allocation and why it was increased. Mr. Lively responded that the $5,6 million was the first year's allocation from the Child Health Insurance program. He was unsure of the senator's question. Senator Torgerson restated his question, asking if the bill was giving the minimum federal match amount of $5.6 million. Mr. Labbe explained that the Children's Health Block Grant general fund amount shown on the chart under Title 21 was $5 million. That was an amount of the federal block grant that would be used the first year. The full amount of the grant would not be used in the first year. A Medicaid match was also shown at a revised 60-40 rate and was to cover pregnant women. Another federal allotment allowed 100 percent for the native population. Therefore the actual block grant general funds used would be $1.973. Five million dollars federal funds would be used. Senator Torgerson then understood. There was further discussion on the chart and the different funding sources. Senator Adams spoke of the debate in the House Finance Committee and the addition of services for pregnant women on the House floor. He felt the conference committee should pass out a $4 million dollar fiscal note to fund the overall package. He excused himself to attend another meeting. Asking about the higher expenses for pregnant women, Senator Parnell wanted to know the costs if the income requirements were brought down from 200 percent to 175 percent. Mr. Labbe replied that the figures had been computed and would cost about $1.5 million in general funds, down from about $2 million. The number of qualified women at the 175 percent income level was estimated at 608 versus 781 qualified women at the 200 percent level. Co-Chair Sharp asked what was the current income percentage level. Ms. Perdue replied that coverage was provided for income levels at 133 percent of the federal poverty level, which was the federal minimum. Co-Chair Sharp restated his disappointment that the House Finance Committee did not have an opportunity to review this and figure how it would fit into the budget. With the education funding requests, he felt it would be difficult. Senator Pearce pointed out that the fiscal note question was not a problem since there was still $4 million left in the $7 million fiscal note allocation. However, this was not including the education issue with SB 36. Tape #166 Side B, 1:20 p.m. The committee began hearing public testimony on the bill. JANET OATS, Director of Marketing and Government Relations for Providence Health Systems, was called upon first and she testified as follows: "We are adding our support to HB 369. As several of you know, we've been following this bill throughout the session. And when it was introduced, Providence on it's own, began to investigate possibilities of going into the private sector finding some other way to do this. Talk to insurance companies as well. And came to the conclusion that using the Medicaid approach did make the most sense." "I wanted to comment on a couple of things that came up in the discussion with the commissioner. Senator Torgerson, I know you're concerned with being just astonished at [undecipherable] not allowing these co-payments. And I have to confirm what the commissioner told you. It just seems ludicrous to us and I would think as a legislative body you would want to work with them to get [undecipherable] to provide those waivers to Alaska and the other states that are trying to include co-payments for folks who are involved in this." "And then also, as Providence Health Systems and the second largest - at least might even be the first - but second largest private employer in the state, I have to talk about the worry that people might drop out of their insurance - drop their insurance and go into this. Providence probably uses the largest number of entry level employees. We have a very difficult time right now finding those people that we need in those entry-level positions. And as an employer, we know our health care benefits that we offer are key to our recruiting strength. And I think in with the job market the way it is right now, there isn't a danger of seeing people - seeing employers drop that coverage to families." "We are pleased at the format the bill is in right now. I think it's a realistic approach. We're very please to see that it does cover pregnant women. I think, I was just trying to figure it out. It would only take half a dozen babies who have to be taken care of in out NICU with - if you didn't have to spend that, you could cover the 800 pregnant women. And if they end up in the NICU, they're going to end up Medicaid, using state dollars. So it just seems to make sense to spend the money keeping those women healthy during their pregnancy." "The bill includes, talks about case management. And as I've talked to our social workers, our home health care nurses who are working with this population, I can't stress how important it is just this amount of time where we can interact with those pregnant mothers, gives us a little time to provide those parenting skills that you would be astonished that people don't know. Just the basics of how to diaper a baby and hygiene needs for babies. Things that you and I take for granted that we've learned, so important that they be provided the opportunity to learn how to that and take care of their children." "And in conclusion, I think since its Mother's Day, it would be great to pass this bill out of committee, looking after mothers and children." Co-Chair Sharp asked what percentage of treatment in Alaska did Providence Hospital perform and would expect to financially benefit from this legislation? Ms. Oats said all hospitals would benefit. She estimated 300 babies a month were delivered. In terms of the Newborn Intensive Care Unit, Providence treated all the children in the state, she said. Next to testify was LORRAINE DERR, representative of the Alaska State Hospital and Nursing Home Association. She spoke as follows: "All of the hospitals with the exception of Barrow and Mount Edgecumbe are members of the association as are all the nursing homes in the state." "Alaskans share a common goal of safe health children and the Alaska State Hospital and Nursing Home Association incorporates that goal into its mission of improving health care of all individuals. Last year the federal government made additional funding available for the purchase of insurance for children's health care coverage. HB 369 would allow the State Of Alaska to take advantage of those federal funds. But because there's a direct correlation between the lack of prenatal care and giving birth to a low, or very low birth weight baby, and the low birth rate accounts for ten percent of all health care costs for all Alaskans, the association is pleased that pregnant women are included in this bill." "Alaska's hospitals continue to report growth for uncompensated care. It was $122 million in 1993 and that rose to $177 million just two years later. As a result of serving uninsured and underinsured Alaskans who cannot pay their medical bills shows that more Alaskans need care and are not able to pay. Raising the poverty level to 200 percent for children under the age of 19 will go a long ways towards making sure that health care coverage is available to children before they reach that critical stage and come to the hospital and end up uncompensated care. HB 369 will do that." ANGELA SALERNO, Executive Director of the National Association of Social Workers, and member of the Board of Directors of the National Association for the Education of Young Children, was the last to testify and spoke as follows: "Advocates for young children are real unified in their knowledge that children need a good start. And that's why we support this bill so strongly. We really see two very important outcomes with this bill: prevention and welfare to work success. Now you've heard from the department and some of the other supporters of those issues, but let me just state again how important it's going to be for welfare reform to be successful in this state. Because if you remember, we've discussed this so many times that's the main reason why people go back to welfare. They find - or they don't get off. Now that there's a time limit, they will be getting off. But I think as a state we can do so much to make that transition smoother and more successful." "Something that hasn't been mentioned here this morning, around prevention with covering pregnant women is the issue of fetal alcohol syndrome and fetal alcohol affects in this state. I've heard it quoted that if we can save one fetal alcohol syndrome infant we will save the state at least a million dollars. So again, I think it's a quite - it's a bargain that we have here in this bill. And we would very much urge your support. Thank you." That concluded public testimony. Senator Adams asked if the co-chair was ready for a motion on the bill. Co-Chair Sharp said he needed to see the final fiscal note before he would be ready to make a decision. Senator Adams requested a recess. The committee recessed from approximately 1:30 p.m. to 2:00 p.m. Co-Chair Sharp posed a question to the department. He asked how the program would be implemented if the bill were passed in its current form but the fiscal note was later reduced. Ms. Perdue responded that the program would need enough state funds to qualify for the federal matching funds. A shortfall in the money could delay the implementation date. Currently, she explained, the program was scheduled to begin in October. She suggested that their assumptions of the number of qualified families that would actually choose to participate could be reevaluated, which might lower the amount of funds needed. Co-Chair Sharp said he was not opposed to funding the program, but felt it could be the tip of the iceberg. He also spoke of concerns with the $4 million remaining in the FY 99 fiscal note allocation. Senator Torgerson restated his disappointment that the co- payment provision was lost. He wanted the opportunity to take care of the poorest of the poor and felt the current setup spread the program out to others with total earnings that were much higher. He made a statement about the benefits of the co-payment system. Co-Chair Sharp felt that because it was the last few days of the session and the bill just reached the committee, it was unfortunate there was not time to research the matter. He again voiced his concerns that the fiscal note was doubled in the House of Representatives after it had passed through the House Finance Committee. The committee discussed the option of changing the fiscal note. An option was suggested by Senator Parnell that two fiscal notes could be written: one for the services provided to children and another for the services for pregnant women. He stressed that his intent was to not reduce funding for services for the children. Senators Adams and Pearce joined the discussion with Senator Pearce concluding that only one could be presented to the conference committee for acceptance. Senator Pearce offered a motion to move from committee, CS HB 369 (FIN) am. Senator Phillips asked that he be allowed to abstain from voting. Senator Adams objected. Co-Chair Sharp ordered the bill reported out of committee without objection. A Letter of Intent was adopted by the House of Representatives and was included in the packet with the bill. Co-Chair Sharp read the letter for the record, which stated that funding for this program was not intended to be spent on any abortion related services. SENATE CS FOR HOUSE BILL NO. 367(HES) "An Act relating to part-time public school students; and providing for an effective date." The committee members were due in the Senate Chambers and Co-Chair Sharp announced that this bill would be heard after the floor session. Senator Phillips asked to hear from the sponsor now in case the sponsor would be unable to attend the later meeting. Representative FRED DYSON spoke to the bill. His comments included arguments in favor of allowing more equitable treatment for part-time students in the Anchorage School District. He spoke of the current practice of requiring part-time students to defer to full-time students when enrolling for classes. He offered a handout, which showed the Department of Education's regulations allowing the practice. The intent of this bill was to require the school district to accommodate its part-time students the same as it did its full-time students. Senator Donley had an amendment to offer at the request of the representative. He asked that Representative Dyson speak to that amendment while he was at the table. Representative Dyson explained that this amendment would exclude interscholastic or extracurricular student activities from the discrimination or exclusion prohibition. Co-Chair Sharp ordered the bill held in committee and stated his intent to revisit it later in the day. ADJOURNMENT Co-Chair Sharp recessed the meeting to the call of the chair at approximately 3:00 p.m. SFC-98 (14) 1/20/98 am
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