Legislature(2017 - 2018)BELTZ 105 (TSBldg)
01/23/2018 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Dcced Health Insurance Innovation Waiver Update | |
| Pacific Northwest Economic Region | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
January 23, 2018
1:39 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Kevin Meyer
Senator Gary Stevens
Senator Berta Gardner
Senator Peter Micciche
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: UPDATE ON THE HEALTH INSURANCE 1332 WAIVER
- HEARD
PRESENTATION: PACIFIC NORTHWEST ECONOMIC REGION
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community and Economic Development
Anchorage, Alaska,
POSITION STATEMENT: Presented an update on Alaska's Section 1332
Health Care Innovation Waiver.
STEVE MYERS, Senior Program Manager
Pacific Northwest Economic Region
Seattle, Washington
POSITION STATEMENT: Presented an overview of the Pacific
Northwest Economic Region (PNWER).
MATT MORRISON, CEO
Pacific Northwest Economic Region
Seattle, Washington
POSITION STATEMENT: Presented an overview of the Pacific
Northwest Economic Region (PNWER).
ACTION NARRATIVE
1:39:10 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:39 p.m. Present at the call to
order were Senators Stevens, Meyer, Gardner, and Costello.
Senator Micciche arrived during the meeting.
^Presentation: DCCED Health Insurance Innovation Waiver Update
Presentation: DCCED Health Insurance Innovation Waiver Update
1:39:54 PM
CHAIR COSTELLO announced the business before the committee is to
continue the discussion about economic opportunities. The
specific question today is "How are Alaskans Innovating?" She
welcomed Ms. Wing-Heier to give an update on the state's
innovation waiver and noted that Commissioner Navarre was in the
audience.
1:40:27 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
explained that Section 1332 of the Affordable Care Act allows
states the opportunity to innovate in the delivery of the
individual and small group market to consumers. Alaska took
advantage of this to apply for a waiver to fund the reinsurance
program. The things that can be waived are benefits and
subsidies, marketplace and qualified health plans, the
individual mandate, and the employer mandate.
Alaska reallocated premium tax credits to receive the aggregate
value of those tax credits or subsidies to implement an
alternative approach. Each waiver application must satisfy four
criteria: the coverage must be at least as comprehensive; the
coverage must be at least as affordable; the scope of coverage
must reach a comparable number of residents; and the waiver must
not increase the federal deficit.
1:42:27 PM
MS. WING-HEIER explained that the legislature appropriated $55
million to fund the first year of the reinsurance program. The
market began to stabilize, and the individual market only
increased seven percent. The prior two years saw close to a 40
percent increase each year. With the reinsurance program, the
average decrease this year was over 24 percent.
The silver plans did not go down as much as the gold and bronze
plans because President Trump decided not to fund the cost-
sharing reductions. This did not mean that qualified moderate to
low income residents did not receive the cost-sharing
reductions. It's just that the funding had to come from
somewhere else. She noted that the silver plans were also loaded
so they didn't see the reduction that the gold and bronze plan
saw.
MS. WING-HEIER explained that last year the legislature
appropriated a second $55 million to cover the state's portion
of the reinsurance program for the five-year period of the
waiver (2018-2022). It amounts to about 15 percent a year.
She said the benefits of the reinsurance program are not just
the high-risk claimants. The rate decreases are applicable to
everyone regardless of their age, where they live, or their
health status. As a result, Alaska is no longer the highest
health care insurance for the individual market. Idaho,
Nebraska, and Iowa are higher and depending on the plan, so is
Tennessee.
1:44:52 PM
At ease
1:45:45 PM
CHAIR COSTELLO reconvened the meeting.
SENATOR STEVENS asked what happened to the coverage for people
in the high-risk pool. He noted that age, race, income and other
demographic characteristics. He asked what is included in "other
demographic characteristics."
MS. WING-HEIER explained that anyone who applies to the
individual market is insured by Premera, including those in the
high-risk pool. When Premera receives a claim from someone who
has an expensive event or chronic condition, they transfer the
claim to the reinsurance program. The consumer/patient never
knows they been transferred. She clarified that in 2017 the
state paid for the reinsurance program and in 2018 will be a
combination of state and federal funds.
SENATOR STEVENS asked what "other demographic characteristics"
means.
MS. WING-HEIER responded that there is nothing in the plan that
discriminates against an Alaskan who qualifies for the coverage
to begin with.
1:48:23 PM
MS. WING-HEIER continued to explain that Alaska did not waive
any aspect of the Affordable Care Act that would reduce coverage
to obtain the lower rates. The essential health benefits are
still in the plans. Alaska did waive the single risk pool, which
ceded high risk claimants to the reinsurance program, and
requested pass-through of the advanced premium tax credits
(APTC).
She explained that Alaska was getting a lot of money to pay for
the premiums for people with low and moderate incomes. When the
state did the reinsurance program, the rates went up just 7
percent in 2017, which was 33 percent less than the estimate.
The federal government would have paid the premiums regardless
of the increase. Because those rates are basically subsidized,
the state asked the federal government to send the money it
wasn't spending back to the state. Over a five-year period, the
waiver to fund the reinsurance program is an estimated $322
million.
SENATOR GARDNER asked if the elements of the waiver plan were
her original ideas.
MS. WING-HEIER said this is homegrown. She said she has an
incredible staff and they brainstorm a lot.
SENATOR GARDNER asked if other states are looking at what Alaska
has done.
MS. WING-HEIER said she and her staff have worked with 15 states
and they know that this model has been in almost every bill that
has come out of D.C.
CHAIR COSTELLO asked if other states are introducing similar
legislation to apply for a waiver.
MS. WING-HEIER said yes, but there are some quirks to applying
for a waiver which makes some legislatures reluctant. For
example, Washington State has a waiver application but because
their population is not as highly subsidized, they are expecting
to receive just 15 percent from the federal government and fund
85 percent. Another impediment to some states is that they need
the capital to participate in the program. She reminded members
that the state paid the full amount of the reinsurance program
in 2017 and forward paid its share for the five years of the
waiver.
1:53:08 PM
CHAIR COSTELLO recalled that some people characterized the
legislation as a bailout of the insurer.
MS. WING-HEIER said it's not a bailout; it stabilizes the market
so that consumers can afford to participate. The insurer is
still responsible if the claims for the diagnoses that were
listed in the statute go over $55 million and the money doesn't
go directly to the insurer.
SENATOR GARDNER asked if she'd say it is succesful in keeping
insurers in the Alaska market.
MS. WING-HEIER admitted that when this process started, she
thought Alaska would have another insurer in the market by 2019.
That could still happen once it's clear what will happen with
the ACA, she said.
1:55:16 PM
MS. WING-HEIER reviewed the timeline starting in June 2016 when
the legislature passed HB 374 that provided the statutory
authority for a Section 1332 Innovation Waiver. The waiver was
awarded in July 2017 and a contract was sent to the Governor for
a signature. In the next week or so the state will know the
exact dollar amount of what it will receive for 2018, but the
expectation is about $48 million.
The cost of the waiver included $136,226 for the actuarial
report from Oliver Wyman, $16,844 for the economic impact study
from ISER, and staff time. The total cost to the state was about
$250,000. She displayed an excerpt from former Secretary Price
that indicated that DHHS is interested in working with states on
Section 1332 waivers for high-risk pools. Centers for Medicare &
Medicaid Services (CMS) published a checklist in 2017 - with
input from the division, about how to streamline the program.
She said July 11, 2017 was a good day for the division; CMS
issued a news release announcing the approval of Alaska's 1332
innovation waiver application.
MS. WING-HEIER reviewed the Oliver Wyman actuarial analysis that
was submitted with the division's initial waiver application. It
shows what would have been paid in premium tax credits
(baseline). For 2018 that would have approached $234 million.
With the waiver the anticipated cost was $182 million. The state
went after the $51 million difference and will probably receive
$48 million. Enrollment fell short of the estimated 21,000 by
about 3,000. A great deal of the shortfall likely had to do with
the uncertainty associated with the Affordable Care Act.
1:59:41 PM
CHAIR COSTELLO asked what triggers participation in the
reinsurance program.
MS. WING-HEIER explained that an enrollee is not ceded to the
reinsurance program until they are treated for a chronic
condition or they have a traumatic incident that qualifies them
for the reinsurance program.
2:00:55 PM
SENATOR STEVENS referenced the actuarial analysis on slide 11
and asked why the advanced premium tax credit (APTC) baseline
costs and the difference between that and the APTC waiver nearly
doubles in eight years.
MS. WING-HEIER replied that reflects the division's projection
for claims to go up due to medical inflation. The consequence is
that premiums also increase.
SENATOR STEVENS commented that that is scary.
MS. WING-HEIER agreed.
2:01:31 PM
MS. WING-HEIER displayed slide 12 that shows Alaska's estimated
award that was part of the 1332 approval letter from CMS. The
five-year total is [$322.65 million]. She noted that the
estimated net for 2018 is $48 million and the division had
estimated $51 million.
CHAIR COSTELLO asked her to summarize the totals since viewers
were unable to view the PowerPoint realtime due to technical
difficulties.
MS. WING-HEIER recounted that in 2018 the division anticipated
getting $51.6 million from the federal government to fund the
reinsurance program. The federal estimate was $48.3 million. The
reinsurance amount in 2018 is slightly over $59 million, so the
state contribution this year is about $11 million. In 2019, the
division anticipated receiving nearly $56 million and the
federal government is anticipating $61 million. In 2020, the
division anticipated getting $60 million and the federal
government is anticipating $65 million. In 2021, the division
anticipated $65 million and the federal government anticipates
$71 million. In the final year of the waiver, the division
anticipated receiving $69 million and the federal government
anticipates $75 million.
2:04:07 PM
MS. WING-HEIER highlighted the local and national media coverage
following the announcement that Alaska's Section 1332 waiver was
approved. Other states wanted to file an application the next
day but didn't realize the details involved or that there is a
six-month waiting period after the application is conditionally
approved.
SENATOR GARDNER asked the rationale for the six-month delay.
MS. WING-HEIER said the regulations provide a six-month public
comment period and the waiver could potentially change based on
those comments.
2:05:52 PM
MS. WING-HEIER displayed a list of the states that have asked
the division to share its process and experience in setting up a
reinsurance program. She noted that Minnesota and Oregon have
structured their 1332 waivers on Alaska's program and CMS
approved those states waivers. Iowa and Oklahoma withdrew their
applications for similar waivers because they could not come to
agreement with the federal government. Other states continue to
work on the legislation and the program. She further noted that
most federal health care bills that were introduced in 2017
referenced Alaska's reinsurance program as what should be done
to stabilize the individual market. The bill that came the
closest to passing grandfathered Alaska for the term of the
waiver.
The waiver application is available online.
MS. WING-HEIER reviewed examples of how the waiver affects
consumers. In 2014, a 55-year-old individual on a gold plan paid
$887 per month. That increased to $1,837 in 2017. The rates in
2018 are $1,325. In 2014, a 35-year-old on a gold plan paid
$486. That increased to $1,059 in 2017, but this year it has
decreased to $763.
2:09:06 PM
CHAIR COSTELLO suggested everyone stand and applaud Ms. Wing-
Heier.
MS. WING-HEIER credited the legislature and her staff. "This was
a team effort and it was good for Alaska and we're pretty proud
to have brought it home."
CHAIR COSTELLO thanked Ms. Wing-Heier for her commitment to
making things better for Alaskans. She opined that this was an
example of the power of innovation and a proud moment for the
State of Alaska. "The fact that you are so credible was part of
that unanimous support, she said.
2:10:34 PM
At ease
^Pacific Northwest Economic Region
PRESENTATION: PACIFIC NORTHWEST ECONOMIC REGION
2:13:11 PM
CHAIR COSTELLO reconvened the meeting and welcomed Matt Morrison
and Steve Myers from the Pacific Northwest Economic Region.
2:13:56 PM
MATT MORRISON, CEO, Pacific Northwest Economic Region, stated
that PNWER is a $1 trillion public-private partnership that was
chartered by Alaska, Washington, Idaho, Montana, Oregon and the
Canadian provinces of British Columbia, Alberta, Saskatchewan,
Yukon and Northwest Territories. Its mission is to increase the
economic wellbeing and quality of life for all citizens of the
region, while maintaining and enhancing the natural environment.
The federal governments of both countries have recognized PNWER
as the gold standard for U.S./Canada relations. However, things
are more challenging now than at any time in the last 28 years
because the future of NAFTA [the North American Free Trade
Agreement] is unclear.
He discussed the economic trade between the two countries
speaking to the following points:
? $2 billion (USD) in goods and services crosses the
Canada-United States border every day. $451 Million
USD to Canada
? 380,000 people cross the border every day.
? Economic watersheds flow North and South and East
and West across the border.
? Canada and the U.S. are each other's largest source
of direct investment.
? PNWER works with stakeholders to identify and reduce
trade impediments.
He highlighted that Alaska will be impacted if President Trump
rescinds NAFTA and TN visas disappear. These are the visas that
Canadians use when they work in Alaska temporarily. He noted
that since NAFTA has been in place, agricultural trade among
PNWER partners has tripled.
2:16:51 PM
MR. MORRISON expressed appreciation to the Alaska legislators
who serve as delegates and co-chairs of PNWER working groups. He
noted that former Secretary of Homeland Security John Kelly
visited PNWER and spent several hours discussing cross-border
efforts related to economic security and resilience. He
mentioned the earthquake last night that demonstrated the vital
importance of safe and secure shipping lanes. To that end, PNWER
recently received two grants. One is to work with the maritime
community to enhance cyber security and cyber resilience in the
shipping arena. The second is to look at ways to use drones for
post-earthquake assessments. He hopes to develop protocols to
encourage the private sector to work with the public sector to
speed reporting of the magnitude of an earthquake. The use of
LIDAR technology is also invaluable following an earthquake to
assess potential damage hidden deep inside steel and concrete
structures such as bridges.
2:22:08 PM
MR. MORRISON displayed a chart of the 14 PNWER working groups.
He noted there is an active Cross-Border Livestock Health group
that is looking at things such as maintaining the health of the
Porcupine Caribou Herd. He also mentioned the groups that focus
on Mining, Border Issues, and Tourism. He related that for the
past 2.5 years a task force has been working on an initiative to
allow a more seamless flow of legitimate tourism between Canada
and the U.S. He highlighted that the chair of the Energy &
Environment group has educated state and provincial legislators
on how the energy system is built, functions, and is regulated.
This initiative is to help secure the resilience of the energy
system in the region. He noted that infrastructure funding will
be a major part of the president's upcoming State of the Union
address.
2:24:58 PM
SENATOR MICCICHE joined the committee.
MR. MORRISON described a trip about five years ago when PNWER
took its president on a tour of Saskatchewan, Alberta, and
British Columbia to learn about major infrastructure projects
that were public/private partnerships. In one example Alberta
built 20 school buildings of the same design and saved $40
million. This process has also been used for other large-scale
infrastructure and transportation projects, but a major
challenge has been dwindling access to traditional funding
mechanisms and few resources to explore innovative procurement
methods. About three years ago Congress authorized the Regional
Infrastructure Accelerator Demonstration Program to help
municipalities and states understand federal funding
opportunities for large-scale projects and the potential for
using public/private partnerships. If this program is included
in the omnibus budget bill, PNWER will apply to be a regional
accelerator for creative infrastructure finance. Some of
Canada's methodology will be used.
2:30:34 PM
SENATOR STEVENS questioned the benefit of shelving or doing away
with NAFTA.
MR. MORRISON pointed out that Congress has a clear say in what
happens with NAFTA. The Trade Promotion Act of 2015 authorizes
Congress to request information about any trade agreement that
is being negotiated from the Office of the United States Trade
Representative. NAFTA falls in that category. PNWER has been
advocating that member states ask their delegations how a
rescinded NAFTA would impact their states, because there would
be a lot of unintended consequences.
SENATOR STEVENS asked the dollar amount in goods and services
that cross between Alaska and Canada every day.
STEVE MYERS, Senior Program Manager, Pacific Northwest Economic
Region, replied it's $451 million; Canada is Alaska's fourth
largest export partner.
SENATOR GARDNER asked if the Congressional delegation is aware
or if the legislature should do something to emphasize the
impact that NAFTA has on the state.
MR. MORRISON said he isn't sure anyone is aware of the impacts
of a rescinded NAFTA. He reiterated that Congress reserved a lot
of rights for itself when it passed the 2015 legislation. "One
of them is to be informed throughout the process - before,
during, and as the trade negotiations are taking place. And I'm
just encouraging them to use it."
CHAIR COSTELLO expressed interest in hearing about robotics and
their impact on the workforce.
2:35:09 PM
MR. MYERS highlighted examples of best practice workforce
initiatives. The Oregon Manufacturing Innovation Center brings
industry into the classroom to teach students the importance of
engineering in the real world. The second example is the skilled
trades and apprenticeship program. Washington state recently
awarded $6.4 million to 11 communities to bolster apprenticeship
programs. The goal is to have about 100,000 apprenticeships in
the state over the next ten years. He highlighted PNWER's
Innovation Working Group that Senator Costello co-chairs; and
the Cascadia Venture Accelerator Network. The latter is a group
of 50 organizations in Washington, Oregon, and British Columbia
that have agreed to work together to share resources to foster
innovation.
He concluded his comments pointing to information about the 2018
annual summit and highlighted the need for input on issues
important to Alaska at this year's summit. University presidents
who attend share outside the box thinking about best practices
and collaboration techniques related to university research,
management, and ways to better engage students.
2:40:00 PM
SENATOR STEVENS asked what the advantage would be if University
of Alaska President Jim Johnson attended the summit.
MR. MYERS said it would be an opportunity to showcase the
university system and find areas where collaborating with other
universities would be beneficial. He mentioned the Drone Project
as an example.
SENATOR MICCICHE referenced the summit attendance breakdown and
asked what makes up the 15 percent other category.
2:41:24 PM
MR. MORRISON replied people from all walks of life have attended
so it varies. Sometimes it's local governments.
SENATOR GARDNER added that it can be spouses.
MR. MORRISON related a conversation he had with Senator Hughes
about opportunities in Alaska to take hold of the new
technologies of 3D and virtual reality when the bandwidth is
available. He summarized events at the last summit where there
was interaction between gamers and builders/architects - sectors
that don't generally intersect. Gamers came up with some
remarkable solutions to issues in the construction industry. He
emphasized that the notion of bringing the best and brightest
young people to legacy industries is very exciting.
2:47:06 PM
CHAIR COSTELLO said she found the Hackathon fascinating and saw
firsthand the value of virtual training. She noted that she co-
chairs the legislature innovation caucus.
She thanked the presenters.
MR. MORRISON concluded that Alaska is the top of the world and
it has endless potential.
2:49:37 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:49 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| PNWER Overview SL&C 1-23-2018.pdf |
SL&C 1/23/2018 1:30:00 PM |
PNWER Overview SL&C 1-23-18 |
| DCCED 1332 Waiver Update - SL&C 01-23-2018.pdf |
SL&C 1/23/2018 1:30:00 PM |
DCCED 1332 Waiver Update SL&C 01-23-2018 |