HB 21-SCHOOL/UNIVERSITY EMPLOYEE HEALTH INSUR  8:55:48 AM CO-CHAIR ALLARD announced that the final order of business would be HOUSE BILL NO. 21, "An Act relating to group insurance coverage and self-insurance coverage for school district employees, employees of the University of Alaska, and employees of other governmental units in the state; and providing for an effective date." 8:56:24 AM REPRESENTATIVE SARAH VANCE, Alaska State Legislature, as prime sponsor, summarized HB 21 per the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: House Bill 21 amends current statute to create the opportunity for school districts, the University of Alaska, and governmental units such as cities and boroughs to optionally participate in AlaskaCare: our state healthcare program. These entities would have the choice to opt into the pool as an entire entity, enabling Alaska's Department of Administration to negotiate a better cost of healthcare. Research conducted by the Institute of Social and Economic Research of the University of Alaska Anchorage suggests that Alaskans spend the most per resident, face the highest insurance premiums, and have seen overall spending grow much faster than the rest of the country. Alaskans spent more out-of-pocket dollars on health care costs than residents in any other state in 2019, according to a recent Health Affairs study. In fact, in less than 25 years Alaska's spending for health care increased more than 5 times over, growing an average 7.8% per year compared to the U.S. average of 6.0%. On average, 45% of our state educational budget funds healthcare and benefits, leaving only 54% to go towards the classroom. Specifically, school districts across Alaska are facing increasing costs of healthcare that is impacting recruitment and retention of teachers. If passed, House Bill 21 could ease the financial burden of school districts and give the State of Alaska more leverage to negotiate with healthcare providers, improving services for Alaskans with the potential of saving millions of dollars. REPRESENTATIVE VANCE noted the bill supports local control and is 100 percent optional. She pointed out that Alaska has the highest cost per capita of health care in the U.S. and this negatively effects private and public sectors of Alaska's economy because health care costs are part of teacher compensation. 9:00:29 AM REPRESENTATIVE VANCE explained the bill provides the option for school districts, the University of Alaska, and governmental units to participate in AlaskaCare, which is the state healthcare program. The benefits of consolidation consist of three areas: saves money, expands healthcare options, and reduces staff burden. 9:02:33 AM RANDY TRANI, Superintendent, Matanuska-Susitna Borough School District, gave invited testimony via teleconference, and stated the Matanuska-Susitna Borough School Distract supports HB 21, and it has been one of the priorities of the school board for the last three years. He noted he sees no negative downside - it can only provide potential for savings. 9:04:46 AM REPRESENTATIVE VANCE summarized the sectional analysis [included in the committee packet], which read as follows [original punctuation provided]: Section 1. Adds to powers of regional school boards the power to establish and maintain school district participation in a policy of group insurance, selected by the State of Alaska, that provides medical insurance. Section 2. Adds to the duties of a regional school board the duty, when the board's school district participates in a policy of group insurance elected by the State of Alaska that provides medical insurance, to determine and disperse to district employees and administrative officers the amounts necessary to cover the district's portion of the cost of that participation. Section 3. Allows the Commissioner of Administration to expend from the public education fund (AS 14.17.300) to the group health and life benefits fund (AS 39.30.095) a total of $100,000,000 or less as needed to pay claims submitted by school district employees who are covered by a policy of self- insurance provided by the state; and, requires the Commissioner of Administration to repay the public education fund, over a period of 10 years, the full amount of the commissioner's expenditures from the public education fund. Section 4. (a) Allows school districts to participate in a policy of insurance that provides medical insurance coverage to state employees and to school district employees. (b) Requires participating school districts to contribute to the group health and life benefits fund (AS 39.30.095) based on rates set by the commissioner of administration. (c) Requires participating school districts to reimburse the state for procuring excess loss insurance if the state provides insurance benefits to school district employees under a policy of self-insurance. (d) Requires participating school districts to reimburse, over a period not to exceed 10 years, the department of administration's cost of paying insurance claims by school district employees for the first four months school district employees are covered by a policy of self-insurance provided by the state of Alaska. (e) Allows a participating school district to require its employees to pay some or all of the money that this bill section would require the school district to pay to the state. (f) Defines "school employee" and "school employer" for purposes of the bill section. Section 5. Allows the Board of Regents of the University of Alaska to establish and maintain university participation in a policy of group insurance, selected by the State of Alaska, that provides medical insurance for university employees. Section 6. Clarifies that when an employee of a participating governmental unit is covered by a group insurance policy obtained by the Department of Administration the employee spouse and dependent children are also covered. Section 7. Adds to the University of Alaska to the definition of governmental unit applicable to section 6 of the bill. Section 8. Add the definition of school district to AS 39.30.090, which is amended by section 6 and 7 of the bill. Section 9. Authorizes the Department of Administration to provide group medical care insurance coverage to school district employees and employees of other governmental unit by means of self-insurance. Section 10. Requires the Department of Administration to procure excess loss insurance in connection with providing group medical insurance coverage to employees of governmental units other than the state, and allows the department to allocate the cost with the excess loss insurance across all of those governmental units. Section 11. Make sections 1- 8 and section 10 of the bill applicable to collective bargaining agreements and other contracts that become legally binding on or after the effective date of those bill sections. Section 12. Require certain self-insured school districts to transfer the closing balance of their self-funded insurance reserve account soon after they enroll in a health care plan administered by the state, and requires that when transferred by a school district these amounts will be applied to offset reimbursements owed by that school district under AS 14.20.127(d), a provision proposed in section 4 the bill. Section 13. Authorizes the commissioner of administration to adopt regulations necessary to implement the changes made by the bill, to take effect on or after the effective date of the changes made by the bill. Section 14. Make sections 12 and 13 of the bill effective immediately, subject to the restrictions set forth in those bill sections. Section 15. Makes the bill's provisions effective date July 1, 2024, except as provided in bill section 14. 9:08:42 AM REPRESENTATIVE STORY asked Representative Vance if she had assessed how many districts would be interested in this option. REPRESENTATIVE VANCE replied that her office had emailed every school district, but she does not have a definitive number at this point. 9:10:11 AM CO-CHAIR RUFFRIDGE noticed there weren't any fiscal notes, and asked if they are forthcoming. REPRESENTATIVE VANCE replied she just received the fiscal notes [over the weekend] and will forward them soon. 9:11:00 AM REPRESENTATIVE PRAX asked if currently governmental units other than state are not allowed to participate in state employees' health plans. REPRESENTATIVE VANCE confirmed that is correct. REPRESENTATIVE PRAX observed that it is a "one-sided agreement"; there was no mention of underwriting standards, so the state's employee insurance plan would have to accept other groups and not have any other option. REPRESENTATIVE VANCE replied that invited testifier Ms. Wood may better speak to the question. 9:12:36 AM BETSY WOOD, Acting Chief Health Administrator, Division of Retirement and Benefits, Department of Administration, explained that as the bill is written, the Department of Administration would be required to accept any governmental unit or school district that wanted to participate. 9:15:04 AM REPRESENTATIVE HIMSCHOOT asked [Mr. Trani] how the $7 million is calculated. MR. TRANI explained the calculation is the premium paid, plus the premium of AlaskaCare, multiplied times the number of employees. This number was based off a calculation from several years ago and premiums change frequently; therefore, he stated he is not sure what the savings are currently. He noted the average premium is currently between 28 and 30 thousand dollars per year per employee. REPRESENTATIVE HIMSCHOOT requested that the current numbers be forwarded to the committee. 9:16:24 AM CO-CHAIR RUFFRIDGE said he was surprised by the number stated in reference to the cost of premiums and asked whether the cost included the employee's family. MR. TRANI confirmed the number is for family coverage, and there are several different plans for employees to choose from. 9:18:19 AM REPRESENTATIVE PRAX questioned if anyone has done iterations on what happens when working with big insurance companies, and if actuarial standards change. He referenced [the Affordable Care Act] in relation to offering incentives. MS. WOOD responded that the type of actuarial analysis is something that is done when a bill approaches the finance committee to get a better sense of longer-range impacts. 9:20:10 AM REPRESENTATIVE STORY asked Ms. Wood about a study in 2021 regarding the university system joining AlaskaCare, and if costs were affected by much. MS. WOOD replied that the division looked into the possibility, and she recalled there were minor but not significant savings. She stated she can research the exact numbers and provide them at a later date. 9:22:21 AM REPRESENTATIVE PRAX commented that the legislature needs to look at this very carefully. He provided an example of a personal experience with insurance policies and the costs involved. REPRESENTATIVE VANCE stated to Representative Prax that the bill would allow the option for universities and schools to choose and what works for individual units and if it would be beneficial to join the healthcare plan, or not. The overall goal is to ease the financial strain on school districts, so that schools can focus on what matters most. 9:24:29 AM CO-CHAIR ALLARD announced HB 21 was held over.