HOUSE JOINT RESOLUTION NO. 35 Proposing amendments to the Constitution of the State of Alaska prohibiting passage of laws that interfere with direct payments for health care services and the right to purchase health care insurance from a privately owned company, and that compel a person to participate in a health care system. 9:07:00 AM REPRESENTATIVE MIKE KELLY, SPONSOR, presented an overview of the resolution. He emphasized the seriousness of the legislation, noting that health care involves everyone and that 36 states have the issue under consideration. He felt health care should be a state issue and not a federal one. He claimed that 85 percent of Americans were happy with their healthcare system; there were a number of uninsured, usually illegal immigrants and the young. The real number of uninsured was close to 10 million; however, they were all able to receive treatment paid for by others. Representative Kelly asserted that many were upset by recent legislation passed by Congress that they felt represented a dramatic step toward turning the healthcare system over to the federal government. He relayed that the proposed resolution would allow the people to vote on whether or not to participate, prohibit any fines or other punitive actions surrounding the personal decision, protect the right of the individual to purchase health care and the right of doctors to provide lawful medical services without government fines or penalties, and enshrine those rights in the state constitution. Representative Kelly suggested that the legislation would turn Alaska against the federal government. He did not believe health care was provided for in the U.S. Constitution. 9:12:30 AM CHRISTIE HERRERA, DIRECTOR, HEALTH AND HUMAN SERVICES TASK FORCE, AMERICAN LEGISLATIVE EXCHANGE COUNCIL (ALEC) (via teleconference), noted that ALEC was a non-partisan, national association of state lawmakers. She spoke in support of HJR 35, which was modeled after ALEC legislation enacted in 41 states, the Freedom of Choice in Health Care Act. She pointed out that the legislation was a national effort endorsed by the Wall Street Journal and that 59 percent of likely voters believed states should have the right to opt out of federal government programs. Ms. Herrera stated three reasons why ALEC supported the bill: It would ensure continued access to health services; stop mandates that do not work, such as the Massachusetts mandate; and render unconstitutional any attempt by the state to require an individual to purchase healthcare coverage or state prohibition against direct payment for medical care. The legislation would also protect Alaska in a constitutional challenge of the new federal health reform law. Ms. Herrera addressed several misconceptions that she felt had come up in other committee hearings about HJR 35. She assured the Finance Committee that the bill would not block people from taking advantage of the federal law, but would give citizens a choice. She dispelled the idea that prohibiting an individual mandate would exacerbate the "free rider" problem; she argued that people would continue to show up in emergency rooms for free health care even with the new federal mandate. She noted that the newly insured would still be paid for with subsidies; the new federal law dictates that a low-income family of four would qualify for more than $20,000 in government subsidies through the new exchange. She encouraged passage of the resolution. She listed states where similar legislation has already passed, including Virginia, Idaho, Arizona, Alabama, Georgia, and Tennessee. 9:17:30 AM Representative Gara commented that he was skeptical. He asked whether a cost analysis had been done related to how much it cost those who bought insurance (or the taxpayers) to make up for those who did not. Ms. Herrera responded that free riders would show up in the emergency room even if there was a requirement to buy individual health insurance. She claimed an individual mandate would exacerbate the free-rider problem. She offered to provide data showing that the primary free riders are people on Medicaid; doctors have been refusing to see new Medicaid patients because of the low reimbursement rate. The federal law would put most of the newly insured into the Medicaid program, which she felt delivered poor care. Representative Gara asked whether Ms. Herrera had helped write the constitutional amendment. Ms. Herrera related that the resolution was modeled after legislation written by ALEC, an organization of state lawmakers from all 50 states. 9:20:15 AM DAVE ROLAND, ATTORNEY and POLICY ANALYST, SHOW-ME INSTITUTE, MISSOURI (via teleconference), described himself as an experienced constitutional attorney and discussed constitutional implications of the bill at both the state and federal levels. He referred to a countdown to an "unprecedented intrusion" into individual liberty. He asserted that the individual health-insurance mandate recently passed by Congress would require citizens to purchase a product they may not want, a step never before taken. He maintained that the U.S. Constitution did not offer protection of personal freedoms; therefore, states could modify their constitutions to protect their citizens. He believed HJR 35 would give Alaskans a chance to speak up for freedom. Mr. Roland acknowledged that questions had been raised about the effectiveness of the proposed amendment. There have been very few direct conflicts between a state's protection of individual liberty and a federal government demand. He highlighted a Missouri case; the federal government had required the use of public funds for educational purposes, but Missouri's constitution forbids the use of public funds. In response, the U.S. Supreme Court exhibited discomfort with applying the law because of the Missouri constitution. The law was interpreted so that there was no longer a conflict. He maintained that the same pattern had held true through a number of U.S. Supreme Court cases. 9:24:37 AM PAT LUBY, ADVOCACY DIRECTOR, ALASKA ASSOCIATION OF RETIRED PERSONS (AARP), ANCHORAGE (via teleconference), testified in opposition to the resolution. He did not believe that the state constitution should be amended, except for very serious reasons. He argued that the federal government was not taking over health care. He noted that 85 percent of the population was content with current healthcare coverage. He spoke of new managed-care models, the importance of networking, and coordinated delivery of services. He added that in Alaska, Medicaid pays better than Medicare and maintained that providers see Medicaid patients. He believed cost containment was necessary and that something needed to be done about the uninsured. Currently, 17 percent of Alaskans between the ages of 50 and 64 have no insurance at all. They often go to the emergency room; those with insurance pick up the tab. The average cost of the uninsured for every Alaska family was $1,900 annually. Employers, including the state, also pick up the cost of those employers who do not provide coverage to their employees. He emphasized that AARP wants to make sure all Alaskans participate in healthcare coverage in order to end cost-shifting. The resolution would allow people to opt out of coverage. 9:27:08 AM Representative Kelly opined that Mr. Luby did not represent all seniors. He had heard from seniors who disagreed with the sentiments expressed. Representative Fairclough asked how AARP had reached consensus on the issue. Mr. Luby explained that the board of directors had taken a position on the measure. He maintained that the only way to bring down healthcare costs was to end cost-shifting. If people were allowed to opt out, the rest of the people would have to pay for them. Representative Fairclough inquired whether the stated position was an Alaskan or national one. Mr. Luby replied that there was only one national board of directors; AARP is a national organization and the states do not take individual positions. 9:29:32 AM MARIA RENSEL, FAIRBANKS (via teleconference), testified in support of the resolution. She reported that she had collected signatures of others who also strongly supported the resolution; the people she had talked to did not want to participate in the federal healthcare reform. She refuted some of Representative Gara's comments; she believed people should choose for themselves whether they want health insurance. 9:32:10 AM CAM CARLSON, FAIRBANKS (via teleconference), testified in support of the resolution. She could not believe that a law could be passed that prohibited people from buying health services they wanted. She thought it important to protect the individual's and the state's rights against intrusions of the federal government. She did not think the federal government had expertise in health care and had not done well with Medicare or Medicaid. She disagreed with Massachusetts' healthcare plan. RANDY GRIFFIN, FAIRBANKS (via teleconference), testified in support of the resolution challenging the federal government. He believed that the state already regulated insurance companies. He had concerns about his insurance rates going up. He favored supporting those who could not afford health insurance, although he did not think the federal government should be involved. He distinguished between rights and acts of mercy. He did not want young people to develop a welfare mentality. 9:38:36 AM PEGGY ANN MCCONNACHIE, NATIONAL FEDERATION OF INDEPENDENT BUSINESSES (NFIB), voiced concerns about the federal healthcare legislation. She spoke in support of HJR 35. She wanted the right to choose whether to participate in a health-insurance system. She did not want to be forced to pay fees imposed by the federal government if she did not choose to provide health insurance for her three companies. She felt the resolution would help protect Alaskans and Alaskan businesses and that Alaskans should have the right to vote on whether or not they were subject to the federal government's imposed healthcare restrictions. She noted that NFIB has taken a position against mandates. She urged the committee to pass the bill. 9:41:38 AM Representative Fairclough asked whether NFIB's position was Alaskan or national. Ms. McConnachie stated that the position was an Alaskan one. She described NFIB as a group of small Alaskan businesses ranging in size from one individual to over one hundred. The businesses banded together because they employed many people and were concerned about federal mandates. Co-Chair Stoltze noted that he has met many members and had become more aware of the many businesses in the state. 9:43:41 AM MARK REGAN, FAIRBANKS (via teleconference), spoke to concerns about HJR 35. He reported that he had worked on many lawsuits brought by Medicaid beneficiaries against the government during the past 20 years. He maintained that the language of the resolution would have an effect on existing as well as future state laws and on the federal government's authority to impose an individual mandate. Mr. Regan discussed how the resolution might influence state law and court rules related to medical child support. A person with children who is divorced is supposed to have a divorce decree stating who should purchase health insurance for the children. He maintained that the resolution would jeopardize the state medical child-support system that ensures insurance by court order. Mr. Regan called attention to HB 423, which was amended in the Health and Social Services Committee to stipulate that the freedom of choice policy was not to undercut anything that was required or provided by the state (including by state court order); the committee was headed in the direction of allowing the systems to continue and be modified. He felt that HJR 35 would jeopardize the right of a state court to mandate health coverage for children. He thought the language used might confuse voters. Mr. Regan addressed the relationship between national health reform and the individual mandate. The text of the measure says that no law should be passed which is aimed at the Alaska legislature and Alaska state law, and has no necessary effect on anything that happens at the federal level. He believed that the federal mandate was likely to take effect without being challenged by HJR 35. He speculated that the resolution was designed before the federal law passed to prevent the state from requiring people to purchase insurance the way Massachusetts requires people to purchase insurance, to prevent a single-payer or other mandatory contribution system at the state level. He did not think the text was aimed (in spite of what the sponsors intended) at federal healthcare reform individual mandates, but at the state legislature and the state courts to prevent a state law. Mr. Regan spoke to what HJR 35 would do: Because of the way federal way is structured, the resolution would take the state out of a role of protecting Alaska citizens in terms of the health-insurance exchanges through which people might get subsidized health insurance from private companies. He explained that the federal law stipulated that starting in 2014 the health-insurance exchanges were to be regulated by the states if the states signed on, and regulated by the federal government directly or by some non-profit if the states did not sign on. Each individual state was given a choice. He suspected that if the language was passed and enacted by the voters, the main effect it would have on federal healthcare reform would be that the state could not operate the exchanges. The state would then no longer be engaged in healthcare regulation; the federal government would run the exchanges. Mr. Regan compared the situation with the federal government's relationship to subsistence regulation. The state is able to regulate under the Alaska National Interest Lands Conservation Act (ANILCA) if it has laws that do a certain set of things, but if the state does not have those laws or if the laws are unconstitutional, as the Alaska Supreme Court has found them to be, the federal government does the regulating on federal land. He claimed that the proposed constitutional amendment would put the state in the same position. The state would be taking itself out of the health-insurance business, and the state would not be able to protect Alaskans through regulating the exchanges. Mr. Regan argued that if there is a constitutional challenge to the individual mandate and to the exchanges, it would not be assisted or undercut by passage of the constitutional amendment. 9:52:27 AM Representative Fairclough asked whether the amendment would prohibit a parent mandated by the court to provide for health insurance for a child in a custody situation. She also wanted a response regarding the issue of taking Alaska out of the role of making regulatory decisions. DENNIS BAILEY, ATTORNEY, LEGISLATIVE AFFAIRS (via teleconference), agreed that the first issue could be a potential interpretation of the language in Section 2 of the bill. He was not certain, but believed the second issue also appeared to be correct: the federal government or non- profits could run the programs if the state did not run the exchange programs; then they could be run by non-profits or by the federal government. Co-Chair Stoltze queried the phrase "potential interpretation." Mr. Baily replied that the language said that it would prohibit the state from penalizing a person for making a particular healthcare choice. For example, if the state requires a parent to provide health insurance for a child under a divorce decree, the constitutional amendment could be interpreted to prohibit a penalty on the choice of the individual not to do what the court says. He opined that a conflict would be presented. 9:56:48 AM Representative Austerman requested that Mr. Regan put his testimony in writing. Mr. Regan agreed to do so. Representative Kelly commented that the same questions were being addressed in 36 states and suggested that there would be many questions like the ones posed by Mr. Regan. Representative Fairclough stated that she was supportive of the legislation, but wanted to examine its unintended consequences. She wanted to build a record for the courts to look at. The intent of the resolution was that the national government should not tell states what to do regarding healthcare coverage in the state. Co-Chair Stoltze also wanted to look at all possible consequences of the federal mandate. Representative Kelly agreed with the statements. He said the bill process was just beginning and the committee's comments would be on the record. Representative Fairclough explained that she commented about the intent on the record because the court uses meeting minutes to consider legislative intent. 10:00:44 AM BOB HOWARD, FAIRBANKS (via teleconference) urged support of a constitutional amendment to protect Alaskans from the federal government's overreaching legislation. He stated that whether the amendment passed or not, the federal law already existed. He requested strong language on other possible federal mandates besides health care. He hoped for a broader statement through a constitutional amendment that would prohibit passage of any law that would compel a person or an employer to purchase any good or service, or that levied any penalty, tax, or surcharge on a person or employer for failing to purchase any good or service. 10:03:15 AM Representative Doogan asked who Mr. Howard was speaking for. Mr. Howard replied that he was speaking on his own behalf. HUGH BROWNE, ANCHORAGE (via teleconference), opposed the bill because he thought spending time fighting the President or the federal legislation was a waste of time. He agreed with statements made by Mr. Regan and the state lawyer about possible unintended consequences. He was against spending resources to fight a federal law that had already been passed; the resolution would affect the state and not the federal government. He maintained that the bill could take liberties from Alaskans and that there were beneficial things in the federal healthcare bill. He was concerned that the bill would cause a constitutional fight over health care. He thought the result would be ineffectual since the language in the resolution says that no law shall be passed; he emphasized that the federal law had already been passed. 10:09:16 AM Representative Kelly acknowledged that the passage of the federal healthcare bill had stirred up discussion. He reiterated that 36 other states had taken stands against the federal bill. He noted that Alaska had been counseled to proceed carefully and thoughtfully. The process was underway in Alaska with the governor and the attorney general looking at it. He pointed to additional legislation related to the issue: HR 14 and HB 423. He maintained that the issue would not go away. He stated that "America is on the march" and maintained that the legislature must pay attention. He urged considering unintended and intended consequences. He concluded that the legislature should not give up. 10:11:53 AM Representative Gara offered to help make the resolution a better piece of legislation. He believed that people should get the medical care they needed, but he thought the provision would work against people getting it. His major concern was that he did not believe in creating false expectations among the people who elected him. He stated that the resolution was unenforceable and unconstitutional. Representative Gara pointed out that there were people who disliked other federal programs, such as the space program, environmental regulations, and the federal tax system, but in the end, Americans "get what they get" from Congress and the President; if they don't like it, they can elect new Congress people and a new president. He disagreed with Alaskan legislators pretending to be Congressmen on television and trying to change a congressional law with a piece of state legislation, which he thought created false expectations among the public. Representative Gara maintained that he did not want to write something blatantly unconstitutional into the state constitution. He likened it to trying to change the First Amendment through language in the state constitution, or putting language into the state constitution removing the right to freedom of religion. He argued that America does not work that way. He did not want to pretend to the Alaskan public that a measure like HJR 35 could change something. Representative Doogan voiced his opposition to the resolution. He related that his father had helped write the Alaska Constitution. Like any living document, it has been amended several times. He believed that the resolution went beyond being a sensible amendment and was purely a political statement. He was opposed to enshrining political statements in the state constitution, the basic document governing who Alaskans are and what they do. He did not know enough about law to know what consequence the resolution could have in the end, but he did not want to put a "passing political fancy" into the state constitution. 10:16:40 AM Representative Austerman inquired whether the chair was planning to move the bill. Co-Chair Stoltze responded that he preferred to have all 11 members present before doing so. Representative Kelly appreciated the committee's comments. He believed that 70 percent of Americans were upset and seeking ways to "unscrew the screwing." He acknowledged that the process was fraught with difficulty, but he did not believe people would back off. He thought the resolution was one method that Americans could use to change the situation or at least send a message. He predicted change in the upcoming elections. He maintained that he was not acting in order to be re-elected, but because he believed in what he was doing. He believed he was not alone and that the people were not done. HJR 35 was set aside until later in the meeting. 10:19:54 AM AT EASE 10:39:56 AM RECONVENED HOUSE JOINT RESOLUTION NO. 35 Proposing amendments to the Constitution of the State of Alaska prohibiting passage of laws that interfere with direct payments for health care services and the right to purchase health care insurance from a privately owned company, and that compel a person to participate in a health care system. 7:01:14 PM AT EASE 7:02:05 PM RECONVENED Representative Kelly MOVED to report HJR 35 out of committee with individual recommendations and the accompanying fiscal note. Representative Doogan OBJECTED. He stated that he was against the resolution. He WITHDREW his OBJECTION. 7:03:00 PM AT EASE 7:03:25 PM RECONVENED There being NO further OBJECTION, it was so ordered. HJR 35 was REPORTED out of committee with no recommendation and with previously published fiscal note: FN 1 (GOV).