TAPE 94-46, SIDE A Number 000 CHAIR BUNDE called the meeting to order at 1:10 p.m., noted members present and announced the calendar. He brought HB 414 to the table. HB 414 - COMPREHENSIVE HEALTH CARE CS FOR HOUSE BILL NO. 414(HES): "An Act creating the Alaska Health Commission; relating to the delivery, quality, access, and financing of health care; relating to health insurers, health maintenance organizations, and medical service corporations; relating to certain civil actions against health care providers and health insurers; amending Alaska Rules of Civil Procedure 26 and 27 and Alaska Rules of Evidence 802, 803, and 804; repealing Alaska Rule of Civil Procedure 72.1; and providing for an effective date." CHAIR BUNDE said the committee substitute (CS) for HB 414 (version 8-GH2024\E) was before the committee. He asked Commissioner Usera to address the CS. Number 005 NANCY USERA, Commissioner, Department of Administration, testified on the proposed CS for HB 414. She stated that she had just received the CS and had not had time to review it. She said she assumed that it included the five amendments that were adopted last week. She then said it appeared that there were a number of other provisions in the bill that she was unaware of. (Chair Bunde indicated for the record that Rep. Pete Kott arrived at 1:12 p.m.) CHAIR BUNDE asked Commissioner Usera to take some time to review the bill. He then indicated that there was one person who would be testifying via teleconference. Number 083 REP. TOOHEY said Commissioner Usera seemed to think that there were additional provisions in the proposal and asked if the CS was not her amendment packet through legal services. COMMISSIONER USERA said she had in her possession the CS for HB 414. REP. OLBERG indicated that the new CS was five pages longer. Number 086 LYNNE SMITH, Committee Aide, House HESS Committee, stated that the CS contained the amendments that were adopted on the Wednesday prior and that it was also reorganized. COMMISSIONER USERA said that she did not recall the language on page 2, line 10: GROUNDS FOR IMPOSITION OF DISCIPLINARY SANCTIONS. REP. TOOHEY asked if there was anyone present from the Division of Legal Services. COMMISSIONER USERA continued to read the unfamiliar language and said she could still not recall its origin. CHAIR BUNDE offered that it was discussed previously what should be done if health providers did not post their rates. COMMISSIONER USERA again stated that the language was unfamiliar. CHAIR BUNDE suggested that the committee address the amendments and then look at the CS in the near future. COMMISSIONER USERA said again there were unfamiliar provisions. Number 172 JACK HEESCH, Lobbyist, Alaska Nurses Association, offered an answer as to the origin of the provisions in the CS for HB 414. He stated that the provisions specified that the board should impose sanctions for the subsequent infractions. REP. VEZEY asked if the proposal had been completely reorganized. REP. TOOHEY said yes. CHAIR BUNDE stated that Mr. Heesch had provided the committee with a statute that was relative to the provision that requires sanctions to be imposed if health care providers fail to comply with the proposed law. He then said that the CS more than likely reflects the inclusion of amendments that were adopted and also the reorganization of language. COMMISSIONER USERA agreed. REP. TOOHEY asked Ms. Smith if the added provisions and the reorganization was at the discretion of the drafter of the bill. MS. SMITH said yes. She indicated that the drafter addressed some problems that he saw within the language of the bill. Number 239 CHAIR BUNDE said again that the provision addresses sanctions and what they will be. He asked to move on to the amendments. He stated that Amendment 5 was before the committee. COMMISSIONER USERA indicated that Deputy Commissioner Jay Livey was present also to answer any questions. CHAIR BUNDE called on Reed Stoops to address Amendment 5. REP. OLBERG asked if Amendment 5 would amend the CS or the original bill. CHAIR BUNDE replied that it was aimed at the CS. REP. TOOHEY asked if the there should be a motion to adopt the CS. CHAIR BUNDE indicated that amendments cannot be adopted if the CS is not adopted. He assumed the CS was reflective of the committee's wishes and also indicated that there is nothing that restricts the committee from reversing their decisions regarding the CS at a later date. REP. OLBERG made a motion to adopt the CS for HB 414. CHAIR BUNDE, hearing no objections, stated that the CS was so moved. He further stated that Amendment 5 was before the committee. He asked Reed Stoops to address the amendment. Number 380 REED STOOPS, Lobbyist, Aetna Life Insurance Company, addressed Amendment 5 to CSHB 414. He stated that he would like to address an issue regarding Section 6 of the legislation that provides for arbitration of insurance claims. He said Aetna had reviewed the provision and recommended that a binding arbitration provision would be more effective. He maintained that there would be no incentive to accept the results of arbitration and it would be preferable to allow someone who has a claim the option of either going into binding arbitration or to go to the courts. He felt the subject was more of a judicial issue and said he had no proposed amendments. Number 403 CHAIR BUNDE reminded the committee that there was discussion pertaining to voluntary and binding arbitration in a previous meeting that addressed HB 492 and HB 493. He maintained that the same concerns that were expressed in that meeting more than likely were germane to the arbitration provisions within CSHB 414. MR. STOOPS continued with his testimony. He indicated that his concern was with insurance rate regulation, which was in Sections 7,9, and 11 of the bill. He indicated that Aetna and other private insurers are addressed in Section 7, Health Maintenance Organizations (HMO), of which there currently are none in Alaska, are addressed under Section 9, and medical hospital service corporations, which refers to Blue Cross, are treated under Section 11. He said that Blue Cross has a nonprofit status. MR. STOOPS said the proposed amendment would delete the aforementioned sections. He explained that there are two different types of insurance rates. One rate is for large groups which is predominately the market for Aetna in the state of Alaska, and cited Alyeska and Arco as customers. He explained that in a large group market, the insurance rate that is set for an individual customer is based on the experience of the group from the prior year and also a medical trend component that estimates the cost of medical inflation for the upcoming year. He asserted that with a large group the odds are that there will be some comparability on the experience if the benefit package remains the same. He then indicated that the medical trend was based on the Alaska and national market for medical rates which is subject to some controversy. He further explained that the administrative costs are the companies' proposed rate for processing a large number of claims throughout the year. MR. STOOPS said if the rate turns out to be too high because payments made out were less than they were estimated to be, the customer would benefit from the surplus at the end of the year. Aetna would return a check to the state plus interest. He then said if the estimates based on prior experience fall short, it would be the insurer's loss. Number 532 REP. TOOHEY asked Mr. Stoops what the chances would be of the state terminating insurance with Aetna because "you've under charged." MR. STOOPS explained that the state is required to bid every five years and the situation would arise in a year where they intend to bid. He said Aetna would incur losses if the state did not accept the bid or if claims spiked up in a year where there were many catastrophic claims. He then said, "...for that reason the state decided to change its policy and there was a bid as a result to that; again the insurance company would be the loser. If it's a self- insured product, if it's the state taking the risk, or Arco or any other large customer, then it's the company or the client that's taking the risk instead of the insurance company." Number 561 REP. TOOHEY asked Mr. Stoops if it is only the administrative costs that Aetna is concerned about. MR. STOOPS said administrative costs are the main variable. REP. TOOHEY said, "So the rate, give or take, is going to come back and even itself out." MR. STOOPS agreed, but said it is different for the small group market because if there are only ten people in a company there is a greater fluctuation, making it difficult to rate on experience, especially if one person in the group has a catastrophic loss. There would not be much of a difference if there are 5,000 employees. He said those rates are developed differently and generally an annual fee is paid. If the estimate is low, the company bears the entire risk and if it's high, the insurance company keeps the difference. He further explained that small employers bid frequently, sometimes every year, and because of the competitive market, they will take the lowest bid for the year. MR. STOOPS stated that Sections 7, 9 and 11 would give power to the new Alaska Health Commission to regulate rates by determining whether the rates submitted by the insurance companies are acceptable. He asserted that a commission should not have that type of authority. He said if the legislature thinks that it's in the best interest of the state to grant that type of authority, he recommended giving it to Director Walsh or whoever the Director of Insurance is at the time. He maintained that the commission would not have the expertise to make those decisions. MR. STOOPS further indicated that if the state is trying to reduce health care costs by regulating insurers, the providers should also be regulated. He explained that more than 90% of quoted rates are based on "the actual pass through of costs, medical costs..." He said it is obvious the bulk of the cost to the system is being generated. He said the legislation does not propose to regulate doctors' rates or hospital rates, only insurers rates. He stated that regulating either the insurance company or the providers won't work and suggested that if disclosure for provider rates would be required, the disclosure of insurer rates should also be required so that consumers will know what rates are available and how they were put together. MR. STOOPS said, "The other, I guess, concern about rate regulation is that where you give that power, and you have an activist commission or an activist director that takes full advantage of that authority and essentially uses it to use the insurance company as a way of driving down doctors' costs. By saying we're going to cap you at your current rate, we're not going to allow any increases; therefore, your only option is to tell the doctors and hospitals that you're going to get paid less for services, because that's the only way you can make the system work. You're going to create a situation where at some point the insurers, particularly the smaller ones, aren't going to want to do the business, because you have a cap on them and there's not any way for them to pass through any increased cost." He indicated that there was a study done by Millen and Roberts that looks at states with insurance rate regulation and most states end up with less insurers after a period of time and also with a greater number of uninsured people as a result of less competition. Number 703 REP. TOOHEY asked how many competitors there are on the state level for group insurance. COMMISSIONER USERA said the last time the state went out to bid there was only one bidder. REP. TOOHEY said that is dangerous and asked why there was only one bidder. COMMISSIONER USERA stated that due to the size of the account for the state of Alaska, there just are not that many insurance companies making bids. REP. TOOHEY asked if Alaskan claims are any higher or if there is any difference because Alaska is a small state. She asked what would make the state unattractive to an insurance company. MR. STOOPS suggested that perhaps it would be better to ask his competitors. He said Blue Cross indicated that in one case they did not bid because the state was not self-insured and that was an insurance risk they did not want to handle. He submitted that whether there is competition or not for a large group, it is not the same situation where there is lack of competition for a small group. He offered that there would be many problems if there was no competition in small groups and suggested that there should be insurance rate regulations for that specific situation. Number 769 REP. TOOHEY asked what would happen if Aetna doesn't bid the next time. She asked if the state would be forced into a single payer system. COMMISSIONER USERA said that alternatives would be explored and suggested that perhaps self-insuring would be an option. She mentioned that Alaska is a difficult state to insure because of the eleven different bargaining units and other complications. She also indicated that there are few insurers that insure large blocks like the state system and Aetna has done an excellent job and has been very flexible. Number 817 REP. TOOHEY stressed how unhealthy she felt it was to have one insurance company bidding on the state contract. MR. STOOPS, to bring the discussion back to the context of rate regulation, asked what would happen if Aetna was the only bidder and quoted a rate to the commission that was unacceptable to them. He said in that case the state would then have no other options except to self-insure. He felt that rate regulation would not solve that particular problem for a large group market. CHAIR BUNDE observed that the free market economy was at work. Number 860 MR. STOOPS said if rate regulation authority is granted to the commission, he suggested that the legislature look to other states for more mainstream rate regulation, citing that California's Director of the Division of Insurance requires the filing of rates, but does not have unlimited authority to decide that rates are not adequate. He felt there are simpler ways to accomplish the same thing. He reiterated that Aetna supported HB 414. Number 894 CHAIR BUNDE said that everyone must become part of the solution. REP. TOOHEY clarified by saying that rates are refigured and presented to the state each year. She asked, if and when the country becomes covered with a socialized, universal insurance, would the rate being offered to the state be reduced? She said she assumes that rates are so high because people who do pay are also paying for those who are irresponsible or too poor to pay for insurance. MR. STOOPS said that is true in respect to the individual client who pays for a part of uncompensated care that hospitals provide. He maintained that hospitals will not turn a patient away, but they do have to recover the cost just like any other business. The way hospitals traditionally recover costs is to charge differential rates so privately insured people pay a premium to pay for those who are not insured. It's a hidden subsidy that is in the system. He felt there would be some other form of compensation in the form of tax in lieu of the premiums of those privately insured. Number 968 (Chair Bunde stated for the record that Rep. Nicholia arrived at 1:30 and welcomed the participation of Rep. Willis.) Number 969 CHAIR BUNDE indicated that Amendment 5 was before the committee. He asked for testimony from the Department of Administration (DOA). COMMISSIONER USERA said the administration knew that the inclusion of rate regulation within the legislation would be controversial. She said Alaska is one of few states that does not use some form of a rate approval process. She explained that the DOA felt the final decision should reside with the commission and not the Division of Insurance so that the final approval would lie with a board who is seeing it in the context of the entire health care system. She said the legislation is designed to have a public hearing process associated with it and also to capture information associated with the rate review process. MR. STOOPS further indicated that she personally became involved with the issue of comprehensive health care because she represents one of the largest employers in the state and has been fighting with union organizations for over a year over health care benefits and their costs. She said the state has no official mechanism to validate the accuracy of the information that was being submitted by the insurance carriers. REP. TOOHEY asked if the rate is really a concern if the state is being reimbursed for being overcharged. COMMISSIONER USERA said, "In the case of the state of Alaska, we are for all intents and purposes a self-insured account and then we pay an administrative fee on top of that. The way it works systemically is that the actuaries get together and they say... based on your most recent experience, this is what we think the rate would be to even things out. And, you're right, the rates are just a way of providing a level payment." She said there is a reserve account for the state that has a minimum of $10 million in it, much like an over-insured account. She said over the past few years there has been some build up and now "we've been working down on the account." REP. TOOHEY said it was her understanding that there is $26 million in that account and that it will supposedly pay for the proposed legislation. COMMISSIONER USERA said no. She said premium tax would pay for the legislation. She said insurance premiums are based on experience and what benefits have been utilized over the prior year. She said "hard numbers" are needed to indicate specifically how much each individual person has used of their benefits. Currently, the state receives gross utilization numbers and must take the insurance company's word that they have exercised the correct level of usage for those benefits and what the benefits went to pay for. She said there is no mechanism to verify the accuracy of the information upon which the rates are based. REP. TOOHEY asked if there was someone in the administration that collects and analyzes that type of information. COMMISSIONER USERA said yes, but the DOA is an interested party. REP. TOOHEY said, "You don't do it Outside?" COMMISSIONER USERA replied that the state has an insurance consultant, but they also are an interested party. TAPE 94-46, SIDE B Number 000 REP. TOOHEY asked how much the mechanism will cost. COMMISSIONER USERA answered that it would be approximately $157,000, but the fiscal note was being reevaluated because of some discrepancies that have recently been pointed out. She indicated that the rate approval system would be one of the more expensive pieces of the proposal. REP. TOOHEY asked if Commissioner Usera would still be as concerned about rate verification if there were four insurance companies bidding for the state instead of just the one. COMMISSIONER USERA maintained that the state does not feel that they are being taken advantage. Number 045 (Chair Bunde indicated that Rep. Vezey joined the meeting at 1:45 p.m.) COMMISSIONER USERA said the administration believes in the accuracy of the numbers that Aetna has presented, but when dealing with union representatives that represent labor and management on the other side, the issue is one of a collective bargaining. She explained that one of the top dollar items associated with the collective bargain agreements is health care benefits and costs. Number 099 REP. TOOHEY said, "If you put cost caps, then aren't you doing the same thing that Medicaid is doing?" COMMISSIONER USERA stated that in some instances the state has done that and cited the vision program where there are provisions that will pay up to a certain amount. She said the state has been able to negotiate agreements on prescription drugs and has also explored a number of cost containment pieces. Number 149 (Chair Bunde indicated that Rep. Nordlund joined the meeting and welcomed his expertise.) CHAIR BUNDE asserted that Commissioner Usera said she was satisfied with Aetna as an insurer but had not yet said how rate regulation would save money. COMMISSIONER USERA said for the record, "Let's not for a second think that the state employee health plan is representative of what is going on in the health insurance industry in the rest of the state, for small employers, and for individuals. We are an aberration. Now, we may drive the market because we cover 65,000 employees because it includes employees and retirees and their dependents." She said the scope of the legislation goes further than the current state plan. She then said it was her understanding that all other lines of insurance in the state are subject to rate approval. She further stated that HB 414 was not put together as a compromise bill and if not rate approval then rate review makes sense, as an objective third party would review the rates. Commissioner Usera further stated that the administration feels that health insurance rates should have the same scrutiny as all other insurance coverages. Number 251 CHAIR BUNDE clarified that it was not so much a cost saving measure but more a matter of checks and balances. COMMISSIONER USERA said yes and it would require accountability and would also be a way to collect information on the health care system. CHAIR BUNDE asked Commissioner Usera why only health insurance would be regulated and suggest that perhaps people be regulated. He asked why he should have to pay for people who smoke. COMMISSIONER USERA indicated that the proposal is not rate setting or regulating. It would verify the information upon which the rates are based and would approve or disapprove of the basis. CHAIR BUNDE clarified that it was more of a rate review process. REP. TOOHEY asked what items are included in the figuring of rates. COMMISSIONER USERA deferred to Deputy Commission Livey. Number 325 JAY LIVEY, Deputy Commissioner, Department of Health and Social Services, answered questions on HB 414. He stated that the age of the group, the relative mix of males and females, the size of the group, and many other factors figure into an insurance rate. Number 334 MR. STOOPS said that part of the commission's role would be in determining the solvency and ability of the insurance companies involved. She said the administration's concern is the pricing of the premium. There is much more to the rate process other than cost and utilization. REP. TOOHEY asked if it would be cheaper to insure with a nonprofit company. COMMISSIONER USERA said not necessarily. CHAIR BUNDE quoted a bumper sticker slogan that said, "If you enjoy the post office's efficiency, than you'll love socialized medicine." He asserted that the profit motive encourages an improvement in the quality of the product because the better the product the higher the profit. He asked, if it is nonprofit, what would be the motive to improve? REP. TOOHEY agreed with Chair Bunde's perspective. REP. G. DAVIS indicated that there have been requests to have rate regulation deleted from the legislation and stated that health insurance, provider fees, and public health and prevention are key to the proposal. He said that the commission should be very knowledgeable in the field of health insurance and that direction be given through amendments to public health concerns. He said the effort and the work of the commission would be reduced by giving them such specific directions as to how the issue of insurance will be addressed. Rep. G. Davis submitted that perhaps rate regulation should be deleted from the proposal to allow the commission to deal with the issue of insurance themselves. Number 463 CHAIR BUNDE directed the committee's attention back to Amendment 5. REP. NICHOLIA asked why there was no one from the Division of Insurance to testify. CHAIR BUNDE indicated that they were invited. REP. TOOHEY said that a representative was unable to attend. REP. OLBERG asked if the amendment had been moved. CHAIR BUNDE said it had not. He reminded the committee that the amendment would delete Sections 7, 9 and 11. REP. OLBERG made a motion to adopt Amendment 5 to narrow the discussion. CHAIR BUNDE asked for objections. REP. B. DAVIS objected to the amendment as written. She said "...because the amendment that is written deletes it out and doesn't say what will happen to it. And, the only way that I would be supportive of it, if it's not in here for the commission to do it, it would have to be in the Division of Insurance. Or, I'd be willing to make another amendment, friendly amendment, to say that it will be done by the Division of Insurance." REP. G. DAVIS said the amendment would have to be an inclusion under the duties of the commission if it is not already indicated. COMMISSIONER USERA said she understood Rep. B. Davis to say that rather than deleting the sections altogether, the final approval authority would be converted from the commission over to the Division of Insurance. She said the DOA did not find the concept to be optimum; however, it would be acceptable. REP. B. DAVIS said she would not vote for the amendment if everything is deleted and the final approval decision is not addressed. CHAIR BUNDE indicated that the amendment was before the committee for discussion. He then asked for further testimony. Number 537 JERRY REINWAND, Lobbyist, Blue Cross of Washington & Alaska, testified on Amendment 5. He stated that the thrust of the bill is to have a commission review and access health care reform. The only part of the bill that is a vehicle for reform is the insurance rate review. He said, "...it ought to be part of the commission's job to include as part of the total package and come back... and I don't know how you can jump to the conclusion that that's needed now, if this is really a reform bill. If it's the insurance rate reform issue, put it in a separate bill and let's talk about that, number one. Number two, the way this is structured, for what ever it's worth, is our view, the way it's structured in the bill, we got to answer to two masters. We have a commission that has some or all the authority and a division that has some of the authority. And finally we really do think that having rate approval or the semantics that the commissioner mentioned is the same thing as saying yes or no to rates. So, we must look, but right now the way it is it's the worst of all worlds. We have two masters instead of one. We still suggest that if the issue before the committee is health care reform, then insurance, and there are lots of other insurance related issues, not just the rates, should be part of the commission's task to look at it and report back to the legislature." Number 585 CHAIR BUNDE asked for further testimony. Number 587 BONNIE NELSON, Representative, Alaska Public Interest Research Group (AKPIRG), testified via teleconference on Amendment 5 for CSHB 414. She indicated that the Legislative Information Office (LIO) had not yet received copies of the CS or the amendments. She stated that rate regulation should be included in the legislation and that AKPIRG preferred the language as written in the original bill. She indicated that there should be a public process within the Division of Insurance and suggested that perhaps the commission could take an active part in rate regulation. CHAIR BUNDE stated that Amendment 5 refers to language that is the same in the original bill and the CS. He then indicated that his intention was not to move the bill out of committee. REP. G. DAVIS suggested that the administration has decided from the plans that have come forth to date that the bill and its inclusions (Sections 7, 9 and 11) are workable and should be included in statute now. DEPUTY COMMISSIONER LIVEY indicated that the original Health Resources Access Task Force recommended that the Division of Insurance should be given rate approval so that health insurance is treated like all other lines of insurance in the state. He indicated that the concept has been around for quite some time. CHAIR BUNDE said if the amendment does not achieve its purpose, there are other options available and cited a rate review process that is used in California. Number 703 GORDAN EVANS, Lobbyist, Health Insurance Association of America, testified on Amendment 5. He stated that the Director of Insurance testified in the Senate that there are four levels of rate approval, no regulation which is what Alaska has, use and file, file and use (there's a difference in those terminologies), and rate approval. He indicated that the most stringent level is rate approval. He asserted that the proposal would take Alaska from the least amount of coverage to the most stringent. He said of the companies that he works with, most would not object to some regulation, perhaps file and use, and offered to submit language to specify that in the bill. He further indicated that rate approval has been attempted but has continually been opposed. Number 750 CHAIR BUNDE agreed with Mr. Evans that the state is at zero and the legislation would bring it to ten as far as the degree of regulation on rates. He said the committee can decide if there is some step that would allow for a happy medium and asked that the committee be furnished with more information regarding rate review and the process that California uses. REP. TOOHEY suggested that decisions be postponed until the committee has had time to study the CS, the submitted amendments, and to talk to other people about the implications of any changes. She cautioned that the committee not act hastily. CHAIR BUNDE reiterated that Amendment 5 was before the committee, which would delete Sections 7, 9 and 11 and would delete any type of regulation of health insurance within the bill. There being no further testimony, Chair Bunde closed public testimony and asked the pleasure of the committee. REP. B. DAVIS associated herself with Rep. Toohey and asked that all decisions be delayed until more could be learned about the CS and the proposed amendments. REP. VEZEY made a motion to adopt Amendment 5. CHAIR BUNDE indicated that the amendment had already been moved. REP. TOOHEY objected and asked that the amendment be tabled until the next meeting. Number 803 CHAIR BUNDE called for the vote. Representatives G. Davis, Vezey and Olberg voted Yea; and Representatives Toohey, Bunde, Kott, B. Davis and Nicholia voted Nay. Chair Bunde indicated that Amendment 5 failed. He then indicated that it was his intent to further discuss and perhaps address future potential amendments regarding the issue of rate regulation/review. COMMISSIONER USERA said she would ensure that someone from the Division of Insurance would be present for those discussions. Number 833 REP. OLBERG asked Commissioner Usera the meaning of the phrase "Upon review and recommendation by the Division of Insurance, the commission can approve changes to health insurance premiums." COMMISSIONER USERA replied that the final authority for the approval would lie with the commission rather than the Director of Insurance. REP. OLBERG asked if the commission was whom she was purporting to be a disinterested third party. COMMISSIONER USERA said yes, the Division of Insurance would do the actuarial and investigatory work, and the commission would be the final decision maker. CHAIR BUNDE asked the committee to number the amendment before them as Amendment 6, as submitted by Rep. Kott. Number 859 REP. KOTT made a motion to adopt Amendment 6 and also objected for purposes of discussion. CHAIR BUNDE asked Rep. Kott to speak to his amendment. REP. KOTT referred to page 14, line 9, of the CS and said the amendment would ensure that the commission is not dominated by certain occupational groups. He further indicated that the amendment offers three combinations that would be afforded as options. He said one member would be a provider and the remaining two would neither be providers or employed by an insurance company. The second option would allow for one member to be a member of an insurance company and the two remaining members would neither be employed by an insurance company or a provider. He indicated that the third option would be that none of the members would be members of an insurance company or the health care field. He maintained that the amendment would allow for balance and would ensure that one group could not be dominate. Number 888 REP. TOOHEY asked if past health care providers could be on the commission; i.e., retired doctor, retired nurse, or a retired occupational therapist. REP. KOTT said that by law a licensed doctor who is not practicing would satisfy the requirements within the amendment. There could be a current practicing physician and one retired physician on the commission. REP. TOOHEY asked if the retired doctor or nurse must have an active license. REP. KOTT said yes. Number 922 CHAIR BUNDE suggested that the word current be included in the language to ensure that those members would not be current health providers or currently employed by health insurance companies. TAPE 94-47, SIDE A Number 000 COMMISSIONER USERA maintained that those people appointed to the commission will be full time state employees that will not be employed elsewhere. She clarified that the amendment addresses specifically the time at which the person is appointed that they cannot be actively providing health care and\or employed by an insurance company. She also indicated that the commission requires legislative confirmation and suggested that the legislature would make the ultimate decision of who is on the commission. Number 079 CHAIR BUNDE explained that there could be a person who quit their job yesterday and would not be currently employed. He then suggested that the legislative confirmation process would perhaps deter those types of "games." REP. KOTT said he agreed with the confirmation process but pointed out that the confirmation process generally occurs quite late in the session and that there would be very little time for a new nominee to be appointed and have a hearing. He said a situation would be created where the appointee would be nonconfirmed for perhaps as long as eight months. Number 118 REP. VEZEY said that the amendment would eliminate all the people who would have a background to understand the issue. He assumed that if the commission is a totally neutral board, it would result in a "totally neutral, bland result." He felt the legislative confirmation process was sufficient. REP. OLBERG stated that he felt the amendment had merit and suggested a friendly amendment that would exclude lawyers from being on the commission. REP. KOTT quipped that he would be most amenable to Rep. Olberg's muse. CHAIR BUNDE indicated that there was an amendment to the amendment before the committee if it was not meant in jest. REP. OLBERG said, "Let's vote it up or down. That would add to Rep. Kott's Amendment 6 that in appointing members to the commission the Governor shall ensure that a majority of the members are not health care providers or employed by a health insurance company, nor shall any member of the commission be an attorney." REP. TOOHEY quipped that she wished to add legislators to the list. REP. OLBERG indicated that he would consider Rep. Toohey's suggestion a friendly amendment to the amendment. CHAIR BUNDE indicated that before the committee was an amendment to Amendment 6 that would include the words attorney or legislator. He asked for further discussion or comments. Number 222 JACK PHELPS, Legislative Aide to Rep. Pete Kott, said that he was unsure if legislators are already excluded by law to be members of any commissions. CHAIR BUNDE said, "Article 5 of the constitution says you shall not have two positions of profit with the state...," and it would preclude a legislator from being appointed. DEPUTY COMMISSIONER LIVEY recommended that the Chair may want to discuss with an attorney as to whether or not an occupational group can be excluded for no particular public policy reason. Number 242 CHAIR BUNDE, hearing no further discussion on the amendment to the amendment, called for the vote to include the categories of attorneys or legislators. Representatives Kott and Olberg voted Yea; and Representatives Bunde, G. Davis, Vezey, Nicholia and Toohey voted Nay. The amendment to the amendment failed. CHAIR BUNDE stated that Amendment 6 was before the committee. Hearing no further discussion, he called for the vote. Representatives Kott and Olberg voted Yea; and Representatives G. Davis, Vezey, Nicholia, Toohey and Bunde voted Nay. Chair Bunde announced that Amendment 6 failed. CHAIR BUNDE then asked Rep. Kott to address his Amendment 7. Number 328 REP. KOTT said the amendment would allow for only one health care provider and one member from a health insurance company to serve on the commission. He said the third member would be a "user." He asserted that in many established commissions the membership is specified by similar guidelines. COMMISSIONER USERA said, "As I read this, it's a de facto designated seat or limiting seats. I presume if you want this at the same time that you can't have more than one provider and more than one insurance person serving on the commission at the same time." She said the language would need to be clarified. She then indicated that the amendment was better than the others and she would not have an objection to it as long as the words "at the same time" are included. Number 427 REP. KOTT indicated that the legislative attorney that drafted the amendment said the language addresses Commissioner Usera's concern. CHAIR BUNDE said it was his understanding that the amendment does not require any of the members to be health care providers or insurance people and suggested that they all could be "civilians." REP. TOOHEY referred to the Alaska Public Utilities Corporation (APUC) and asked if there are other regulations similar to the amendment in statute pertaining to other commissions. COMMISSIONER USERA explained that other boards have designated seats; i.e., the APUC which requires that there be an engineer, an attorney, and a representative of consumers. She said, "By naming one or the other, we felt that that was at the exclusion of people who have a broader background." She asserted that the best people to serve on the commission would be those who are knowledgeable about the overall system. Commissioner Usera said she understood the concept that Rep. Kott was advocating but again reminded the committee that the appointees would be confirmed by the legislature. Number 495 CHAIR BUNDE suggested that the concern is more than that of the commission being dominated by one interest or another or even lack of ethics and said it would encourage public confidence. He then asked if there was further public testimony. There being none, Chair Bunde closed public testimony and asked the pleasure of the committee regarding Amendment 7. REP. KOTT made a motion to adopt Amendment 7. REP. TOOHEY objected. She then asked if an employee of a health insurance company would have to quit his/her job. CHAIR BUNDE interjected and said once the person becomes a member of the commission, that will be their only job. REP. TOOHEY asked if there would be a time frame for them to quit and suggested that the amendment is moot as they would no longer be employed. REP. KOTT indicated that the amendment would ensure that there would not be two members of the medical community or the insurance industry on the commission. He said one of each could be an option. Number 572 REP. OLBERG supposed that it would be theoretically possible for a person to hold both jobs until they are confirmed and cited that someone could be on the commission and be on retainer from an insurance company. CHAIR BUNDE said Rep. Olberg made an interesting point. He asked for further discussion. He said, "For the record, I want it understood that that is concurrently. That doesn't say one serves once in the commission's life and then never again do we have a health... Laura Lee, would you call the roll?" Representatives Kott, Olberg, Toohey and Bunde voted Yea; and Representatives Vezey, Nicholia and G. Davis voted Nay. Chair Bunde declared that Amendment 7 was so moved. He then asked for Rep. Kott's last amendment. Number 621 REP. KOTT made a motion to adopt Amendment 8. He then referred to page 13, line 20. CHAIR BUNDE indicated that the amendment was being distributed to the committee and asked the members to renumber it accordingly. REP. KOTT explained that the amendment requires that all persons with preexisting conditions be addressed in whatever proposal the commission brings forth. COMMISSIONER USERA stated that she felt the amendment would be a fine addition. She felt the universal coverage should be portable and should cover those with preexisting conditions. REP. TOOHEY said, "I would like to see it reworded somewhat to say including a benefit package that contains preexisting conditions." Number 674 REP. KOTT said he viewed Rep. Toohey's recommendation as a friendly amendment. CHAIR BUNDE asked Rep. Toohey to suggest the intended language. REP. TOOHEY said, "...defining a range of potential benefit packages for universal health care coverage for residents including a package that does not omit preexisting conditions for residents of the state of Alaska." CHAIR BUNDE stated that the provision says that a benefit may not limit the covered health services on the basis of preexisting conditions. REP. TOOHEY said it was her preference to add the word "including." CHAIR BUNDE stated that Rep. Toohey wanted to use more proactive language by adding the words "must include." REP. TOOHEY said, "Including a benefit package would be fine..." Number 714 COMMISSIONER USERA suggested that the phrase read: "the benefit package must include coverage for preexisting conditions." CHAIR BUNDE reiterated that the verbiage would read: "a benefit package must include coverage for preexisting conditions." REP. OLBERG said, "Does it say that instead of what the amendment says? Have we deleted this...?" CHAIR BUNDE explained that the committee is attempting to amend the amendment and felt that it was becoming too substantial to be a friendly amendment. He said it was his preference to have the exact amendment written out to clarify what is before the committee. REP. NICHOLIA asked Rep. Kott if the proposed language would be a friendly amendment. REP. KOTT reminded the committee that the original language would not limit the coverage of health care insurance on the basis of preexisting conditions. CHAIR BUNDE clarified that the intent of the proposed friendly amendment would make Amendment 8 more proactive by saying "it will include..." He then asked if Rep. Kott would rather have the amendment written up by legal services. COMMISSIONER USERA, for clarification said, "That as this commission is designing benefit packages under this universal coverage, that your intent is to make sure that each of those has a component that includes preexisting conditions. So that we're not going to say O.K. we end up with this universal benefit package that the reason we're keeping the price down is because we've excluded preexisting conditions." She said the intent could be achieved with language that says each benefit package must include coverage for preexisting conditions. REP. TOOHEY agreed. Number 799 CHAIR BUNDE asked if the committee understood the amendment. REP. KOTT said it was his understanding that the friendly amendment would delete the words "may not limit" and insert the words "must include." He felt that would be the easiest way to address the concern. He further stated that he had no objection to the friendly amendment. CHAIR BUNDE indicated that the amendment to Amendment 8 was before the committee. He asked for further discussion. There being none, he then asked the pleasure of the committee. REP. OLBERG objected. Number 819 CHAIR BUNDE called for the vote. Representatives Kott, Nicholia, Toohey, Bunde and G. Davis voted Yea; and Representative Olberg voted Nay. Chair Bunde indicated that Amendment 8 was so moved. He then asked if there were any more amendments to be addressed or for further amendments. Seeing no further business before the committee, CHAIR BUNDE ADJOURNED the meeting at 2:50 p.m.