SB 110-SCHOOL/UNIVERSITY EMPLOYEE HEALTH INSUR  3:57:34 PM CHAIR TOBIN reconvened the meeting and announced the consideration of SENATE BILL NO. 110 "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." 3:57:57 PM SENATOR HUGHES, District M, Alaska State Legislature, Juneau, Alaska, introduced Ms. Gonzalez as an intern working in her office. She noted that Juneau School District Superintendent Ms. Weiss, Association of Alaska School Boards Executive Director Mr. Garrison, and Ketchikan Gateway Borough Mayor Mr. Dial were unavailable to testify in person and submitted written testimony in support of SB 110. She said there is a broad spectrum of support across the state for SB 110. SENATOR HUGHES explained that if SB 110 were to pass, it would offer school districts the opportunity to consider joining the state employee health insurance pool. In addition to being a quality plan, it has the potential for significant cost savings. As discussed in a previous hearing, the estimated cost for both the employer and employee state health insurance plan is approximately $20,000 per year. For Mat-Su, the combined cost for employers and employees is $28,000 - $30,000 per year. This is a cost differential of $8,000 - $10,000 per year. Superintendents have expressed interest in the cost-saving option that SB 110 could provide. 4:00:56 PM ELWIN BLACKWELL, School Finance Manager, School Finance and Facilities, Department of Education and Early Development (DEED), Juneau, Alaska, provided an overview of the fiscal note OMB 2804 for SB 110. He stated that the fiscal note for the Department of Education indicated an indeterminate fiscal impact. The fiscal note stated that there was uncertainty regarding the number of districts that would choose to participate in the program and the timeframe for their participation. This uncertainty was because SB 110 made participation contingent on ratification by the unions representing teachers and other district members, and the timing of such ratification was unknown. 4:02:06 PM SARA PERMAN, State Government Relations Manager, University of Alaska, Fairbanks, Alaska, provided an overview of SB 110 fiscal note OMB 730. She said the university presented a zero fiscal note because SB 110 made the proposed plan an option for the university. She said the university had internally decided not to take advantage of this option. She informed the committee that in 2020, the university did a study in collaboration with the Department of Retirement and Benefits and a consultant. The study revealed that switching from the University of Alaska (UA) Choice health plan to the AlaskaCare plan would cost the university $9 - $16 million to implement. While it might lower health insurance premiums, it would also eliminate the $600 wellness rebate provided to employees annually, as well as other retirement benefits included in their current package. 4:03:43 PM BETSY WOOD, Chief Health Administrator, Division of Retirement & Benefits, Department of Administration, Juneau, Alaska, provided the following overview of SB 110 fiscal note OMB 2152: [Original punctuation provided.] The Division also anticipates a fiscal impact to claim and program costs for the AlaskaCare employee plan, however that impact requires an actuarial analysis and will be discussed in a separate fiscal note. This bill would enable governmental units (school districts, municipalities, the University of Alaska, other political subdivisions, and the North Pacific Fishery Management Council) to join in self-insured group health insurance plans administered by the Department of Administration for State employees. This type of health coverage is currently provided to State employees through the AlaskaCare health plans. The Division will require three permanent employees, two Retirement and Benefits Technician 2 positions and one Retirement and Benefits Specialist 2 (personalservices) plus computer, phone, cubicle, supplies (commodities) to provide billing and accounts-receivable supportservices to manage enrollment, eligibility, and employee premium and employer contribution payments from participating governmental units. These positions should begin in mid FY2024. The Division will incur costs related to required system coding changes (both internal Division systems and third-party contracted partners), contracted actuarial consultants, and support from the Department of Law for legal and regulatory review (services). These costs are anticipated to largely accrue during the first two fiscal years, however some consulting services will be ongoing. The Department would need to promulgate regulations as a result of the passage of this bill. These regulations should be in place by the effective date of the bill (July 1, 2024), as they will articulate the process and protocol for governmental units seeking to join the AlaskaCare employee health plan. 4:05:44 PM SENATOR KIEHL asked Ms. Wood to clarify the assumptions the department used to formulate the fiscal note. Specifically, he inquired about the department's estimates regarding the number of additional covered lives that might result from the proposed changes. He provided an example, suggesting that if every school district and municipality were to participate, it would likely be unmanageable with only three people. He sought information on the working assumptions used in the fiscal note's estimation. 4:06:17 PM MS. WOOD replied that it was unlikely that three people could handle the workload if every eligible group joined. However, since SB 110 made participation voluntary, the department assumed that not every group would choose to join. She mentioned that several groups expressed disinterest. Therefore, the department anticipated a slower uptake, which it believed could be managed with three staff members. She said the department was looking at groups joining that consist of approximately 3,000 to 4,000 additional covered lives. This approach aimed to establish systems with a single new employer or group rather than with each individual new enrollee. 4:07:14 PM SENATOR KIEHL stated that her response provided an order of magnitude. 4:07:21 PM CHAIR TOBIN announced invited testimony on SB 110. 4:07:36 PM KATHY LEARY, City Administrator, Gustavus, Alaska, expressed support for SB 110 because it would provide smaller municipalities with more options for healthcare benefits. She explained that currently, the city could only afford to offer health insurance for employees. She mentioned the desire to attract and retain employees by expanding healthcare to employees families, as some opt out due to more affordable insurance options elsewhere. She cited an example of losing a city clerk to an organization with better benefits. Ms. Leary also mentioned concerns about potential regulations that might exclude small cities like hers from participation, specifically addressing minimum threshold requirements. She believed that being part of a larger pool would result in cost savings for both the school district and the city. Additionally, she advocated for the state to invest in a few positions to manage enrollment. 4:11:17 PM SENATOR KIEHL asked how much Gustavus pays for city employee insurance. 4:11:38 PM MS. LEARY mentioned that the city paid approximately $800 per month for insurance. She acknowledged that the state plan had similar costs, but Gustavus employees were responsible for 20 percent of the benefit's cost. She expressed hope that with a larger pool, this expense might become more feasible, and there could be potential cost reductions. Ms. Leary stated her belief that the city might be able to cover both employees and their families if costs were less than the current option of $28,000 per year. 4:12:18 PM SENATOR KIEHL asked whether the insurance policy met health care law standards or if it was a catastrophic plan. MS. LEARY replied that she thinks the policy meets health care law, however the city has so few employees that it is exempt from compliance. Gustavus purchased the plan it could afford through Alaska Public Entity Insurance (APEI). Some employees have expressed a preference for a stipend. The employees are part-time, and their earnings are low enough that they would qualify for better insurance through the Affordable Care Act (ACA). However, they cannot purchase through ACA when they have a plan through the city. 4:13:43 PM CLAYTON HOLLAND, Superintendent, Kenai Peninsula Borough School District, Soldotna, Alaska, stated that healthcare costs in Alaska are the highest in the nation, reaching about five times the national average. Alaskans spend the most per resident, have the highest insurance premiums, and have seen overall spending grow much faster than the rest of the US. Alaskan's have spent more out-of-pocket dollars on healthcare costs than any other state. Escalating healthcare costs affect the paychecks of employees and strain the district's overall budget. It hinders the recruitment of new staff and the retention of existing school personnel in Kenai and across Alaska. For Fiscal Year 2024, the Kenai Peninsula rural school district allocated $22 million for healthcare, which constituted approximately 16 percent of its total general fund budget. MR. HOLLAND emphasized the importance of the opportunity to join a healthcare plan with a large pool of employees, not only for the Kenai Peninsula Borough School District but also for other school districts in Alaska. 4:15:41 PM DAN POLTA, Superintendent, Denali School District, Healy, Alaska, expressed his support and urged the legislature to pass SB 110. He highlighted that the cost of providing adequate healthcare coverage for teachers and support staff was a significant financial burden for school districts. Specifically, the Denali school district allocated approximately 12 percent of its annual budget to cover health insurance expenses. He emphasized the importance of taking measures to reduce these costs to allow school districts to allocate more funding towards the essential task of educating children. MR. POLTA emphasized the importance of robust health insurance in retaining and attracting high-quality educators for Alaska's students. He also stressed the benefits of limiting healthcare insurance costs for employees. In Denali and other districts, teachers pay a percentage share of their health care premiums. Lower premiums would mean that more of a teacher's salary remained with them and their families. He advocated for the passage of SB 110, as it would offer districts more choices for employee coverage, enabling the Denali Borough School District to make efficient and effective decisions regarding healthcare coverage. 4:17:28 PM CHAIR TOBIN opened public testimony on SB 110; finding none, she closed public testimony. 4:18:08 PM CHAIR TOBIN held SB 110 in committee.