SENATE BILL NO. 70 "An Act establishing the Alaska Health Benefit Exchange; and providing for an effective date." 9:06:41 AM Senator Hollis French introduced SB 70 and thanked the committee for giving thorough attention to such a complex bill. The bill would establish an exchange that was an outgrowth of the Patient Protection and Affordable Care Act (PPACA). The exchange would essentially be a state created website that contained insurance policies; it would direct uninsured Alaskans to select a policy and would help them make an informed decision regarding healthcare. The website would offer private company insurance policies and would not be a state entity. Each state was authorized to create its own exchange; if Alaska did not show progress towards creating an exchange by January of 2013, the federal government would create its own for Alaska. It was federally mandated that by 2014 each person in America must be covered by healthcare insurance or be able demonstrate why they could not obtain it. He stated that the bill was a fundamental step towards getting everyone covered by healthcare; it was designed to eliminate the "free rider" problem, whereby uninsured individuals enjoyed free medical care primarily through emergency room visits. He furthered that the legislation addressed the free rider problem by attempting to get those people to pay into the insurance pool. He stated that there were aspects of price control and access issues that were designed into the federal bill, but that SB 70 was meant to help people make the choice about healthcare coverage. The exchange would also direct eligible individuals to government programs that they might not be aware of and would serve an important information sharing function. 9:09:38 AM Senator French addressed the questions raised during the previous hearing on SB 70. He discussed a sectional analysis addressing which provisions of the bill were mandated by federal law (copy on file). He stated the "vast majority" of the pieces of the bill were "basically" mandated by federal law and were required in order to have an exchange. He furthered that these provisions were mainly designed to protect consumers by insuring that people weren't "fleeced" and were able to find a suitable policy. Senator French pointed out a few areas in Section 2 that were not mandated by federal law but were necessary additions. He explained that (a)(27) on page 8 of the bill was not mandatory, but was added because applying for federal planning and establishment grants was a good idea. He pointed out that (a)(28) on page 9 of the bill also was not mandatory, but was added in response to Co-Chair Hoffman's inquiry about whether the state could form pools. One of the concerns that the administration had was that Alaska would not be a big enough pool to work efficiently in the market; (a)(28) would allow the exchange to look at pooling mechanisms in order to join with other northwest states with similar populations. 9:11:28 AM Senator Thomas asked how many people in Alaska were not currently covered by health insurance. Senator Hollis responded that there were about 115,000 uninsured individuals who would be looking for insurance through the exchange. Senator Thomas stated that in respect to forming pools, 115,000 was a large number if only a percentage were served by insurance Senator Olson asked how many of the 115,000 uninsured people in the state included members of the native population and stated that while a majority those individuals were not insured, they were covered by Indian Health Services (IHS). Senator French responded that he did not believe the figure included IHS beneficiaries. He observed that IHS beneficiaries were a unique group as they were not formally covered by health insurance, but still had access to health care. Senator Olson referenced the previously mentioned federal mandate in 2014 and queried how a change in presidency could affect SB 70. Senator French responded that the House and Senate would have to agree with a president's desire to repeal PPACA, but that the exchange would no longer be required if it was overturned. He furthered that it was possible that the U.S. Supreme Court could "gut" the bill by eliminating the individual mandate from the legislation and acknowledged there were political forces that could undermine the legislation. Senator Olson referenced Alaska's current lawsuit that was challenging the federal mandate and asked how challenges to PPACA in court could affect the legislation. Senator French responded that many states were fighting court battles against PPACA, but were still moving forward with their own exchanges; Florida and Texas were good examples of this. He furthered that it was possible to oppose PPACA through the appropriate venue and still embrace the idea of an exchange to comply with the law as it exists. 9:15:13 AM Co-Chair Stedman asked if Senator French was aware of any federal grants that were still available regarding implementing the exchanges. Senator French indicated that that he and the Department of Health and Social Services (DHSS) had "battles" over the issue the prior year, but that the state had missed out on those grants. Senator French stated that DHSS was currently moving forward with a plan for an exchange and stressed concern that an issue this large was being addressed outside of the legislature. He spoke about importance of the legislature being involved in the formulation of the exchange and expressed interest about where DHSS stood on the issue. He stated that he had spoken to Commissioner Streur's office the day before and was interested in talking to them further in order to gauge where they stood with "respect to this idea". Co-Chair Stedman discussed a fiscal note from the Department of Administration for $3.0 million in general funds for purchasing bandwidth, hardware, software, and maintenance of the system, a fiscal note from the Department of Commerce Community and Economic Development (DCCED) for $1.8247 million in general funds for 12 new positions for program management, board costs, and supplies. The FY 13 fiscal note from DCCED was increased by $ 162,600 due to higher personnel service costs. He discussed a fiscal note from DHSS for $182,700 in general funds and $182,700 in matching federal funds for 3 new part-time analyst positions and a zero fiscal note from the Division of Insurance. 9:17:13 AM AT EASE 9:17:50 AM RECONVENED Co-Chair Stedman asked if the bill sponsor had any closing comments. Senator French stated that he would work outside of the committee with Commissioner Streur to discuss DHSS's efforts to start an exchange. 9:18:26 AM SB 70 was HEARD and HELD in committee for further consideration.