ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 15, 2015
4:47 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Shelley Hughes, Vice Chair
Representative Jim Colver
Representative Gabrielle LeDoux
Representative Cathy Tilton
Representative Andy Josephson
Representative Sam Kito
MEMBERS ABSENT
Representative Mike Chenault (alternate)
COMMITTEE CALENDAR
HOUSE BILL NO. 12
"An Act relating to mortgage lending, mortgage loan originators,
depository institutions, nonprofit organizations, and nonprofit
organization employees; and providing for an effective date."
- MOVED CSHB 12(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 159
"An Act exempting certain health care agreements from regulation
as insurance."
- HEARD & HELD
HOUSE BILL NO. 185
"An Act relating to alcoholic beverages; relating to the
regulation of manufacturers, wholesalers, and retailers of
alcoholic beverages; relating to licenses, endorsements, and
permits involving alcoholic beverages; relating to the Alcoholic
Beverage Control Board; relating to offenses involving alcoholic
beverages; relating to the offense of minor consuming; relating
to revocation of a driver's license for a minor consuming
offense; relating to the effect of the revocation of a driver's
license for a minor consuming offense on a motor vehicle
liability insurance policy; and providing for an effective
date."
- HEARD & HELD
SENATE BILL NO. 71
"An Act relating to the practice of pharmacy; and relating to
the administration of vaccines and related emergency
medications."
- MOVED SB 71 OUT OF COMMITTEE
SENATE BILL NO. 47
"An Act relating to exemptions for cash surrender values,
accrued dividends, and loan values of life insurance and annuity
contracts."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 12
SHORT TITLE: MORTGAGE LENDING AND LOAN ORIGINATORS
SPONSOR(s): REPRESENTATIVE(s) HUGHES
01/21/15 (H) PREFILE RELEASED 1/9/15
01/21/15 (H) READ THE FIRST TIME - REFERRALS
01/21/15 (H) L&C
04/13/15 (H) L&C AT 3:15 PM BARNES 124
04/13/15 (H) Heard & Held
04/13/15 (H) MINUTE(L&C)
04/15/15 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 159
SHORT TITLE: HEALTH CARE RETAINER; INSURANCE EXEMPT
SPONSOR(s): REPRESENTATIVE(s) KELLER
03/23/15 (H) READ THE FIRST TIME - REFERRALS
03/23/15 (H) L&C
04/15/15 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 185
SHORT TITLE: ALCOHOLIC BEVERAGE CONTROL
SPONSOR(s): REPRESENTATIVE(s) HERRON
04/09/15 (H) READ THE FIRST TIME - REFERRALS
04/09/15 (H) L&C, JUD
04/15/15 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 71
SHORT TITLE: VACCINE CERTIFICATION FOR PHARMACISTS
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST
03/11/15 (S) READ THE FIRST TIME - REFERRALS
03/11/15 (S) L&C
03/17/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/17/15 (S) Heard & Held
03/17/15 (S) MINUTE(L&C)
03/19/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/19/15 (S) Moved SB 71 Out of Committee
03/19/15 (S) MINUTE(L&C)
03/20/15 (S) L&C RPT 5DP
03/20/15 (S) DP: COSTELLO, GIESSEL, MEYER, STEVENS,
ELLIS
03/20/15 (S) FIN REFERRAL ADDED AFTER L&C
04/02/15 (S) FIN AT 1:30 PM SENATE FINANCE 532
04/02/15 (S) Heard & Held
04/02/15 (S) MINUTE(FIN)
04/10/15 (S) FIN RPT 4DP 1NR
04/10/15 (S) DP: MACKINNON, MICCICHE, BISHOP,
HOFFMAN
04/10/15 (S) NR: DUNLEAVY
04/10/15 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/10/15 (S) Moved SB 71 Out of Committee
04/10/15 (S) MINUTE(FIN)
04/13/15 (S) TRANSMITTED TO (H)
04/13/15 (S) VERSION: SB 71
04/13/15 (H) READ THE FIRST TIME - REFERRALS
04/13/15 (H) L&C, FIN
04/15/15 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 47
SHORT TITLE: LIFE INSURANCE/ANNUITY EXEMPTIONS
SPONSOR(s): SENATOR(s) COGHILL
02/11/15 (S) READ THE FIRST TIME - REFERRALS
02/11/15 (S) L&C, JUD
02/26/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/26/15 (S) Heard & Held
02/26/15 (S) MINUTE(L&C)
03/03/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/03/15 (S) Moved SB 47 Out of Committee
03/03/15 (S) MINUTE(L&C)
03/04/15 (S) L&C RPT 3DP
03/04/15 (S) DP: GIESSEL, MEYER, STEVENS
03/16/15 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
03/16/15 (S) Heard & Held
03/16/15 (S) MINUTE(JUD)
03/25/15 (S) JUD AT 1:30 PM BUTROVICH 205
03/25/15 (S) Bills Previously Heard/Scheduled:
03/30/15 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
03/30/15 (S) -- Rescheduled from 3/25/15 --
03/31/15 (S) JUD RPT 3DP 1NR
03/31/15 (S) DP: MCGUIRE, COSTELLO, COGHILL
03/31/15 (S) NR: WIELECHOWSKI
04/09/15 (S) TRANSMITTED TO (H)
04/09/15 (S) VERSION: SB 47
04/10/15 (H) READ THE FIRST TIME - REFERRALS
04/10/15 (H) L&C
04/15/15 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
GINGER BLAISDELL, Staff
Representative Shelley Hughes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking on behalf of the prime sponsor,
Representative Shelley Hughes, provided an overview of HB 12.
KEN TRUITT, Staff
Representative Wes Keller
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the sponsor,
Representative Wes Keller, during the discussion of HB 159.
REPRESENTATIVE WES KELLER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as prime sponsor of HB 159.
REPRESENTATIVE BOB HERRON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions as prime
sponsor of HB 185.
JANE CONWAY, Staff
Senator Cathy Giessel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on behalf
of the sponsor on SB 71, Senator Cathy Giessel.
SENATOR CATHY GIESSEL
Alaska State Legislature
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions as prime
sponsor of SB 71.
BARRY CHRISTENSEN, Co-Chair
Alaska Pharmacists Association
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of SB 71.
LIS HOUCHEN, Counsel; NW Regional Director
National Association of Chain Drugstores (NACD)
Arlington, Virginia
POSITION STATEMENT: Testified in support of SB 71.
RYAN RUGGLES, Pharmacist
Carrs-Safeway
Sitka, Alaska
POSITION STATEMENT: Testified in support of SB 71.
GERMAN BAQUERO, Intern
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the prime sponsor of
SB 47.
RYNNIEVA MOSS, Staff
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of SB 47.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community, & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
SB 47.
MATTHEW BLATTMACHR, Vice-President & Trust Officer
Alaska Trust Company
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of SB 47.
LINDA HULBERT
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of SB 47.
ACTION NARRATIVE
4:47:10 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 4:47 p.m. Representatives Tilton,
LeDoux, Kito, Hughes, and Olson were present at the call to
order. Representatives Josephson and Colver arrived as the
meeting was in progress.
HB 12-MORTGAGE LENDING AND LOAN ORIGINATORS
4:47:40 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 12 "An Act relating to mortgage lending, mortgage
loan originators, depository institutions, nonprofit
organizations, and nonprofit organization employees; and
providing for an effective date."
4:48:44 PM
GINGER BLAISDELL, Staff, Representative Shelley Hughes, Alaska
State Legislature, speaking on behalf of the sponsor of HB 12,
Representative Hughes, offered to give the 50,000 foot version
of this bill. By changing some of the state's statutes
regarding mortgage licensing, this bill will create an equal-
playing field for mortgage brokers, mortgage loan originators,
and a similar oversight to banks or registered depository
institutions.
4:49:21 PM
CHAIR OLSON said that this bill was originally opposed by the
Alaska Bankers Association, but the changes in the committee
substitute seemed to neutralize the opposition to the bill.
CHAIR OLSON, after first determining no one wished to testify,
closed public testimony on HB 12.
4:49:45 PM
REPRESENTATIVE TILTON moved the proposed committee substitute
(CS) for HB 12, labeled 29-LS0089\H, Bannister, 4/10/15 out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHB 12(L&C) was
reported from the House Labor and Commerce Standing Committee.
4:50:11 PM
The committee took an at-ease from 4:50 p.m. to 4:52 p.m.
HB 159-HEALTH CARE RETAINER; INSURANCE EXEMPT
4:52:28 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 159, "An Act exempting certain health care
agreements from regulation as insurance."
4:53:38 PM
REPRESENTATIVE WES KELLER, Alaska State Legislature, stated he
served on the Alaska Health Commission in 2007. He has become
convinced that health care reform means that the market must be
working. This bill would exempt direct primary care
associations from the Alaska insurance code definitions of
insurance. The bill would not propose any new regulations or
incur additional expenses. This would allow primary care
physicians to have contractual agreement with patients for
primary care services. It would remove the third party payer
since patients would subscribe to the primary care service. He
characterized it as the doctor being one call away. The
contracts would be handled by existing law. He offered that the
positive effects of this bill include improved quality and
access of care that patients would have with their provider,
which could reduce overall health care cost since administrative
costs are drastically reduced. Further, the number of patients
per doctor is also higher than the current system. He
highlighted that doctors often have 15 minutes per patient and
if one takes longer it can create stress for everyone.
4:57:04 PM
REPRESENTATIVE HUGHES thanked for bringing this concept forward.
She asked how reimbursement would work for the patient since it
will prohibit the provider from billing insurance.
KEN TRUITT, Staff, Representative Wes Keller, Alaska State
Legislature, on behalf of the prime sponsor, Representative Wes
Keller, said the concept behind the bill is that it wouldn't
change any existing relationship. Patients can still seek
reimbursement for their primary care costs, including membership
into the primary care network.
4:58:03 PM
REPRESENTATIVE HUGHES asked whether insurers will pay a monthly
service fee and if patient and doctor contracts happen in other
states.
MR. TRUITT said he was not certain. The language for HB 159 was
modeled on legislation that passed in Michigan. He has also
reviewed other states that have primary care legislation,
including Utah.
CHAIR OLSON answered that several bills before the legislature
this session are related to medical costs.
4:58:51 PM
REPRESENTATIVE LEDOUX asked for further clarification on whether
this bill would prohibit the doctors from billing insurance
companies.
MR. TRUITT answered yes; that the concept was to relieve
physicians from dealing with third-party payers. For example,
he said that billing manuals for Blue Cross was over 200 pages
and showed several. The benefit from the provider would be
payment via contract with the patient and no longer need to deal
with the third party payers.
5:00:00 PM
CHAIR OLSON asked for a copy of the manuals.
REPRESENTATIVE KELLER offered to provide it.
5:00:09 PM
REPRESENTATIVE LEDOUX said that currently some doctors hold down
fees by not billing insurance. She asked the reason to have
statutory provisions that prohibit doctors from billing an
insurance company since doctors can currently opt not to bill
insurance. She said it seemed to interfere, which didn't seem
like limited government to her.
REPRESENTATIVE KELLER offered to provide the logic from other
states.
5:01:06 PM
REPRESENTATIVE KITO asked which provider networks would use this
program. He asked whether any doctor's office or company was
seeking an alternate option or if it was a concept that the
sponsor wanted to make available.
REPRESENTATIVE KELLER replied he did not specifically know of
anyone although he has doctor friends who have expressed
interest or positively inclined. He said he became acquainted
with health care agreements via the Alaska Health Commission,
however, this type of contract is not currently available.
5:02:08 PM
REPRESENTATIVE KITO asked whether these health care agreement
contracts will result in monthly fees for patients or a fee for
services. He was unsure how the patient would find the billing
code and the amount of the procedure.
REPRESENTATIVE KELLER answered that this bill does not speak to
fees, but he noted it would need to be addressed. He said this
bill allows contracts between doctor and their patients. He
surmised that some of these contracts or subscriptions might
even include clauses for visitor care. For example, a patient
might pay a certain amount for a subscription for primary care,
which allows visiting family or friends to use the service when
in town. He said that in other states the rates have ranged
from $80-$200 per month for these subscriptions.
5:04:07 PM
REPRESENTATIVE JOSEPHSON asked for the client and patient care
protections that might be given up in terms of regulatory
protections in order to accrue the benefits.
REPRESENTATIVE KELLER answered that he wasn't aware of any
increased risk to patients.
5:04:55 PM
CHAIR OLSON offered that the sponsor may continue work during
the legislative interim.
REPRESENTATIVE KELLER said that the Division of Insurance has
indicated a willingness to work on this bill during the interim.
5:05:33 PM
REPRESENTATIVE LEDOUX noted that this bill doesn't prohibit
doctors from billing insurance, but the process would be
addressed as part of the contract. She recalled reading about
these services, also known as concierge services, in which
people pay $200-300 per month to have the benefit of private
physicians. She recalled that concierge plans have become
popular in California in order for people to avoid dealing with
Medicaid, Medicare, and the various private insurers. Again,
she said, it might be difficult if the doctor doesn't provide
billing information, but some people might be interested in this
to get a doctor's appointment.
5:06:56 PM
REPRESENTATIVE KELLER said many stories are available online
that illustrate the benefits of this type of health care.
[HB 159 was held over.]
5:07:36 PM
The committee took an at-ease from 5:07 p.m. to 5:08 p.m.
5:08:23 PM
HB 185-ALCOHOLIC BEVERAGE CONTROL
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 185, "An Act relating to alcoholic beverages;
relating to the regulation of manufacturers, wholesalers, and
retailers of alcoholic beverages; relating to licenses,
endorsements, and permits involving alcoholic beverages;
relating to the Alcoholic Beverage Control Board; relating to
offenses involving alcoholic beverages; relating to the offense
of minor consuming; relating to revocation of a driver's license
for a minor consuming offense; relating to the effect of the
revocation of a driver's license for a minor consuming offense
on a motor vehicle liability insurance policy; and providing for
an effective date."
5:09:00 PM
REPRESENTATIVE BOB HERRON, Alaska State Legislature, stated that
HB 185 was the Title 4, [AS 04] rewrite, noting a companion bill
was in the other body. He said that Title 04 regulates
alcoholic beverages and the ABC Board [Alcoholic Beverage
Control Board (ABC Board)], its staff, and law enforcement carry
out these laws. These statutes haven't been reviewed since
1980, although numerous updates have occurred. He suggested it
was time for a review. During the spring 2012, sixty
stakeholders and staff dedicated time to make recommendations to
improve the structure, organization, the policies, and the
implementation of AS 04. He listed stakeholders, including the
alcohol industry, public health, local government, law
enforcement, public safety, education, the court system, and
community outreach sectors.
REPRESENTATIVE HERRON highlighted two review goals, including
promoting a fair business climate and protecting health and
public safety. Further, the stakeholder wanted to make Title 04
a clear and consistent legal framework that can be used by
licensees, the ABC Board, and law enforcement. He offered that
the bill consists of a comprehensive packet of interrelated
proposals for revision.
5:10:08 PM
REPRESENTATIVE HERRON agreed the report would make a stout
doorstop, but this was the first time all the stakeholders have
looked at how Title 4 can be improved. He envisioned that the
stakeholders will look forward to interim work and he hoped the
legislature will pass this bill or the companion bill next year.
5:10:59 PM
REPRESENTATIVE JOSEPHSON said he would be looking for the
consensus and real "buy in" for the bill.
REPRESENTATIVE HERRON stated his belief that the "buy in" has
already happened. He said he will continue to work with all the
stakeholders, noting the legislative process brings unusual and
unforeseen circumstances and influences. He offered that the
stakeholders will have the tedious job of keeping the package
together while still allowing for suggestions.
5:12:23 PM
REPRESENTATIVE JOSEPHSON said that seemed to suggest if the bill
passed as written everyone will be equally content.
REPRESENTATIVE HERRON thought "equally content" was a little
generous. However, at this point the bill essentially been the
stakeholders' product, but now it will go through the public
process.
CHAIR OLSON offered his belief that the sponsor is a consensus
builder.
5:13:20 PM
REPRESENTATIVE LEDOUX asked whether the committee will be
hearing testimony from stakeholders that it shouldn't amend this
or that since it will destroy the consensus.
REPRESENTATIVE HERRON answered that everyone recognizes the
process. He suggested it will take "all hands on deck" to get
the bill through the process and the stakeholders know what to
expect. He said that Title 4 [AS 04] as currently written has
become very clumsy. Although stakeholders are committed, they
recognize that the legislative process will bring out undue and
unforeseen influences.
5:14:27 PM
REPRESENTATIVE HUGHES said she has been involved in the process
and predicted that it will be a delicate balance to pass the
bill. She offered her belief that the stakeholders agree this
process needs to happen. She said she was glad Representative
Herron is at the helm with this bill since everyone will need to
work together given the significant compromise that has happened
during the process of creating the draft bill. Everyone did not
get what they wanted, but worked to achieve balance, she said.
She said she appreciated the chair bringing this bill forward to
allow work to occur during the interim.
[HB 185 was held over.]
SB 71-VACCINE CERTIFICATION FOR PHARMACISTS
5:15:52 PM
CHAIR OLSON announced that the final order of business would be
SENATE BILL NO. 71, "An Act relating to the practice of
pharmacy; and relating to the administration of vaccines and
related emergency medications."
5:16:16 PM
JANE CONWAY, Staff, Senator Cathy Giessel, Alaska State
Legislature, on behalf of the prime sponsor, Senator Cathy
Giessel, stated that SB 71 would allow Alaska pharmacists to
administer all vaccines without a collaborative practice
agreement. Since 2001, Alaska pharmacists have required
oversight by medical doctor or a nurse practitioner to
administer vaccines. These oversight practice agreements cost
$50-500 annually for pharmacists depending on the agreement with
the oversight physician or nurse practitioner. The oversight
amounts to the physician or nurse practitioner overseeing the
immunization records.
5:17:28 PM
MS. CONWAY offered that some pharmacies have difficulty finding
a collaborative medical doctor or nurse practitioner and this
hurdle reduces access to needed vaccines to the public. This
bill, SB 71 will give already educated and certified pharmacists
the authority to immunize Alaskan adults and children without
having to contract with often hard to find an overseeing
physician or nurse practitioner.
MS. CONWAY explained that the appropriate clinical procedure for
vaccine administration is part of the course work for a pharmacy
doctorate degree, which has been the case since 2005. The level
of entry into the pharmacist position is a doctorate or PhD of
pharmacology. Under the bill, pharmacists educated prior to
2005 are required to immunization education program outlined by
the Board of Pharmacy.
5:19:23 PM
SENATOR CATHY GIESSEL, Alaska State Legislature, stated that the
Board of Pharmacy would provide a vaccine administration
program. The pharmacists already understand the vaccines,
including the pharmacology and side effects, but they would be
polishing their skills on the administration. Their education
already includes the drug therapy, dosing, and adverse events.
How to respond to adverse events was a question raised in the
other committees. When she prescribes she often asks
pharmacists for information since they know the drugs and are
definitely qualified [to administer vaccines]. In addition,
this bill would help rural communities since people often have
more interaction with their pharmacists than they do their
health care providers. Many states already authorize this and
have experienced higher immunization rates, which Alaska could
benefit from.
5:20:54 PM
SENATOR GIESSEL explained that the statewide database
"vacstracks" was used to track vaccines. Pharmacists would be
required to enter the vaccine data, which is accessible to all
health care providers in the state. In 2013, pharmacists
administered over 13,000 flu vaccines. This bill could
definitely make more vaccines available through these
pharmacists and pharmacies.
5:21:26 PM
REPRESENTATIVE LEDOUX asked whether pharmacists currently
required to enter data into the statewide database.
SENATOR GIESSEL answered yes.
5:21:45 PM
REPRESENTATIVE HUGHES related her understanding that they are
trained on dosages. She asked whether pharmacists are also
trained in administering them.
SENATOR GIESSEL answered that pharmacists from 2005 forward have
been educated in the administration of vaccines. Those
pharmacists educated prior to 2005 will be required to take the
vaccine administration course that the Board of Pharmacy
approves.
5:22:16 PM
REPRESENTATIVE HUGHES asked whether taking patient's medical
history was part of process since she did not think of
pharmacists as taking medical history.
SENATOR GIESSEL answered that currently for flu vaccines citizen
fills out a form citing medications they currently take, any
allergies to medications, and any chronic conditions they may
have. The same requirements would happen with other vaccines
administered.
5:23:02 PM
REPRESENTATIVE HUGHES wondered if this might lower the cost of
administration of vaccines.
SENATOR GIESSEL was unsure. Certainly, that would be the goal
and it will reduce the cost for the individual professionals who
administer the vaccines. Currently, it can take 6-12 months for
collaborative agreements to be solidified.
5:23:57 PM
REPRESENTATIVE LEDOUX asked for further clarification that
administering means actually giving the shots.
SENATOR GIESSEL answered yes.
5:24:10 PM
REPRESENTATIVE LEDOUX said she really likes this bill. She
wondered whether it might be possible in the future to allow
pharmacists some limited powers to prescribe drugs. She has
experienced picking up prescription drugs such as antibiotics in
other countries.
SENATOR GIESSEL replied that it would require changes in the
pharmacists' educational program to perform diagnosis. She said
that the state insurance program has nurse advice lines for
patients to receive advice.
5:25:40 PM
REPRESENTATIVE JOSEPHSON asked whether the footprint of
pharmacies would need to change.
SENATOR GIESSEL answered that pharmacists currently administer
vaccines so they already have the facilities.
5:26:27 PM
REPRESENTATIVE KITO related his understanding rural Alaska
experiences problems obtaining oversight agreements. He asked
whether other circumstances exist in which doctors or
pharmacists are having difficulties in putting together
agreements.
SENATOR GIESSEL answered that she was not certain and deferred
to the pharmacists to respond.
5:27:04 PM
BARRY CHRISTENSEN, Co-Chair, Alaska Pharmacists Association,
stated the Alaska Pharmacists Association membership consists of
pharmacists, pharmacies, and pharmacy technicians. The
association fully supports this bill, which he characterized as
a "win-win-win" such that it will ensure that pharmacists who
are currently immunizing can continue to do so. It would also
open up open up immunizations to pharmacists who have had
difficulty obtaining a partner for a collaborative practice
agreement. Further, it would open up access to patients for
immunizations. Finally, it's a "win" for employers since this
will keep people healthier. The Center for Disease Control has
reported that every dollar spent on immunization will save $10
in overall health care costs. This bill has support from "mom
pop" pharmacies to chain pharmacies.
5:28:58 PM
LIS HOUCHEN, Counsel, NW Regional Director, National Association
of Chain Drugstores (NACD) stated that she represents chain drug
stores in the Northwest region, including Costco, Genoa Health
Care, Good neighbor Health Mart, Carrs-Safeway, Target,
Walgreen, and Walmart. She thanked members for hearing this
important bill to allow pharmacists to independently prescribe
and administer immunizations in Alaska. She said that Senator
Giessel mentioned that the state was not doing as good a job as
it could. In 2012, only 1.2 percent of Alaskans were immunized
for influenza flu, which ranked as 49th in the nation.
MS. HOUCHEN said that the organization was encouraged by SB 71
since many additional needed vaccines will be administered in
local villages by pharmacists to patients and families that may
otherwise go without being immunized.
5:30:33 PM
CHAIR OLSON commented that he gets his flu shots at the
pharmacy.
5:31:36 PM
RYAN RUGGLES, Pharmacist, Carrs-Safeway, stated that he works as
a pharmacist and he currently administers vaccines. He offered
strong support for SB 71, which all comes down to patient
access. Although Carrs-Safeway stores has a collaborative
practice provider that they regularly use, but if the provider
is traveling or unavailable, it can take time to find a
substitute. Sometimes the pharmacists simply waits for the
collaborative practice provider to return.
5:32:56 PM
CHAIR OLSON, after first determining no one wished to testify,
closed public testimony on SB 71.
5:33:09 PM
REPRESENTATIVE COLVER remarked that this was an excellent bill.
He stated that this can help combat health care costs. He
offered his belief that it was common in other countries to have
a streamlined process to administer vaccines. Further, a number
of people already obtain their immunizations from their
neighborhood pharmacies.
5:33:37 PM
REPRESENTATIVE HUGHES acknowledged that pharmacists eager to get
in place. She asked whether nurse practitioners and physicians
support this concept.
SENATOR GIESSEL answered that there has not been any opposition
to the bill.
5:34:11 PM
REPRESENTATIVE HUGHES moved to report SB 71 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, SB 71 was reported from the
House Labor and Commerce Standing Committee.
The committee took a brief at ease.
SB 47-LIFE INSURANCE/ANNUITY EXEMPTIONS
5:34:42 PM
CHAIR OLSON announced that the final order of business would be
SENATE BILL NO. 47, "An Act relating to exemptions for cash
surrender values, accrued dividends, and loan values of life
insurance and annuity contracts."
5:36:32 PM
GERMAN BAQUERO, Intern, Senator John Coghill, Alaska State
Legislature, stated that Section 1 of SB 47 would repeal and
reenact one AS 09.38.025 (a), which will essentially repeal the
$500,000 cap on the exemption of un-matured life insurance
policies, and reenacts it as a full exemption regardless of the
value limit. Section 2 of the bill clarifies the applicability
date.
5:37:27 PM
MR. BAQUERO said this bill came about when some members of
insurance industry and trust industry found more private
employees are turning to life insurance and life insurance
policies as new estate and retirement tools. He said that
granting a full exemption was a means to treat all retirement
funds as secured, just as public employee retirement accounts or
union accounts, which are completely shielded by the federal
government and not subject to garnishment. He stated that a
zero fiscal note was attached to HB 47. He said that this bill
does not shield life insurance policies from any type of
criminal action, but refers to civil litigation. He directed
attention to members' bill packets to [AS 09.38.065] claims
enforceable against exempt property that provides the list of
exceptions to the exemptions ranging from being able to levy
against property to enforcing child support claims.
5:39:36 PM
MR. BAQUERO He read a portion of paragraph (3), which read, "(3)
a creditor may make a levy against exempt property of any kind
to enforce the claim of a victim, including a judgment of
restitution on behalf of a victim of a crime or a delinquent
act, ...." He interpreted this to mean that this bill would not
stop someone from trying to seek just restitution in a criminal
situation. He said that the bill has opposition from the Alaska
Bankers Association, who expressed concern that this could
create a means to shield assets that could be garnished by a
bank, but the sponsor found that interpretation a little
wanting. For one thing, the exemptions under AS 09.38.030
[(c)], related earnings and liquid assets clearly states a
creditor can levy upon the earning of an individual if the
creditor's claim is enforceable under an order of a court of
bankruptcy under the Bankruptcy Reform Act of 1978. Therefore
the concerns of the banking industry are not quite accurate in
terms of a debtor trying to hide or commit fraud. Finally, this
bill does not interfere assigning a policy as collateral to a
bank for a loan. He directed attention to AS 34.40.010, related
to invalidity generally, basically says that anyone who assigns
any of their property as collateral means that the person is
assigning the property to them, subject to garnishment on any
default. He said there really is not any fraudulent intent that
could come along, but can help make life insurance policies more
secure tools for estate planning while the policies remain un-
matured.
5:42:57 PM
REPRESENTATIVE LEDOUX related a scenario involving criminal
action, but noted the standards of proof in a criminal action
and a civil action are different. She asked for further
clarification that regardless of the amount of damages, they can
keep the insurance policy that may be valuable.
MR. BAQUERO answered that the intent of the bill is not to
harbor savings, earnings, or investment of an insurance policy;
instead, the intent is to secure the investments a person makes
in an insurance policy while the policy is un-matured. Once the
policies have matured and the assets have transferred over to
the beneficiary, the assets become the property of the
beneficiary and are attachable. This bill was trying to put AS
09.38.025 in line with exemptions for retirement plans under AS
09.38.017.
5:45:53 PM
REPRESENTATIVE LEDOUX asked whether retirement plans were
exempt.
MR. BAQUERO answered there was no numerical value limit since
they are fully exempted.
REPRESENTATIVE LEDOUX remarked she had some problems with that,
too.
5:46:19 PM
REPRESENTATIVE HUGHES suppose someone owes $500,000 to the
creditor. She asked whether the creditor can come after the
debtor.
MR. BAQUERO stated that currently under AS 09.38.025, when the
policy has matured the assets are attachable. This legislature
pertains to un-matured life insurance and once the insurance was
matured, the assets are accessible to garnishment. In further
response to Representative Hughes, he said that once the value
of the policy exceeds $500,000, it is subject to garnishment.
5:48:11 PM
REPRESENTATIVE HUGHES related her understanding that was current
law, but if this bill passes it could not be garnished.
MR. BAQUERO answered that if the bill passed it would exempt all
un-matured life insurance and annuity contracts regardless of
the value limit.
5:48:37 PM
REPRESENTATIVE KITO asked for the reason to make these changes.
MR. BAQUERO answered that the trust and life insurance industry
has found that once clients were buying policies up to $500,000,
they found that clients wanted more protection similar to the
protections that public employees have with respect to social
security or the state's supplemental annuity plan. In fact the
top ten highest gross retirement plans in the state's
supplemental annuity were over $1 million and were shielded from
garnishment. This bill was a means to level the playing field
from private employees trying to find a new estate planning
tool.
5:50:27 PM
REPRESENTATIVE KITO asked for further clarification that in
creating additional security with the policy does it decrease
the cost to consumer for that policy.
MR. BAQUERO deferred to the trust industry to respond.
5:50:55 PM
RYNNIEVA MOSS, Staff, Senator John Coghill, Alaska State
Legislature, echoed that the sponsor found that many people who
wanted to invest money in a retirement system were limited to
$500,000 to obtain the same benefits the union and public
employees have. In addition, the sponsor was interested in
building a trust industry in Alaska that helps to diversify the
economy and potentially result in $58 million in taxes to the
state in 2016. One disadvantage in getting people to invest
more than $500,000 into a life insurance or annuity program is
that money is not secure and is un-matured. Currently, the
Alaska Trust Industry in Alaska has $50 million deposited in
Northrim Bank since it is the limit for funds secured by FDIC
[Federal Deposit Insurance Corporation]. The rest of their
funds are invested in money markets and other investments. In
conclusion, she recapped that the sponsor would like to create
an industry and incentive people to invest in larger life
insurance policies since the state assesses premium taxes on the
life insurance policies.
5:52:44 PM
REPRESENTATIVE KITO offered his belief that individuals
investing more than $500,000 would be a small pool in Alaska.
MS. MOSS answered that people from the Lower 48 invest in these
life insurance policies.
5:53:12 PM
REPRESENTATIVE LEDOUX offered her belief that the funds would be
secure so long as people did not get into accidents and paid
their bills.
MS. MOSS suggested that people can go to other states to get the
policies. She said that one objection the banks had was that
they couldn't get to a life insurance policy prior to the
insurance policy being issues. She said that banks are
responsible for obtaining collateral at the time money is
loaned. She suggested it was a little disingenuous to reach out
after the fact and grab unto a life insurance policy that was
purchased after loans were approved with other collateral. She
suggested that if they issued a loan without an appropriate
amount of collateral would be the bank's decision. She said a
person shouldn't be punished for it.
5:54:36 PM
REPRESENTATIVE LEDOUX asked whether John Q. Public who wants to
collect his debts.
MS. MOSS answered that state has exceptions to the exemptions,
which was a fairly lengthy list, but it does not give carte
blanche protection or immunity from paying debts.
5:55:05 PM
REPRESENTATIVE JOSEPHSON stated that in his experience with
debtors/creditors [in his law practice], that much of what we
own is vulnerable. He suggested that most people are not
worried about it and take one step at a time.
MS. MOSS directed attention to the issue of equal treatment for
retirement and the opportunity to build a nest egg for
retirement. She stated that public employees and union
employees are protected under federal law with a $500,000 limit
for individuals. She acknowledged that this bill was a policy
call. She said that her issue is that anyone who wants
retirement system should be treated equally.
5:57:24 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community, & Economic Development (DCCED), said she
testified on this bill in the Senate. She offered that the
industry being discussed was new to Alaska. The life insurance
industry in Alaska has come up with an idea that attempts to
stimulate the insurance industry and provide something new to
the state. She said people could question the other
jurisdictions, such as Switzerland, have so much business in the
financial industry. She answered that it was because they have
created a favorable tax structure.
5:58:51 PM
MS. WING-HEIER said that Vermont has been renowned for its
captive insurance policies since Vermont built a good tax
structure, as have other jurisdictions, such as the Bahamas,
Bermuda, and the Virgin Islands. She offered her belief that
Alaska's life insurance industry has expressed interest in
several changes, including the $500,000 issue, which is not
limited to Alaskans but some of the biggest polices in Alaska
are sold to nonresidents. She characterized Alaska's tax
structure as good, noting that after $100,000 the tax rate drops
from .1 to .08 percent premium tax. If Alaska can become more
competitive, the industry believes it can sell more and removing
the $500,000 limit may help to do so. Secondly, life insurance
is a very safe retirement vehicle for small employers, who may
not feel comfortable with stocks and bonds. Once the insurance
reaches $500,000, it becomes accessible to creditors. She
acknowledged everyone should pay their debts; however, the issue
of fair play should be considered, such that the public or
unions paying into their retirement systems are protected, but
the private sector employees are not. Thus creditors can access
their $500,000 or un-matured cash value, but they cannot access
the public employee's $500,000.
6:00:46 PM
MS. WING-HEIER explained that this bill does not affect her
division since the Division of Insurance's statutes fall under
Title 21 [AS 21]; however, she has done some research. She said
that [garnishments] can happen on life insurance and annuities
with criminal actions, but not under civil actions. She
recalled the Division of Insurance did receive a letter from the
Department of Law to clarify that point.
6:01:38 PM
REPRESENTATIVE LEDOUX expressed concern that the state might not
want to allow bank accounts, like Switzerland does, in which
people can avoid lawsuits and other things.
MS. WING-HEIER answered she used Switzerland as an example, but
noted that other jurisdictions that have taken actions on the
insurance or financial industries have had good success.
6:02:45 PM
REPRESENTATIVE JOSEPHSON surmised the administration supports
this bill.
MS. WING-HEIER answered that there has not been any opposition
to the bill. In further response, she clarified that the
division's statutes are under Title 21, not in Title 9 and the
bill affects AS 09 and the administration has not given her any
direction on this bill.
6:03:17 PM
REPRESENTATIVE JOSEPHSON said he was in the process of vetting
SB 47, but he has found that normally when the department is
neutral on a bill, the administration doesn't necessarily
support the bill. He assumed that was the case with SB 47.
MS. WING-HEIER reiterated that this bill would affect AS 09 and
not the insurance code that falls under AS 21.
6:04:25 PM
REPRESENTATIVE KITO suggested that it might be necessary to
protect consumers and residents of Alaska, for example, if the
state was creating a new product, it will be important that the
product not harm anyone in Alaska. He said he would like to
learn more about potential impacts on Alaskans.
6:05:10 PM
REPRESENTATIVE HUGHES said [the changes proposed in SB 47]
sounds like a new economic opportunity. She asked whether this
could bring in hundreds of millions to the state.
MS. WING-HEIER answered the insurance industry is the second
largest contributor to the general fund in premium taxes. If
the insurance industry was right in its predictions, it could be
significant to Alaska. Certainly, the state charges 2.7 percent
as a rule on all premiums that come into the state. Life
insurance taxes on premiums drop to 1 percent after $100,000 in
premium. She estimated that the premium taxes would be
approximately $55 or $56 million and if the market changed and
the industry can entice people from the Lower 48 to invest in
trusts, annuities, and life insurance, it could be significant
to the state.
6:06:36 PM
CHAIR OLSON asked for further clarification on the tax cap of
.08 percent.
MS. WING-HEIER answered that another bill [SB 15] would reduce
the premium tax from 1 percent to .08.
CHAIR OLSON asked for the projections on a bill that passed 3-4
years ago in which the state gave up premium taxes.
MS. WING-HEIER offered to research and provide the information.
6:07:50 PM
MATTHEW BLATTMACHR, Vice-President & Trust Officer, Alaska Trust
Company, stated that Alaska Trust Company doesn't offer
insurance services nor was one that the company was pushing
forward, but the Alaska Trust Company supports it. He explained
that a substantial portion of its business comes from estate
planning with life insurance and annuity contracts.
6:08:44 PM
MR. BLATTMACHR asked how much was lost in revenue for the
previous premium taxes. He said the statute currently reads
that the state charges 2.7 percent on any premium under 100,000
and it drops ten basis points after $100,000. At the time that
bill passed, the Alaska Trust Company asked the Division of
Insurance for largest policy premium, with no policy in excess
of $50,000. This didn't give up any premium tax revenue, but
gave an incentive to receive additional large policies.
6:09:50 PM
CHAIR OLSON asked whether the prior bill affected any premium
tax impact.
MR. BLATTMACHR testified it was his understanding it did not.
6:10:06 PM
CHAIR OLSON asked for further clarification on why the bill was
passed. He recalled it was going to bring in large premium
policies.
MR. BLATTMACHR answered that did impact a number of policies
that came to the state, but it did not cost to implement the
changes.
6:10:47 PM
MR. BLATTMACHR said that the life insurance industry is growing
in Alaska and contributes to the state's economic industry. He
said that the trust industry in Alaska deals with life insurance
almost on a daily base so it is in support of the bill as a
means of keeping Alaska as attractive environment.
6:11:25 PM
REPRESENTATIVE HUGHES related her understanding that the last
change to 1 percent in taxes didn't affect revenue. She asked
what Alaska gained.
MR. BLATTMACHR answered that the discussion today was regarding
SB 47, but the tax change was contained in SB 15. However, he
did state that Alaska has received additional policies it likely
would not have received due to the favorable tax structure. He
suggested that the exact number would be difficult to determine,
but he offered that currently, the state has a substantial
number of large policies.
6:12:36 PM
LINDA HULBERT stated that she was involved in the insurance
industry as an agent for 25 years and prior to that she spent 20
years in the educational community in Alaska. She said she does
not represent any companies, but represents herself. She said
that this protection was available in many states throughout the
United States, including New York, Florida, Texas, and Arizona.
She said that many states have the exemption for life insurance
and annuities as part of their state policies. She said that if
someone were to move from Alaska to New York and took their
insurance policy with them and changed their residency, they
would have this protection. She characterized this as a
fairness issue and an opportunity to create revenue and an
opportunity for savings.
6:14:37 PM
CHAIR OLSON asked whether NAIC has any model legislation.
MS. WING-HEIER answered no, not with respect to lifting the cap
for creditors since it does not affect Title 21.
6:15:02 PM
REPRESENTATIVE KITO asked whose responsibility Title 9 fell
under.
MS. WING-HEIER said she was unsure since statutes governing the
Division of Insurance fall under Title 21, so she was unsure who
administers the title.
[SB 47 was held over.]
6:15:52 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
6:15 p.m.