SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE April 6, 1994 1:38 p.m. MEMBERS PRESENT Senator Steve Rieger, Chairman Senator Bert Sharp, Vice-Chairman Senator Loren Leman Senator Mike Miller Senator Jim Duncan Senator Johnny Ellis Senator Judy Salo MEMBERS ABSENT All members present. COMMITTEE CALENDAR SENATE BILL NO. 367 "An Act relating to health care and insurance for health care; to review and approval of health insurance rates and rating factors; relating to certain civil actions against health care providers; to coordination of insurance benefits and to determination and disclosure of fees paid to an insured or health care provider; to the rate of interest on certain judgments and decrees; to excise taxes on cigarettes; amending Alaska Rules of Civil Procedure 26, 27, 68, 79, and 82 and Alaska Rules of Evidence 802, 803, and 804; repealing Alaska Rule of Civil Procedure 72.1; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 367 - See Health, Education & Social Services minutes dated 3/28/94 and 3/30/94. WITNESS REGISTER Elmer Lindstrom, Special Assistant Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811-0601 POSITION STATEMENT: Suggested adding an alcohol excise tax. Peter Nakamura, Director Division of Public Health Department of Health and Social Services P.O. Box 110610 Juneau, Alaska 99811-0601 POSITION STATEMENT: Addressed the need for public health. Offered an amendment. Nancy Usera, Commissioner Department of Administration P.O. Box 110200 Juneau, Alaska 99811-0200 POSITION STATEMENT: Discussed Amendment 3. David Walsh, Director Division of Insurance P.O. Box 110805 Juneau, Alaska 99811 POSITION STATEMENT: Reviewed amendments and offered information regarding SB 367. Mike Ford, Legislative Legal Counsel Division of Legal Services Legislative Affairs Agency 130 Seward Street Juneau, Alaska POSITION STATEMENT: Offered legal information regarding SB 367. Barbara Thurston, Chief Actuary Division of Insurance Juneau, Alaska POSITION STATEMENT: Answered questions. Katy Campbell, Actuary Division of Insurance Juneau, Alaska POSITION STATEMENT: Discussed various insurance packages. Dr. Rodman Wilson, Physician 800 M Street #5W Anchorage, Alaska 99501 POSITION STATEMENT: Expressed other concerns. ACTION NARRATIVE TAPE 94-26, SIDE A Number 007 CHAIRMAN RIEGER called the Senate Health, Education and Social Services (HESS) Committee to order at 1:38 p.m. He introduced SB 367 (HEALTH CARE REFORM COMMITTEES) as the only order of business before the committee. ELMER LINDSTROM, Special Assistant for the Department of Health and Social Services, commended the inclusion of a provision increasing the excise tax on tobacco. He requested the inclusion of an excise tax increase on alcohol for the same reasons that the tobacco excise tax was included. He noted that Governor Hickel had sponsored legislation dealing with alcohol and tobacco tax increases. The rationale is essentially the same in both cases. From the perspective of DHSS, an increase in taxes on alcohol and tobacco would be justified solely on the grounds of public health regardless of the health care or financial environment. He stated that an increase in taxation of these products would result in a decrease in consumption which would be beneficial for all Alaskans. Mr. Lindstrom said that the cost of alcohol and tobacco use and abuse on the health care system is extraordinary which everyone should understand very well by now. The increase in excise tax would offset some of those costs to the health care system. He expressed the need for a prevention aspect when attempting cost containment of health care reform which could be achieved by decreasing the use and abuse of alcohol and tobacco. The revenue generated from the increased excise tax could help pay for other aspects of health care reform in SB 367. He noted that SB 269 includes increases in alcohol and tobacco taxes which would bring in approximately $15 million in additional revenues. He urged consideration of amending SB 367 to include an increase in taxes on alcohol as outlined in SB 269. Number 092 SENATOR DUNCAN expressed concern with the cigarette tax paying for this bill. That would seem to violate the single subject rule of the constitution. He asked if that had been considered. He also said that he did have a legal opinion that indicated that this was in violation of the single subject rule which would be a constitutional matter. CHAIRMAN RIEGER explained that conceptually those issues are a single subject when addressing and considering the health care package. If later on there is concern that SB 367 would be jeopardized by the single subject rule, then the bill could be split into sustainable pieces. He reiterated the importance to consider it as a whole for purposes of debate on health care. SENATOR DUNCAN agreed that increased taxation on alcohol and tobacco are important portions of the health care discussion; however, the constitutional violation is clear. He noted that he had passed out Mr. Ford's opinion. He thought it could be considered together, but in different legislation. Perhaps, it would not be in the best interest of the legislation, if passage of SB 367 is desired, to have it combined. PETER NAKAMURA, Director of the Division of Public Health, said that he was speaking for the Division of Public Health as well as a large coalition of Alaskans who have discussed health care reform, specifically the issue of health as it applies to health care reform. In that dialogue, much of the discussion has focused on access to clinical care, financing of health care, etcetera. He indicated that this coalition and other citizens have practically mandated that the Division of Public Health stay in the dialogue in order to assure that public health is addressed. He expressed concern with the possibility that health care reform proposals may not address the public health issue. He recommended that any health care reform proposal address the issue of developing a public health improvement plan. That would identify the core services and functions while quantifying them in terms of dollars; therefore, allowing meaningful decisions. CHAIRMAN RIEGER asked if Dr. Nakamura had any specific amendments that he wanted to propose. PETER NAKAMURA submitted the amendment which was in the Governor's bill, HB 414. Number 181 SENATOR SALO asked if Dr. Nakamura had participated in the process resulting in SB 284 and did it include a good comprehensive public health proposal. PETER NAKAMURA said yes. The wording of SB 284 basically came from the various health conferences on public health. SENATOR DUNCAN asked if Dr. Nakamura felt that SB 367 addressed public health. PETER NAKAMURA said that SB 367 does not address public health in a manner with which they feel comfortable. CHAIRMAN RIEGER said that they could take his suggested amendment under advisement. He felt that this amendment seemed to be fairly soft language. Some of the provisions of SB 367 were intended to be more concrete in the area of public health. He pointed out the excise tax on cigarettes, the direction for the benefit plan to review prenatal care and child health issues as examples that address public health in SB 367. He stated that he did not oppose what the amendment offered, but the language seemed soft. PETER NAKAMURA explained that specific service issues such as immunization, cancer screening, etcetera are very important; however, the trade-offs must be understood in order to make meaningful decisions. Before specific programs are launched, the total need for public health must be known which is what the public health improvement plan addresses. CHAIRMAN RIEGER reminded the committee of the previous meeting in which Senator Leman offered two amendments. SENATOR LEMAN moved to adopt Amendment 2. AMENDMENT 2  Page 19, after line 27: Insert new paragraph to read: "(3) health care services that may not be covered include elective abortions;" Renumber the following paragraphs accordingly. CHAIRMAN RIEGER objected. SENATOR LEMAN explained that Amendment 2 eliminates the provision of health services for elective abortions in the basic package. He felt that asking all taxpayers to pay for something they find objectionable was inappropriate. In his opinion, Amendment 2 is the Pro-Choice position because this allows people the choice of whether to select this or not rather than mandating that everyone pay for it. He expressed his view that elective abortions do not have anything to do with health care. This amendment seems to be consistent with SB 367. He urged their support for Amendment 2. SENATOR SALO felt that Amendment 2 was inconsistent with SB 367 because there is no defined benefits package in SB 367. Amendment 2 is not a Pro-Choice position. She explained that it would only be a Pro-Choice position for women with money. She objected to Amendment 2. Number 270 CHAIRMAN RIEGER called for a hand vote on Amendment 2. Senators Leman and Miller voted "yea" and Senators Sharp, Rieger, Salo, Duncan, and Ellis voted "no." The motion failed. CHAIRMAN RIEGER offered Amendment 3. He explained that the Administration had suggested that the advisory committee be located in the Department of Commerce and Economic Development instead of the Office of the Governor. AMENDMENT 3  Page 19, lines 1-2: Delete "Office of the Governor" Insert "Department of Commerce and Economic Development" Page 21, line 24: Delete "Office of the Governor" Insert "Department of Commerce and Economic Development" NANCY USERA, Commissioner of the Department of Administration, explained that the advisory committees outlined in SB 367 are very task specific. All of the other responsibilities in SB 367 are located in the Department of Commerce. She felt keeping everything in one area would be valuable and more cost effective. SENATOR ELLIS asked if the Commissioner of the Department of Commerce had expressed an opinion on this amendment. NANCY USERA said that this was at the request of the Administration. Ms. Usera clarified that she was a spokesperson for the Administration on health care issues. SENATOR ELLIS stated that it appeared to him that when something is moved from the Office of the Governor to a department, there is a perception of less importance of the task. CHAIRMAN RIEGER called for a hand vote on Amendment 3. Senators Miller and Sharp voted "Yea" and Senators Duncan, Ellis, Salo and Leman voted "Nay." The motion failed. CHAIRMAN RIEGER offered Amendment 4. He explained that he had received correspondence suggesting that the parties should have an opportunity to agree on an arbitrator before the Court appoints one. Amendment 4 would place that process in the scheme of arbitration. AMENDMENT 4  Page 5, line 11, after "shall": Insert "determine if the parties can agree on an arbitrator to review the claim. If the parties agree on an arbitrator, the court shall appoint that person to review the claim. If within 30 days after the filing of an answer to the complaint the parties have not agreed on an arbitrator, the court shall" SENATOR ELLIS asked if any of these amendments were responsive to Dr. Rodman Wilson's written comments. CHAIRMAN RIEGER said he did not know, he did not believe the amendment corresponded to Dr. Wilson's concerns. Hearing no objection, Amendment 4 was adopted. CHAIRMAN RIEGER explained that Amendment 5 would clarify the ambiguity of the sequence of events regarding arbitration. Amendment 5 would have the arbitration occur first, if there was no resolution the arbitration would move into the Court process with the expert advisor. He pointed out a typographical error in the amendment; "[AGREED TO]" should be "[NOT AGREED TO]." AMENDMENT 5  Page 6, lines 10-11: Delete "[WHEN THE PARTIES HAVE NOT AGREED TO ARBITRATION OF THE CLAIM UNDER AS 09.55.535,]" Insert " after [WHEN] the parties have completed  [NOT AGREED D TO] arbitration of the claim under AS 09.55.535." Page 6, lines 12-13: Delete "within 20 days after filing of answer to a summons and complaint an expert medical advisor  [A THREE-PERSON EXPERT ADVISOR SOR PANEL]" Insert " an expert medical advisor  within 20 days after completion of arbitration  [FILING OF ANSWER TO A SUMMONS AND COMPLAINT A THREE-PERSON EXPERT ADVISORY PANEL]" Hearing no objection, Amendment 5 was adopted. Number 388 CHAIRMAN RIEGER explained that Amendment 6 would change the Division of Insurance's approval of rates. Amendment 6 would give the division 90 days to review and disapprove a rate. He noted that Amendment 6 addresses the concern that with prior approval, the Division of Insurance could sit on rate filing forever. AMENDMENT 6  Page 8, line 21, through page 9, line 3: Delete all material and insert: "Sec. 21.51.350. PREMIUM RATES AND RATING FACTORS. (a) A disability insurer (1) shall file with the director rates or rating factors for disability insurance at least 90 days before the intended effective date of the rate or rating factor; and (2) may not use a rate or rating factor that has not been filed with the director as required under this subsection. (b) A rate or rating factor not disapproved by the director before the intended effective date of the rate or rating factor is considered approved by the director." Page 11, after line 29: Insert new bill sections to read: " *Sec. 9. AS 21.86.070(g) is amended to read: (g) The director may require that additional relevant material considered necessary by the director be submitted in order to determine the acceptability of a filing made under [EITHER] (b) [OR (e)] of this section. *Sec. 10. AS 21.86 is amended by adding a new section to read: Sec. 21.86.075. PREMIUM RATES AND CHARGES. (a) A health maintenance organization (1) shall file with the director rates, rating factors, premiums, fees for services, and enrollee fees, including a change to a rate, rating factor, premium, or fee, used in providing health care services to enrollees of the health maintenance organization; a filing required under this paragraph must be made at least 90 days before the intended effective date of the filing; and (2) may not use a rate, rating factor, premium, or fee that has not been filed with the director as required under this subsection. (b) A filing under this section not disapproved by the director before its intended effective date is considered approved by the director." Renumber the following bill sections accordingly. Page 12, after line 5: Insert a new bill section to read: " *Sec. 12. AS 21.87.190 is repealed and reenacted to read: Sec. 21.87.190. RATES AND CHARGES . (a) A service corporation (1) shall file with the director subscription rates, rating factors, fees, and payment charges, including a change to a rate, rating factor, fee, or payment charge, to be charged to or on account of the service corporation's subscribers; a filing required under this paragraph must be made at least 90 days before the intended effective date of the filing; and (2) may not use a rate, rating factor, fee, or payment charge that has not been filed with the director as required under this subsection. (b) A filing under this section not disapproved by the director before its intended effective date is considered approved by the director." Renumber the following bill sections accordingly. Page 18, line 22: Delete "Sections 9, 10, and 11" Insert "Sections 11, 13, and 14" Page 22, after line 24: Insert a new bill section to read: " *Sec. 22. AS 21.86.070(e) and 21.86.070(f) are repealed." Renumber the following bill sections accordingly. Page 23, line 7: Delete "Section 18" Insert "Section 21" Page 23, line 10: Delete "Sections 16 and 17" Insert "Sections 19 and 20" SENATOR ELLIS asked what the sanction would be if the approval is not done in 90 days. CHAIRMAN RIEGER said that in that case it would be considered approved. SENATOR ELLIS asked if the division could appeal that. DAVID WALSH, Director of the Division of Insurance, said that under Amendment 6 and prior approval the division has a specified amount of time and if they do not make a decision then the rates are deemed approved. He said that there had never been a case when the time limit was reached and the rates had to be deemed approved. SENATOR DUNCAN asked Mr. Walsh what he meant by prior approval. DAVID WALSH clarified that he was referring to prior approval as with other insurances. SENATOR LEMAN felt that Amendment 6 would be an improvement. He asked if they had already considered an amendment on a file and use approach which he believes would be better than Amendment 6. CHAIRMAN RIEGER did not have a problem with the sequence of the amendments or suggested language regarding this issue. Hearing no objection, Amendment 6 was adopted. CHAIRMAN RIEGER explained that Amendment 7 would take a similar approach to that of SB 284 regarding the compensation of the members of the advisory committee. There would be a daily compensation of $400. AMENDMENT 7  Page 19, after line 13: Insert a new subsection to read: "(c) A committee member is entitled to receive compensation at the rate of $400 a day for each day spent in performing duties as a committee member and to travel and per diem expenses authorized by law for boards and commissions under AS 39.20.180." Renumber the following sections accordingly. Page 20, line 20: Delete "(d)(1)-(5)" Insert "(e)(1)-(5)" Page 21, after line 31: Insert a new subsection to read: "(b) A committee member is entitled to receive compensation at the rate of $400 a day for each day spent in performing duties as a committee member and to travel and per diem expenses authorized by law for boards and commissions under AS 39.20.180." Reletter the following sections accordingly. Number 440 CHAIRMAN RIEGER offered Amendment 7. Hearing no objection, Amendment 7 was adopted. SENATOR MILLER offered Amendment 8. He noted earlier discussion on the single subject rule which he felt should be left for the committee to discuss. He believed that Amendment 8 fits under health care. Amendment 8 would lower the alcohol for driving to .08. AMENDMENT 8  Page 1, line 5, after " provider; ": Insert " relating to the offense of operating a commercial motor vehicle, aircraft, or watercraft while intoxicated; relating to presumptions arising from the amount of alcohol in a person's breath or blood; relating " Page 17, after line 13: Insert new bill sections to read: " *Sec. 12. AS 28.33.030(a) is amended to read: (a) A person commits the crime of operating a commercial motor vehicle while intoxicated if the person operates a commercial motor vehicle (1) while under the influence of intoxicating liquor or any controlled substance; (2) when, as determined by a chemical test taken within four hours after the alleged offense was committed, there is at the time the test is taken  0.04 percent or more by weight of alcohol in the person's blood or 40 milligrams or more of alcohol per 100 milliliters of blood, or when there is 0.04 grams or more of alcohol per 210 liters of the person's breath; or (3) while under the combined influence of intoxicating liquor and a controlled substance. *Sec. 13. AS 28.35.030(a) is amended to read: (a) A person commits the crime of driving while intoxicated if the person operates or drives a motor vehicle or operates an aircraft or a watercraft (1) while under the influence of intoxicating liquor, or any controlled substance; (2) when, as determined by a chemical test taken within four hours after the alleged offense was committed, there is at the time the test is taken 0.08  [0.10] percent or more by weight of alcohol in the person's blood or 80  [100] milligrams or more of alcohol per 100 milliliters of blood, or when there is 0.08  [0.10] grams or more of alcohol per 210 liters of the person's breath; or (3) while the person is under the combined influence of intoxicating liquor and a controlled substance. *Sec. 14. AS 28.35.033(a) is amended to read: (a) Upon the trial of a civil or criminal action or proceeding arising out of acts alleged to have been committed by a person while operating or driving a motor vehicle or operating an aircraft or a watercraft while intoxicated, the amount of alcohol in the person's blood or breath at the time alleged shall give rise to the following presumptions: (1) If there was 0.04  [0.05] percent or less by weight of alcohol in the person's blood, or 40  [50] milligrams or less of alcohol per 100 milliliters of the person's blood 0.04  [0.05] grams or less of alcohol per 210 liters of the person's breath, it shall be presumed that the person was not under the influence of intoxicating liquor. (2) If there was in excess of 0.04  [0.05] percent but less than 0.08  [0.10] percent by weight of alcohol in the person's blood, or in excess of 40  [50] but less than  80  [100] milligrams of alcohol per 100 milliliters of the person's blood, or in excess of 0.04  [0.05] grams but less than 0.08  [0.10] grams of alcohol per 210 liters of the person's breath, that fact does not give rise to any presumption that the person was or was not under the influence of intoxicating liquor, but that fact may be considered with other competent evidence in determining whether the person was under the influence of intoxicating liquor. (3) [REPEALED (4)] If there was 0.08  [0.10] percent or more by weight of alcohol in the person's blood, or 80  [100] milligrams or more of alcohol per 100 milliliters of the person's blood, or 0.08  [0.10] grams or more of alcohol per 210 liters of the person's breath, it shall be presumed that the person was under the influence of intoxicating liquor. *Sec. 15. AS 28.35.033(c) is amended to read: (c) The provisions of (a) of this section (1)  may not be construed to limit the introduction of any other competent evidence bearing upon the question of whether the person was or was not under the influence of intoxicating liquor ; and  (2)  do not apply to a civil action permitted under AS 04.21.020. " Page 23, line 7: Delete "Section 18" Insert "Section 22" Page 23, line 10: Delete "Sections 16 and 17" Insert "Sections 20 and 21" SENATOR DUNCAN reiterated the issue of having multiple subjects in one bill which would create a constitutional problem. He said that he would support the amendment. Hearing no objection, Amendment 8 was adopted. CHAIRMAN RIEGER directed the committee to the letter from Dr. Rodman Wilson. He suggested reviewing his proposals for possible amendments of the committee. The committee began to go through Dr. Wilson's suggestions. SENATOR ELLIS moved Amendment 9 for purposes of discussion. AMENDMENT 9  Page 5, line 20, after "a": Insert "written" Hearing no objection, Amendment 9 was adopted. SENATOR ELLIS moved Amendment 10. SENATOR DUNCAN did not believe that Amendment 10 was in the context of the bill. CHAIRMAN RIEGER said that the amendment could be reduced to the singular by saying "the specialty represented by the medical expert" or the amendment could refer to "the specialty of the expert." Chairman Rieger asked what the difference would be. Number 506 MIKE FORD, Legislative Legal Counsel for the Division of Legal Services, explained that originally the sentence was intended to allow the Court to determine what specialties are on the panel and then allow parties to make suggestions to the panel. Even with the amendment, it does not fit because it changes to a single person. He thought that this section may need some additional work. He suggested eliminating the issue of specialty. CHAIRMAN RIEGER felt that adopting Amendment 10 would not do any damage. MIKE FORD agreed that if the language said, "represented by the medical expert" it should work. SENATOR ELLIS withdrew Amendment 10. SENATOR DUNCAN clarified the revised version of the amendment, now Amendment 10A. SENATOR ELLIS moved to adopt Amendment 10A AMENDMENT 10A  Page 6, line 15: Delete "professions or specialties to be" Insert "profession or specialty" Hearing no objection, Amendment 10A was adopted. MIKE FORD explained that Dr. Wilson's question regarding the use of "must" versus "shall" page 7, lines 10, 12, 13 was the appropriate style for Alaska's statutes. He addressed Dr. Wilson's next concern with the discovery issue. Dr. Wilson's suggestion would eliminate a provision prohibiting discovery until the expert advisor completes their report. He noted an exception to that if good cause is shown. It would stop the process until the expert advisor completes his work. CHAIRMAN RIEGER asked if this had been suggested in a bill introduced last year. MIKE FORD recommended that this provision be kept because it prohibits the Court process while the arbitration for the expert advisor processes are occurring. SENATOR DUNCAN offered Amendment 11. CHAIRMAN RIEGER objected. AMENDMENT 11  Page 8: Delete lines 1-3 Page 23: Delete lines 1-3 SENATOR DUNCAN asked if this provision had been introduced as legislation resulting from the task force last year. DEBORAH GRAVO, Executive Director of the Alaska Trollers, recollected that this issue had been discussed in the task force and the amendment was well received. She said that she thought that the medical community was in favor of the amendment and the trial lawyers did not have any problems with Dr. Wilson's amendment. In response to Senator Duncan, Ms. Gravo explained that staying discovery would make the process longer and a little more expensive. CHAIRMAN RIEGER reiterated that the court may relax this prohibition if good cause is shown. CHAIRMAN RIEGER maintained his objection. Upon a hand vote Senators Salo, Ellis, and Duncan voted "Yea" and Senators Miller, Leman, Sharp, and Rieger voted "No." The motion failed. TAPE 94-26, SIDE B Number 592 CHAIRMAN RIEGER explained Dr. Wilson's next suggestion. Dr. Wilson suggested that the expert advisor receive a stipend of $500. Currently, SB 367 allows a $300 per day expert witness fee which would only be on the witness day. Chairman Rieger offered Amendment 12.  SENATOR MILLER asked if this was only a substitution from " $300 00 $500. CHAIRMAN RIEGER believed that the $300 was an expert fee on the day of the trial while Dr. Wilson's suggestion referred to work other than the trial day. Chairman Rieger felt that Senator Miller's suggestion would work if line 11 changed the $300 to $500. AMENDMENT 12  Page 8, line 11: Delete " $300 " Insert "$500" SENATOR SHARP inquired of the differences in qualifications of the individual receiving $150 per day described in existing statutes and the individual receiving $500 per day. CHAIRMAN RIEGER explained that there is already a three person panel provided in statutes. Each of the members of the panel receive $150 per day if they testify at the trial. He said that Amendment 12 would decrease the number of participants involved in the expert advise section of the civil proceedings from 3 to 1. The 1 individual would be paid $500 per day. Hearing no objection, Amendment 12 was adopted. SENATOR MILLER said that some of Dr. Wilson's points were actually editorial comments not specific changes. MIKE FORD pointed out that the definition of "Health care service" was actually defined as Dr. Wilson had suggested. "Health care service" is defined by AS 21.58.400. CHAIRMAN RIEGER referred Dr. Wilson's question about actuaries to Mr. Walsh. DAVID WALSH informed the committee that there are three actuaries in Alaska and the Division of Insurance has two of them. Mr. Walsh noted that there are contracted actuaries outside of Alaska. Mr. Walsh pointed out that the division's two actuaries took approximately two years to acquire. CHAIRMAN RIEGER inquired as to the value of an actuary serving on an advisory committee determining a health care benefit package. Number 510 BARBARA THURSTON, Chief Actuary for the Division of Insurance, stated that actuarial expertise was definitely needed; however, in this case it may be better to contract those actuaries. She explained that part of the responsibilities in SB 367 such as coming up with a benefits package within certain guidelines would necessitate an actuary. There are consulting firms that do that for other states which may be an option. CHAIRMAN RIEGER offered Amendment 13. AMENDMENT 13  Page 19, line 11: Delete "is an actuary who" SENATOR DUNCAN asked what that would mean; an insurance salesman, a broker. CHAIRMAN RIEGER said that it could mean any of those; the Governor would choose who to appoint. SENATOR DUNCAN felt that this would refer to an insurance industry person. SENATOR ELLIS thought that changing the language to "who has experience with health care insurance" rather than "in health care insurance." SENATOR DUNCAN inquired as to Chairman Rieger's intention with this amendment. CHAIRMAN RIEGER said that he was flexible. Chairman Rieger stated that with the amendment the language seemed flexible. Hearing no objection, Amendment 13 was adopted. CHAIRMAN RIEGER offered Amendment 13 due to previous testimony by Alaska Public Interest Research Group (AKPIRG). AMENDMENT 14  Page 19, lines 4 and 6: Delete " who is employed" Insert " with experience" Page 19, line 8: Delete "who is" Insert "with experience as" Hearing no objection, Amendment 14 was adopted. SENATOR DUNCAN asked why spouse and dependent children coverage was needed if participation is mandatory by all state residents; the spouse and the dependent children are state residents. He inquired as to the intent of the $3000 in covered expenses; would that be per individual or per family. CHAIRMAN RIEGER said that it referred to individual policies, but there is a break for a premium when a spouse and a dependent child are part of a family unit. The premium could be 50 percent of the first individual's cost. He agreed that it could be implicitly treated that way without specific language. SENATOR MILLER posed the example of the military. In a military situation, a spouse may be or may not be a state resident. He explained that deleting that language could eliminate those individuals because they are not state residents. CHAIRMAN RIEGER agreed that this language would not be superfluous because of Senator Miller's point. SENATOR DUNCAN stated that participation is mandatory by all state residents. If a man, a resident of California, in the military comes to Alaska, marries an Alaskan resident. Under this language, her coverage would include her spouse. SENATOR ELLIS gave the example of children of divorce who live out of state with one of the parents while the other parent remains in Alaska; would the out of state children be covered. Number 425 CHAIRMAN RIEGER thought that using language such as "spouse and dependent children in the state" could be useful. He asked if there was a difference between "residing in Alaska" and "resident of Alaska." MIKE FORD noted that the term "residency" had not been defined which is a key point for triggering coverage. SENATOR SALO expressed the need to avoid leaving college students uninsured because they resided outside the state. SENATOR DUNCAN and SENATOR ELLIS both implied that should not be a problem since they would be legal residents of Alaska. SENATOR SALO felt that would still return to the question of the difference between "residing in Alaska" and "resident of Alaska." SENATOR MILLER felt that Chairman Rieger's suggestion was in the correct direction; we may not want to cover dependent children in another state while wanting to cover a dependent spouse physically in the state of Alaska. CHAIRMAN RIEGER asked if inserting ", who are residing in the state" after the word "children" would correct the problem. MIKE FORD suggested inserting the following language: "coverage includes spouse and dependent children whether or not they are residents, but who live in the state." Mr. Ford reiterated the problem of not knowing the definition of "residency." Mr. Ford asked if the committee wanted to exclude individuals living outside the state versus an individual who does not qualify for residency, but is located in the state. CHAIRMAN RIEGER clarified that they were referring to an individual who was neither a resident nor physically present in the state, but is a dependent child or spouse of an Alaskan resident. Those individuals should not be covered. He felt that Mr. Ford's suggested language would work. MIKE FORD stated that the decision of what living in the state means, six months or a year, would remain. SENATOR DUNCAN inquired as to why the children of divorce living with one parent in another state while the other parent resides in Alaska would not be covered under the Alaskan parents insurance. He was unsure of the impact of this as well as the impact of excluding children just because they do not reside in the state. MIKE FORD explained that much of this issue would be left to interpretation of the committee. They could create coverage that resolves this problem or exclude certain individuals who live in the state, but do not qualify under the terms the committee applies. He suggested changing the language if the committee wants to exclude certain individuals. Number 366 CHAIRMAN RIEGER expressed willingness to leave the issue to the advisory committee to address. He pointed out that SB 367 attempts to give the advisory committee some direction in designing a plan. He said that he would entertain more specific language. Chairman Rieger directed the committee back to Dr. Wilson's letter picking up with Dr. Wilson's concerns regarding preventive care. Hearing no discussion, they continued with Dr. Wilson's next concern. CHAIRMAN RIEGER interpreted line 30 as saying that expenses would be covered by a policy, but has a deductible on covered expenses so that the first $3,000 would not be paid. MIKE FORD said that once again, this would be left to the committee's interpretation unless specified. SENATOR DUNCAN did not want to leave that up to the committee. He suggested the following language: "after the first $3,000 of the expenses incurred for the covered benefits." There is a $3,000 deductible after which there is an 80 percent reimbursement. He recommended clearer language. MIKE FORD stated that if they wanted to specify, then language such as "coverage shall be designed to impose a deductible of $3,000 and to allow reimbursement" should be added to line 28 on page 19. SENATOR DUNCAN expressed the need to be sure that the $3,000 deductible does not apply to preventive care, prenatal care, and immunizations. He inquired as to the intent of the deductible; is the $3,000 a family or an individual deductible. CHAIRMAN RIEGER stated that he had not thought about that issue, but felt that it would be a family deductible. SENATOR DUNCAN said that a $3,000 individual deductible would be a catastrophic policy. That would be the only way to reach the $100 per month premium. The $3,000 deductible would be different for an individual versus a family. CHAIRMAN RIEGER suggested that it be considered a family deductible. SENATOR DUNCAN asked if the premium specified on page 20, lines 7-8 was in the range of possibility. He expressed concern that the advisory committee was being sent conflicting directions. He indicated that this would be headed for failure due to the provision not allowing a premium to exceed $100 per month. CHAIRMAN RIEGER noted that the state of Washington's basic plan had $110 per month premium. SENATOR DUNCAN clarified Washington state's plan. Senator Duncan felt that many of the issues of SB 367 such as the children's health program were good areas to cover; however, they are not covered by the basic plan. In Washington, the basic plan does not cover children's health programs and it has a $100 per month premium whereas here such coverage is mandated, but cannot exceed $100 per month premium. Senator Duncan thought that with a $100 premium limit, the cost of the coverage could be determined by simple multiplication. Number 252 KATY CAMPBELL, Actuary for the Division of Insurance, said that she was a life and financial actuary, but that she had been getting involved in the area of health. CHAIRMAN RIEGER posed the example of a family policy where the first individual covered is $100 a month and each additional individual covered under that policy would be $50. With a three member family, you would have a family premium of $200 a month. He asked if there is catastrophic health insurance coverage that could cover catastrophic and other things contemplated in SB 367 for $200 a month under assumptions of very broad based coverage. He inquired as to the size of an average family. A discussion ensued regarding the size of an average family which concluded that an average family would be four. CHAIRMAN RIEGER said that an average family premium would be $250 under the parameters. He inquired as to the type of policy $250 would purchase under assumptions of broad based coverage. KATY CAMPBELL stated that such a policy would have very high deductibles and high co-insurance. She said, "the current rates under Blue Cross's basic one is something closer to $400." In response to Chairman Rieger, she said, "that is not a catastrophic plan, but it has fairly high deductibles; they'll go up to $2,500 deductibles, some $5,000 deductibles and that has fairly low benefits in comparison to their other plans." SENATOR DUNCAN pointed out that Blue Cross's basic plan does not have the requirements of children's health care, immunizations, preventive care and prenatal care as does SB 367. KATY CAMPBELL agreed. SENATOR DUNCAN said that those areas, although commendable, were not cheap and he did not want to direct the committee to attempt something that would be impossible. CHAIRMAN RIEGER asked if Senator Duncan wanted to design an escape valve if the committee cannot achieve this. He felt that this was a realistic although, an aggressive target. KATY CAMPBELL stated, "that most people are going to make more than that, that $8,500 you'd have to be making to meet that $100." MIKE FORD said that the premium requirement language was only intent language which the committee could change. CHAIRMAN RIEGER did not believe that the committee was prevented from making recommendations, but they need some direction. Number 183 SENATOR DUNCAN expressed concern that the intent language was misleading because the committee would not be reviewing a comprehensive package. This approach would come back with a high cost figure. He said that SB 367 directs the committee to review the cost of a package with a $3,000 family deductible under present market conditions with the numerous inefficiencies of the current system while adding prenatal care, children's health care, preventive care, and immunizations into the package. Without a system designed to stop cost shifting and decrease administrative expenses of the insurance industry there will be high cost projections which will shock people; that illustrates the danger with an incremental approach. CHAIRMAN RIEGER directed the committee to page 19, lines 23 & 24, when asking Ms. Campbell if there would be a dramatic differential between health care plans subject to individual, voluntary selecting in or out of the plan versus mandatorily covered group policies. KATY CAMPBELL believed that there is a great deal of anti-selection among health care plans which would eliminate some of the cost shifting by covering everyone. She did not have specific numbers. CHAIRMAN RIEGER asked if mandatory participation by all state residents was assumed, would anti-selection be eliminated. KATY CAMPBELL agreed because if they are all required to participate then there would not be any selection decisions. SENATOR DUNCAN agreed that might eliminate some cost shifting, but he noted the other types of cost shifting. There is cost shifting due to uncompensated care, but there is also cost shifting from Medicare which shifts costs to private payers. He expressed the need to solve that problem in order to include all payers in the system. He did not believe that provision would eliminate cost shifting. This does not reduce cost shifting because there will still be a level of uncompensated care; people forced to use the $3,000 deductible will get the service and not be able to pay for it. He reiterated his belief that costs will increase without a comprehensive package. DAVID WALSH informed the committee that a few years ago the biggest area of underpayment or uncompensated care was Medicare and Medicaid underpayment. Mr. Walsh said, "If I remember the Providence spreadsheet right, they had $129 million in gross sales; of that they collected $80 or $90. In the spread, whatever the number was, there was about $3 million that they booked as uncompensated care. There was about $5 million they booked as charity care and all the rest was Medicare, Medicaid underpayment." He recounted a question of one of the members, "What would happen to your claim about uncompensated care if Medicare and Medicaid paid at 100 percent?" There would not be much of a problem. He felt that Senator Duncan was correct about the problem of cost shifting, but he did not have a solution. Number 047 CHAIRMAN RIEGER inquired as to what a $250 family policy would buy as catastrophic or what a $375 basic plan would buy. DAVID WALSH said, "I would think that at $375, you could probably get the deductible fairly low." Mr. Walsh noted that it was still a guess. He said, "My guess is that you would be looking at a substantial deductible, but maybe not $3,000." He stated that they could request that the companies give them a better idea. He said, "I think you would be looking at $1,000 at $375 and a little more than that at $250." CHAIRMAN RIEGER noted that adding $50 would place the plan at the level of the state plan. He did not understand the dramatic difference between a $375 and a $425 deductible. SENATOR DUNCAN indicated that perhaps Mr. Walsh did not consider that this is more than a $3,000 deductible, some benefits are not applied to that deductible. He expressed concern with the committee coming back with such an astronomical figure. TAPE 94-27, SIDE A Number 012 SENATOR DUNCAN asked if language needed to be changed in order to assure that the $3,000 deductible was per family. MIKE FORD offered some language addressing this issue. AMENDMENT 15  Page 19, line 28, after "designed": Insert " to impose a family deductible of $3,000 for all covered health care services other than prematernal care, preventive care and immunizations and" CHAIRMAN RIEGER moved to adopt Amendment 15. Hearing no objection, Amendment 15 was adopted. He then resumed reviewing Dr. Wilson's list of suggestions and concerns. SENATOR DUNCAN felt that Dr. Wilson's point referring to page 20, lines 4-5 was a valid concern. Senator Duncan agreed with Dr. Wilson that large families would face expensive rates. He asked if a sliding scale had been considered. CHAIRMAN RIEGER preferred to keep that section as it was for now. Once costs are in front of the committee, then there could be a policy call regarding the break point for large families. He reminded everyone of the 14 percent of income escape valve. The committee continued reviewing Dr. Wilson's letter. CHAIRMAN RIEGER offered Dr. Wilson's suggestion regarding page 21, lines 25-31 as Amendment 16. AMENDMENT 16  Page 21: Delete "lines 26 and 27" Insert "two physicians licensed under AS 08.64;" Hearing no objections, Amendment 16 was adopted. Number 118 SENATOR DUNCAN inquired as to the meaning of medical practice parameters referred to under section 17; is this a Tort Reform committee. CHAIRMAN RIEGER stated that Maine and other states were reviewing practice parameters to spell them out in order to define acceptable practice as an alternative to the Courts defining them through malpractice cases. SENATOR DUNCAN asked why there was not a consumer present on the committee, someone from the trial attorneys; why are there only providers. CHAIRMAN RIEGER explained that the reason the Medical Practice Advisory Committee was drafted as such was due to the technical nature of the committee. SENATOR DUNCAN expressed concern that this committee may give policy recommendations on such areas as caps on non-economic damages and other issues. This committee does not seem to be that narrowly charged, consumers have interests in practice parameters. He stated that using practice parameters to help eliminate medical malpractice claims would seem to necessitate a trial attorney position. He did not understand the purposes for having only providers on the committee. Number 174 DR. RODMAN WILSON said that Amendment 5, regarding the expert advisor, seems to have eliminated the expert advisor for arbitration until an appeal occurs. CHAIRMAN RIEGER explained that Amendment 5 was intended to give the arbitrator a chance before moving forward to Court action in which an expert advisor seems to be the first step towards that Court action. DR. RODMAN WILSON thought that a medical malpractice always needed expert testimony. He said that the task force and CHIPRA agreed that an arbitrator needed an expert advisor as soon as the case was filed. The expert reviews the case and offers a written opinion which the arbitrator can use. He indicated that when the expert advisor reviews and writes his opinion, it is hard work and is worth $500. Going to court is not as difficult. In the past, the three person expert panel has only been entitled to travel expenses and per diem. Number 249 CHAIRMAN RIEGER offered to remove Amendment 5. MIKE FORD explained that if a mandatory arbitration provision is created, then the arbitrator can confer with medical specialists. Amendment 5 means that the core process would not begin until the termination of the arbitration process. He noted that if the arbitration cannot settle it, then the core process begins which would trigger the medical expert. That would be a policy call by the committee. CHAIRMAN RIEGER moved to rescind Amendment 5. Hearing no objection, Amendment 5 was rescinded. CHAIRMAN RIEGER continued with Dr. Wilson's other concern regarding the difference between the expert witness fee and the actual entitlement during research of the case. He moved to rescind Amendment 12. Hearing no objection, Amendment 12 was rescinded. Number 289 CHAIRMAN RIEGER moved to adopt a revised Amendment 12 which would insert "a stipend of $500 and" on page 8, line 6 after "to." MIKE FORD suggested using the word "fee" instead of "stipend." CHAIRMAN RIEGER agreed. AMENDMENT 12 (REVISED)  Page 8, line 6 after "to": Insert "a fee of $500 and" Hearing no objections, Amendment 12 (Revised) was adopted. DR. RODMAN WILSON asked if they added a public member to the Medical Advisory Committee. CHAIRMAN RIEGER said no. DR. RODMAN WILSON preferred to have a public member and a lawyer on the committee due to the legal duties required. CHAIRMAN RIEGER pointed out that the Medical Advisory Committee does have the ability to contract for expert advise, but that could be considered. SENATOR DUNCAN moved Amendment 17. SENATOR ELLIS offered his amendment, Amendment 18. CHAIRMAN RIEGER requested that Mr. Ford draft a CS including all the amendments to date. Amendments 17 and 18 were held until Thursday. The committee recessed at 3:35 p.m. and will reconvene after the joint session on Thursday.