Legislature(2017 - 2018)ADAMS ROOM 519
04/09/2018 01:30 PM House FINANCE
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SENATE BILL NO. 165 "An Act relating to the Alaska comprehensive health insurance fund; and providing for an effective date." 4:02:03 PM Co-Chair Foster invited Senator MacKinnon and her staff to the table. SENATOR ANNA MCKINNON, SPONSOR, read the bill sponsor statement: In 2015, the individual health care market in Alaska was in a precarious state. There were only two insurers with current enrollees in individual healthcare plans in Alaska, and each insurer was experiencing significant losses. Average premium rate increases in 2015 were 38.7 percent for one insurer and 39.9 percent for the other. In 2016, one of Alaska's only two remaining insurers gave notice that they would be withdrawing from the Alaska individual market effective January 2017. Senator MacKinnon noted that at the time the state's insurance division came up with a suggestion - a way to address folks that were driving up the costs of the insurance market in Alaska. They were looking at those high utilizers and trying to do something different. She continued reading the sponsor statement: The 29th Legislature passed HB 374 in 2016, which created the Alaska Reinsurance Program, and allowed the Division of Insurance to apply for a federal Section 1332 state innovation waiver under the Affordable Care Act (ACA). That legislation included a sunset date of June 30, 2018 to ensure that the diversion of insurance premium taxes from the general fund was not relied upon as a long-term funding mechanism. In July 2017, the waiver was approved by both the Department of Health and Social Services and the Department of Treasury based on the application submitted by the division, which requested pass- through funding for the Alaska Reinsurance Program. The federal award for this waiver was approximately $322 million over five years. The award is to be used, in conjunction with the Alaska Reinsurance Program, to continue to stabilize the individual healthcare market in Alaska. This legislation extends the sunset provision on the Alaska comprehensive health insurance fund by six years, from June 30, 2018 to June 30, 2024 to allow for the continuation of the Alaska Reinsurance Program and receipt of the federal funding. Senator MacKinnon reported that the federal money and the approval was contingent on the passage of SB 165. The federal funds were guaranteed for 5 years. However, the bill requested a 6-year extension. It would provide time for the state to true up all claims that might remain in the system should the state not have the 1332 waiver extended and because the center for Medicaid and Medicare Services had indicated that they might extend the 1332 waiver for another year. Other states were following Alaska's lead in providing cost savings to the federal government. The bill would reroute or take the diverted insurance premium taxes that were currently being deposited in the Alaska Comprehensive Health Insurance Fund and place them back where they were into the general fund. It would create $63 million of general fund revenue in the current year. She reminded the body that the program had already brought to the state, through the supplemental process, a return of $205 million from Premera Blue Cross - one of the insurers experiencing significant losses in the Alaska market. The bill also removes the requirement that funds collected under AS 21.09.210 (tax on insurers), AS 21.33.055 (unauthorized insurance premium tax), AS 21.34.180 (surplus lines tax) and AS 21.66.110 (annual tax on title insurance premiums) are to be deposited into the Alaska comprehensive health insurance fund within the general fund. Passage of HB374 by the 29th Legislature has resulted in stabilization of the individual insurance market. The Section 1332 state innovation waiver provides funding for the Alaska Reinsurance Program, through the Alaska comprehensive health insurance fund. Now this legislation is necessary to ensure the continued effectiveness of the Alaska Reinsurance Program, meet the intent of the waiver, and receive the federal funding. Co-Chair MacKinnon was open to questions. Representative Guttenberg asked if the bill simply kept it extending with no other changes. Co-Chair MacKinnon responded that it also diverted the insurance premiums from the insurance fund to the general fund. Co-Chair Foster indicated that the director of the Division of insurance, Ms. Wing-Heier, was available for questions. 4:07:14 PM Co-Chair Foster OPENED and CLOSED public testimony. Representative Guttenberg had been at a legislative conference and had received positive feedback from legislators of other states about Alaska's program. Co-Chair Foster asked Co-Chair Seaton to read the fiscal notes into the record. Co-Chair Seaton reviewed the first fiscal note from DOA which had an appropriation of Centralized Administrative Services and an allocation of Finance. The OMB component number was 59. The second fiscal note was from the Department of Commerce, Community and Economic Development (DCCED). It had an appropriation and allocation of Insurance Operations. The component number was 354. The note reflected no expenditures and a change in other revenues of $61.537 million in FY 19. Revenues were expected to increase to $75.859 million in FY 22. Representative Wilson asked if there was anything tied to the money that would be going into the general fund. She wondered if the money could be used in the budget as needed. Co-Chair MacKinnon replied that it went to the general fund and could be allocated at the will of the legislature. MS. LORI WING-HEIER, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, offered thanks for the waiver. There had been significant support of the bill from both bodies. There had been significant thought given to it because the state did not want it to become a permanent reinsurance program unless the waiver could be obtained. She was happy the waiver went through and thought it was showing the benefits that had been discussed in 2016. Co-Chair Seaton MOVED to report SB 165 out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. SB 165 was REPORTED out of committee with a "do pass" recommendation and with two previously published fiscal notes, one zero fiscal note: FN1 (ADM); and one fiscal impact note: FN3 (CED). 4:11:00 PM AT EASE 4:11:46 PM RECONVENED Co-Chair Foster indicated the committee would be hearing HB 306. It was the committee's first hearing on the bill. He invited DOA's representatives to the table.