Legislature(2003 - 2004)

02/17/2004 09:08 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CS FOR HOUSE BILL NO. 374(FIN) am                                                                                          
     "An Act  establishing the senior  care program and relating  to                                                            
     that program;  creating a new fund for the provision  of senior                                                            
     services;  relating to  aid to senior  citizens; and  providing                                                            
     for an effective date."                                                                                                    
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Wilken  noted  that  this  bill  is  similar  to  SB  259-                                                            
SENIORCARE,  which the  Committee  had previously  heard. He  stated                                                            
that  the bill  would establish  a senior  care  program within  the                                                            
Department  of Health  and Social  Services to  provide either  cash                                                            
assistance  or a drug  prescription  benefit to  Alaskans age  65 or                                                            
older. He  specified that  CS HB 374(FIN)am,  Version 23-GH2123\W.A                                                             
and its accompanying fiscal notes are before the Committee.                                                                     
JOEL GILBERTSON,  Commissioner, the Department of  Health and Social                                                            
Services  reviewed that this  legislation  was proposed by  Governor                                                            
Frank  Murkowski  in December  2003  as a  method through  which  to                                                            
provide  a prescription  drug  subsidy or  cash assistance  for  the                                                            
purchase  of prescription  drugs to  the State's  seniors until  the                                                            
federal prescription  Medicare drug  program becomes operational  in                                                            
January,  2006.  He specified  that  qualifying  recipients  of  the                                                            
legislation would  be senior citizens who are living  at 135 percent                                                            
or less  of the  federal  poverty level  (FPL). He  noted that  this                                                            
level would  equate to a single individual  living at approximately                                                             
$15,000 a year or a couple  living at $20,500 a year. He shared that                                                            
these  individuals  are  currently  eligible  for  the Department's                                                             
Senior Assistance  Program that was established after  the Longevity                                                            
Bonus Program was eliminated  in the fall of FY 04. This program, he                                                            
commented,   provides  $120  per   month  cash  assistance   to  its                                                            
recipients.  Furthermore,  he stressed  that the  recipients of  the                                                            
Senior  Assistance   Program  could,  upon  the  enactment   of  the                                                            
SeniorCare   program,   elect  to   continue  receiving   the   cash                                                            
assistance,  which  would  amount to  $1,440  annually,  or elect  a                                                            
prescription  drug subsidy, which  would equate to $1,600  annually.                                                            
Commissioner  Gilbertson continued  that the  seniors who elect  the                                                            
$1,600 prescription  drug subsidy would additionally  receive a $600                                                            
per month federal Medicare  subsidy and a prescription drug discount                                                            
card which  would provide an additional  ten to twenty-five  percent                                                            
savings on  a prescription purchase.  He stated therefore,  that the                                                            
average senior  would receive approximately  $2,450 in prescription                                                             
drug assistance, if living at or below the FPL.                                                                                 
Commissioner Gilbertson  continued that seniors living at 135 to 150                                                            
percent  of the  FPL  would  qualify for  a  $1,000 per  year  State                                                            
prescription  drug subsidy. He noted  that a single individual  or a                                                            
couple in this category  would be living at approximately $17,000 or                                                            
$23,000,   respectfully.   Furthermore,   he   stated   that   these                                                            
individuals would also  receive the prescription drug discount card.                                                            
He  reiterated  that  this  legislation  would  terminate  upon  the                                                            
enactment of the federal Medicare drug prescription program.                                                                    
Commissioner   Gilbertson  communicated   that  during  the   bill's                                                            
progress  through  the House  of  Representatives,  the Legislative                                                             
Legal  and  Research  Services,  Legislative   Affairs  Agency  made                                                            
"technical and  stylist changes," that did not substantially  change                                                            
the bill.                                                                                                                       
Co-Chair Wilken noted that  the Members have been provided a summary                                                            
of the changes [copy on file] being referenced.                                                                                 
Commissioner   Gilbertson  continued  that  the  House   bill  would                                                            
establish  a SeniorCare  Fund, which  would be  a front-funded  sub-                                                            
account in  the general fund to fund  the SeniorCare Program  during                                                            
its projected  three fiscal  year program.  He noted that were  this                                                            
legislation adopted "in  short order," it could begin in April, 2004                                                            
and would, therefore,  incur expenses in the last  quarter of FY 04,                                                            
the full year  of FY 05, and half of FY 06. He noted  that any funds                                                            
remaining in the  SeniorCare Fund would lapse into  the general fund                                                            
upon its termination.                                                                                                           
Commissioner  Gilbertson  noted  that  the House  also  amended  the                                                            
manner through  which a prescriber could prescribe  brand name drugs                                                            
when a generic  brand is available,  in that, he explained,  in this                                                            
situation, the  prescriber must denote on the prescription  that the                                                            
name brand  drug is  "medically  necessary." He  specified that  the                                                            
prescriber  would  not  be  required  to state  the  reason  as  was                                                            
required in the original bill.                                                                                                  
Commissioner Gilbertson  noted that language in the  bill that would                                                            
have denied  the prescription drug  benefit to individuals  residing                                                            
in public facilities  or long-term care facilities  was also amended                                                            
in the  House. He  communicated that  the reason  this language  was                                                            
originally  included was  the understanding  that these individuals                                                             
received prescription drug  coverage through the rate that the State                                                            
paid the facility or that  a process already existed to provide this                                                            
benefit  to them.  He  also noted  that  to provide  the  SeniorCare                                                            
benefit  to  a senior  in  the Pioneer's  Home,  might,  in  affect,                                                            
increase their  financial resources  and result in their  rent being                                                            
increased. He  stated that the House change would  allow individuals                                                            
residing  in  public facilities  or  long-term  care  facilities  to                                                            
continue to receive the benefit for up to three months.                                                                         
Senator Bunde  ascertained  therefore, that  a senior residing  in a                                                            
Pioneer's Home  could, as a consequence,  have their rent  increased                                                            
for three months.                                                                                                               
Commissioner  Gilbertson affirmed  that the rent could be  affected.                                                            
However, he  noted that the frequency  of a rent payment  review and                                                            
whether  the individual  had opted  to receive  the cash  assistance                                                            
option of the SeniorCare program would be determining factors.                                                                  
Senator  Bunde  worried  that   this  might  present  a  "Catch  22"                                                            
situation wherein  the recipient would  receive SeniorCare  benefits                                                            
and at the same time is required to pay more rent as a result.                                                                  
Commissioner Gilbertson  expressed that "there would be no net harm"                                                            
to the recipient  as the income would  offset the rent increase.  He                                                            
stated, however,  that this situation would increase  administrative                                                            
expenses related to the bill.                                                                                                   
Senator  Bunde surmised,  therefore,  that  while two  Pioneer  Home                                                            
residents  might  be receiving  the  SeniorCare  cash  benefit,  one                                                            
resident,  as a result of  a rent review,  might pay more rent  than                                                            
the other who had not undergone a rent review.                                                                                  
Commissioner  Gilbertson responded  that "theoretically"  that might                                                            
Co-Chair Green  asked whether changing the word "may"  to "shall" as                                                            
was done  in Section 1, subsection  (a) on  line 8, page 1  would be                                                            
characterized as a "stylist change" or a substantive change.                                                                    
Commissioner  Gilbertson responded  that the  referenced change  was                                                            
the result  of an [unspecified]  amendment  that was adopted  in the                                                            
House Finance Committee.                                                                                                        
Co-Chair Green  inquired as to whether  the change is acceptable  to                                                            
the Department.                                                                                                                 
Commissioner Gilbertson responded in the affirmative.                                                                           
Senator   Bunde  asked   for  further  information   regarding   the                                                            
SeniorCare  Fund; specifically,  whether  the unspent  money in  the                                                            
Fund would lapse back to  the general funds at the end of the fiscal                                                            
Commissioner Gilbertson  responded that while the SeniorCare Fund is                                                            
expected  to lapse  in FY  06; the  language  is not  specific to  a                                                            
termination  date because  it  is dependent  upon  when the  federal                                                            
Medicare drug prescription  program is implemented. He asserted that                                                            
this  is a  "complex program"  with  an indeterminable  termination                                                             
DAVID  TEAL,   Legislative  Fiscal   Analyst,  Legislative   Finance                                                            
Division,  noted  that rather  than  being required  to appropriate                                                             
program funds  each fiscal year, the  House Finance Committee  opted                                                            
to establish a  single front-loaded SeniorCare Fund  that would fund                                                            
the program's  anticipated expenses  in FY 04, FY 05, and  FY 06. He                                                            
confirmed  that upon the  program's termination,  the funding  would                                                            
Commissioner Gilbertson  noted that the bill would  allow seniors to                                                            
retain  their prescription  drug  benefits  provided  they were  not                                                            
absent  from  the  State  for more  than  30  days  for non-medical                                                             
purposes such as vacations or business trips.                                                                                   
Commissioner    Gilbertson   also   noted   that    the   House   of                                                            
Representatives'  version  of  the bill  changed  a portion  of  the                                                            
original bill to align  its eligibility requirements to those of the                                                            
Permanent  Fund Dividend  program,  which allows  family members  to                                                            
remain eligible  when accompanying relatives receiving  out-of-State                                                            
medical care.                                                                                                                   
MARIE  DARLIN, Coordinator,  AARP  Capital City  Task Force,  voiced                                                            
support  for all  of the  changes  that have  been  proposed to  the                                                            
SeniorCare  program.  She  noted that  AARP  has  submitted  written                                                            
testimony [copy on file] in support of the program.                                                                             
Amendment  #1: This amendment  replaces language  on page one,  line                                                            
five of the  bill that reads "Section  1. The uncodified  law of the                                                            
State of Alaska  is amended by adding  a new section to read:"  with                                                            
new language that reads as follows.                                                                                             
      Section 1. AS 47.65 is amended by adding a new section.                                                                   
In addition, the  Amendment deletes "SENIORCARE PROGRAM"  on page 1,                                                            
line 7 and replaces it with the following language.                                                                             
          Article 4. Cash and Drug Benefit for Older Alaskans.                                                                  
     Sec. 47.65.300. Senior care program.                                                                                       
The amendment  also deletes all material on page five,  beginning on                                                            
line 26 through  page six, line 3.  This language reads as  follows.                                                            
       Sec.  4.  (a) This  Act  is repealed  on  the date  that  the                                                            
     Medicare  Part D benefit  under P.L.  101-173 for prescription                                                             
     drugs for Medicare  recipients is operational for recipients in                                                            
     this state,  as communicated to the commissioner  of health and                                                            
     social services  by the United States Department  of Health and                                                            
     Social Services.                                                                                                           
          (b) The commissioner of health and social services shall                                                              
     notify the revisor  of statutes of the date described in (a) of                                                            
     this section.                                                                                                              
          (c) Money in the fund established in sec. 2 of this Act                                                               
     reverts  to  the unreserved  general  fund  on June  30 in  the                                                            
     fiscal  year in which  this Act is repealed  under (a)  of this                                                            
Senator Olson moved to adopt Amendment #1.                                                                                      
Co-Chair Green objected.                                                                                                        
Senator Olson explained  that this amendment would make this program                                                            
permanent  in statutes rather  than being  temporary. He  referenced                                                            
Commissioner  Gilbertson's comments  regarding the unpredictability                                                             
of when  the federal  program would  be implemented.  He also  noted                                                            
that the State  has no control regarding  changes that might  occur,                                                            
overtime, in the complex  federal program. Therefore, he stated that                                                            
in order to assure  that the State's seniors would  be provided for;                                                            
this program should  be permanent in State statute.  In addition, he                                                            
noted that were the federal  program to differ from the State's cash                                                            
supplement  program, seniors who might  have become dependent  on it                                                            
to supplement their needs would be negatively impacted.                                                                         
Commissioner  Gilbertson   summarized  that  this  amendment   would                                                            
eliminate  the legislation's  termination date.  He reiterated  that                                                            
the legislation was introduced  to serve as "a bridge program" until                                                            
such time as the  federal senior Medicare prescription  drug benefit                                                            
program would  become operational  "in early  2006." He agreed  with                                                            
Senator  Olson's  contention  "that  there are  always  delays  when                                                            
programs  begin;"  however,  he contended  that  the bill  has  been                                                            
drafted  in such  a manner  as to  continue the  SeniorCare  program                                                            
"until the full federal program is available to seniors."                                                                       
Commissioner Gilbertson  informed the Committee that  seniors living                                                            
below 135  percent of FPL  as well as those  living between  135 and                                                            
150 percent of  FPL would "receive preferential treatment  under the                                                            
Medicare  prescription  drug benefit."  He  assured  that, once  the                                                            
federal Medicare  prescription drug benefit program  begins, seniors                                                            
living at below 135 percent  of FPL "would have virtually no out-of-                                                            
pocket  costs,  including deductible  for  prescription  drugs."  He                                                            
continued that  seniors living between  135 and 150 percent  of FPL,                                                            
"would receive  drastically  lower deductibles,  additional  premium                                                            
support,  and  a reduced  co-pay  on prescription  drugs"  than  the                                                            
general federal  Medicare population.  He declared that "a  seamless                                                            
transition"  would occur  and that  were the  SeniorCare program  to                                                            
continue,  some  of  the  federal  and  State   services  "would  be                                                            
Co-Chair  Wilken surmised  therefore, "that  while the amendment  is                                                            
well-intentioned," it is unnecessary.                                                                                           
Commissioner  Gilbertson  concurred.  He replied,  "that  it is  the                                                            
position of the Administration  that it's not necessary" because the                                                            
Medicare  drug benefit would  be available  "to essentially  provide                                                            
every service  that  is going to  be delivered"  via the  SeniorCare                                                            
program.  He stressed that  the SeniorCare  program "was  originally                                                            
designed to mirror the  federal drug program benefits." Furthermore,                                                            
he noted that  safety protocols are included in this  legislation to                                                            
ensure that  the SeniorCare  program would  continue until  the full                                                            
federal Medicare drug benefit program is operational.                                                                           
Senator Olson declared  that rather than debating the particulars of                                                            
the  program,  the  emphasis  should be  on  providing  the  State's                                                            
seniors  with  "a  lifeline"  to assure  them  that  they  would  be                                                            
provided  for. He  opined that  the Legislature  should establish  a                                                            
State program  tailored to the State's situation instead  of relying                                                            
on a federal program  developed by individuals who  might have never                                                            
visited the State  and who might not have a grasp  on the complexity                                                            
of the  State's needs. He  urged the Committee  to keep the  program                                                            
simple and  permanent and tailored  to address the State's  seniors'                                                            
Senator Bunde  declared that regardless of the efforts  or intent of                                                            
any  Legislature,  unless  specific  language  is  included  in  the                                                            
State's  Constitution, "nothing  binds" a  future Legislature"  from                                                            
changing  a program. Therefore,  he contended,  were this  amendment                                                            
adopted,  there  is no  guarantee  that  it would  not  be  changed.                                                            
Continuing,  he  shared  that, were  "the  automatic  repealer"  not                                                            
included  in this legislation,  he could  envision "the battle  that                                                            
would  ensue  in  2006  "about  another  entitlement  that  we  have                                                            
created"  that   people  have  become   to  depend  upon   that  the                                                            
Legislature "could  not take back." He concluded therefore,  that he                                                            
could not support the amendment.                                                                                                
Senator  Hoffman  countered  that  no  battle  had  erupted  in  the                                                            
Legislature  regarding the funding  of the Longevity Bonus  Program,                                                            
which was eventually terminated by Governor Murkowski's veto.                                                                   
Senator  Hoffman noted  that  the Department  of  Health and  Social                                                            
Services'  fiscal  note  #9  analysis depicts  that  90  percent  of                                                            
eligible  program   recipients  would  elect  the  SeniorCare   cash                                                            
program. He  wondered whether the  cash program would be  one of the                                                            
duplicated  services that the Commissioner  had alluded to.  To that                                                            
point,  he  inquired  as to  whether  a  similar  prescription  cash                                                            
prescription   program  would  be  available  through   the  federal                                                            
prescription drug program.                                                                                                      
Commissioner  Gilbertson responded  that it  is "a high assumption"                                                             
that most  seniors would  elect the cash payment  as, he noted,  the                                                            
majority  of  the  individuals  currently  enrolled  in  the  Senior                                                            
Assistance  Program receive  money,  because it is  the only  option                                                            
provided in that  program. He stated therefore that  the majority of                                                            
those individuals  would choose "no  change." He qualified  that the                                                            
cash component of the SeniorCare  bill was included "to continue the                                                            
benefit as  currently constructed."  He acknowledged that  while the                                                            
receipt of  cash is "more  flexible," the  Department believes  that                                                            
"the majority  of individuals  in these income  ranges use  the cash                                                            
assistance" to purchase  prescription drugs because that expense "is                                                            
very high." He  pointed out that the Senior Cash Assistance  program                                                            
is not the  only cash assistance program  offered by the  Department                                                            
as another  program, the  Adult Public Assistance"  program  is also                                                            
available.  He  stressed  that a  total  of $220  million  worth  of                                                            
programs are available  directly to seniors through  the Department.                                                            
He stated  that  the Adult  Public Assistance  (APA)  program is  an                                                            
entitlement  program  that is  included in  this  $220 million,  and                                                            
furthermore, he  contended, while a number of seniors  might qualify                                                            
for the APA, they have not applied.                                                                                             
Senator Hoffman reiterated  that the question is whether there would                                                            
be a  duplicative cash  benefits program  at the  federal level.  He                                                            
stated that this is the issue at "the heart of the amendment."                                                                  
Commissioner  Gilbertson   responded  that  through  the  State  APA                                                            
program, seniors would continue to receive cash assistance.                                                                     
Senator Hoffman interjected  that this program already exists at the                                                            
State  level,  and  he  continued,  the  question  pertains  to  the                                                            
upcoming federal Medicare prescription drug assistance program.                                                                 
Commissioner  Gilbertson responded  that the federal program,  "once                                                            
instituted,   will  be   health  care  insurance."   Therefore,   he                                                            
continued, the degree to  which individuals are paying out of pocket                                                            
for  prescription drugs"  would  be determined  by  the health  care                                                            
insurance system. He declared  that the recipients would not receive                                                            
a direct cash payment.                                                                                                          
Senator Hoffman surmised therefore that the answer is no.                                                                       
Commissioner Gilbertson  affirmed that there would be no direct cash                                                            
payment by the federal government.                                                                                              
Senator Olson informed  the Committee that the proposed amendment is                                                            
supported by the Pioneers  of Alaska. He asked that AARP be provided                                                            
an opportunity to express their position on the amendment.                                                                      
Ms. Darlin  expressed that  while AARP  understands Senator  Hoffman                                                            
and Senator  Olson's concern regarding  the program, and  while AARP                                                            
does not object to the  amendment, it has no "definite stand" on the                                                            
amendment,  as,  she reiterated,   AARP's primary  objective  is  to                                                            
assure  that the  SeniorCare prescription  program  be adopted  this                                                            
Legislative  Session. She  noted however,  that when the  SeniorCare                                                            
cash assistance  program  terminates, seniors  could participate  in                                                            
the State's APA cash assistance program.                                                                                        
Senator Olson  asked for clarification  that AARP's position  is the                                                            
desire "to get  the bill through one way or another,"  regardless of                                                            
whether  the amendment  is adopted  or not. He  contended that  this                                                            
desire  rather than  AARP  being opposed  to  the amendment  is  the                                                            
primary objective.                                                                                                              
Ms. Darlin concurred.                                                                                                           
Senator  Bunde  stated that  were  the cash  assistance  program  to                                                            
continue, some seniors  might regard it as a welfare program, and in                                                            
that case, he contended, some seniors would refuse to apply.                                                                    
A roll call was taken on the motion.                                                                                            
IN FAVOR: Senator Hoffman and Senator Olson                                                                                     
OPPOSED: Senator Bunde,  Senator Dyson, Senator B. Stevens, Co-Chair                                                            
Green, and Co-Chair Wilken                                                                                                      
The motion FAILED (2-5)                                                                                                         
Amendment #1 FAILED to be adopted.                                                                                              
Co-Chair  Green  moved  to  report  the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
There  being no  objection,  CS HB  374(FIN)(am)  was REPORTED  from                                                            
Committee with  five fiscal notes from the Department  of Health and                                                            
Social Services:  zero fiscal note #10; $14,649,600  fiscal note #9;                                                            
$7,100 fiscal  note #8; $184,300 fiscal note #7; and  $61,500 fiscal                                                            
note #6.                                                                                                                        
AT EASE: 9:46 AM / 9:46 AM                                                                                                      

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