Legislature(2015 - 2016)BILL RAY CENTER 230

06/01/2016 09:00 AM Senate FINANCE

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09:02:01 AM Start
09:03:13 AM HB374
10:53:10 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Bills Previously Heard/Scheduled
CS FOR HOUSE BILL NO. 374(FIN)                                                                                                
     "An  Act  relating  to  coverage  under  a  state  plan                                                                    
     provided   by   the  Comprehensive   Health   Insurance                                                                    
     Association;  establishing   the  Alaska  comprehensive                                                                    
     health  insurance  fund;   relating  to  a  reinsurance                                                                    
     program; relating  to the definition of  'residents who                                                                    
     are  high  risks'; relating  to  an  application for  a                                                                    
     waiver for state innovation  for health care insurance;                                                                    
     and providing for an effective date."                                                                                      
9:03:13 AM                                                                                                                    
FRED  PARADY, DEPUTY  COMMISSIONER, DEPARTMENT  OF COMMERCE,                                                                    
COMMUNITY, AND ECONOMIC DEVELOPMENT, introduced himself.                                                                        
9:03:20 AM                                                                                                                    
LORI   WING-HEIER,   DIRECTOR,    DIVISION   OF   INSURANCE,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
introduced herself.                                                                                                             
Mr. Parady  explained that the bill  would initially address                                                                    
a complex set of issues. The  bill would make changes to the                                                                    
Alaska  Insurance   Code  for   assessments  made   under  a                                                                    
reinsurance program  established to reinsure  "residents who                                                                    
are high risks." As the  code is currently written, a member                                                                    
of  the reinsurance  program may  offset 50  percent of  the                                                                    
amount of the assessment  made under the reinsurance program                                                                    
(and  other state  health insurance  programs) as  a premium                                                                    
tax credit.  The bill would  remove the assessments  made in                                                                    
relation  to  the high  risk  reinsurance  program from  the                                                                    
offset provision.  The bill also would  amend the definition                                                                    
of  "residents  who  are high  risks."  These  changes  were                                                                    
intended to provide a mechanism  to help insurers spread the                                                                    
risk of high-cost claims in  the individual health insurance                                                                    
market. The  bill also would authorize  legislation to allow                                                                    
the state  to seek  a waiver  of certain  requirements under                                                                    
the Affordable Care Act (ACA).                                                                                                  
Co-Chair  MacKinnon  surmised  that  the  state  was  losing                                                                    
insurance  carriers. She  felt that  the two  issues in  the                                                                    
bill  were the  losing  of  carriers and  the  high cost  of                                                                    
insurance.  Mr.  Parady  replied   that  the  assertion  was                                                                    
generally  correct.  He  announced that  there  were  23,000                                                                    
Alaskans in  the individual insurance market,  who would not                                                                    
have  access  to insurance  if  the  one provider  left  the                                                                    
state. The  bill was an  attempt to sustain the  system, and                                                                    
get through the crisis in the near term.                                                                                        
Senator Bishop  wondered whether  Congress was  intending to                                                                    
fix the issue of the risk corridor.                                                                                             
Ms.  Wing-Heier  replied  that  the  congress  had  not  yet                                                                    
addressed  the   risk  corridor.  She  stated   the  state's                                                                    
congressional delegation was aware of the risk corridor.                                                                        
Co-Chair  MacKinnon surmised  that, under  ACA, there  was a                                                                    
subsidy  from  the federal  government  as  an incentive  to                                                                    
cover Alaskans  that may or  may not have been  insured. She                                                                    
felt that the federal government  was stepping back from the                                                                    
subsidy.  She wanted  to  know  why this  was  an issue  for                                                                    
Alaska.   Ms.   Wing-Heier   responded  that   the   federal                                                                    
government  had three  subsidies: reinsurance  program, risk                                                                    
corridor, and risk adjustment. She  stated that two of those                                                                    
programs  would end  in  2016. The  programs  were meant  to                                                                    
stabilize the market.                                                                                                           
9:09:35 AM                                                                                                                    
Vice-Chair  Micciche  wondered   how  the  individuals  were                                                                    
covered prior to  ACA.  Ms. Wing-Heier replied  that many of                                                                    
the individuals  were in  ACHIA in the  high risk  pool. She                                                                    
stated that  some were in  ACHIA, but the  majority migrated                                                                    
to ACA in 2014. She  stated that others had enrolled because                                                                    
of the  guaranteed enrollment  provision. She  remarked that                                                                    
many could not afford the  premium in ACHIA. She stated that                                                                    
the 495 people were driving the market.                                                                                         
Vice-Chair Micciche  wondered how the costs  were shifted to                                                                    
the  state.  Ms. Wing-Heier  replied  that  the $55  million                                                                    
looked at the reinsurance fee, and  the tax that was paid to                                                                    
the  federal government.  She stated  that  the $55  million                                                                    
looked to  stabilize rates  between 15  and 18  percent. She                                                                    
stated that a healthy rate increase was expected.                                                                               
Mr. Parady  furthered that ACHIA  had a  narrower definition                                                                    
of high  cost claims  of the covered  areas. He  stated that                                                                    
there were  uninsurable people under the  former regime, who                                                                    
were now under guaranteed coverage.                                                                                             
Senator Hoffman  queried a history of  ACHIA. Ms. Wing-Heier                                                                    
replied that  ACHIA was formed  in the 1980s,  because there                                                                    
were  many sick  Alaskans  who could  not receive  insurance                                                                    
because the market would not  accept them. In the 1980s, the                                                                    
market was allowed to underwrite.                                                                                               
Senator Hoffman queried the experience  of other states. Ms.                                                                    
Wing-Heier replied  that the high-risk pools  were expiring,                                                                    
because of the ACA.                                                                                                             
9:14:34 AM                                                                                                                    
Senator  Hoffman  wondered  whether   other  states  had  to                                                                    
provide  high  checks  in  the  transition.  Ms.  Wing-Heier                                                                    
replied that the only other  state examining reinsurance was                                                                    
Senator  Bishop noted  that  the  federal government  should                                                                    
have agreed to  fully fund ACA. Ms.  Wing-Heier replied that                                                                    
even with  federal funding,  there would  still be  an issue                                                                    
with high cost claims.                                                                                                          
Senator Bishop  stressed that the  amount of money  from the                                                                    
state may  be lower,  had the  federal government  met their                                                                    
financial   obligation.  Ms.   Wing-Heier  replied   in  the                                                                    
Co-Chair MacKinnon asserted that  the federal government set                                                                    
a number  of incentives that anticipated  cost shifting. Ms.                                                                    
Wing-Heier agreed.                                                                                                              
9:17:24 AM                                                                                                                    
Senator  Dunleavy  queried  the future  projections  of  the                                                                    
bill, with the current fiscal  note. Mr. Parady replied that                                                                    
the bill took care of the  first year. He stated that Alaska                                                                    
had experienced 30  to 40 percent rate increases  in each of                                                                    
the last two  years. He asserted that, without  the bill, it                                                                    
was anticipated  that the 23,000  would face a  similar rate                                                                    
increase  in  the  current  year. He  stated  that  the  $55                                                                    
million  addressed  those high  cost  claims  in the  coming                                                                    
year,  and  directly impacted  the  rate  filing that  would                                                                    
occur and be  approved in July and August.  He remarked that                                                                    
the bill left the legislature  with the discretion to how it                                                                    
would approach the issue in the future.                                                                                         
Ms. Wing-Heier  shared that  the bill  also allowed  for the                                                                    
state to apply for Section  1332 Waiver. She stated that, in                                                                    
2017, ACA allowed the state to bring ACA home.                                                                                  
Senator  Dunleavy  wondered  if there  would  be  additional                                                                    
calls upon  the state to  continually fund the  program. Ms.                                                                    
Wing-Heier  replied in  the  affirmative, but  it  may be  a                                                                    
different funding mechanism.                                                                                                    
9:20:51 AM                                                                                                                    
Vice-Chair  Micciche queried  the conditions  that caused  a                                                                    
company  to  leave  the  state  or  county.  Ms.  Wing-Heier                                                                    
replied  that  the  state  had no  control  over  whether  a                                                                    
company  leaves   the  state.   The  only   requirement  was                                                                    
statutory notice.                                                                                                               
Vice-Chair  Micciche queried  the  economic conditions  draw                                                                    
coverage  to the  state. Ms.  Wing-Heier replied  that there                                                                    
was  a  concern  about  Premera   leaving  Alaska,  or  only                                                                    
continue in the urban areas.                                                                                                    
Vice-Chair Micciche  queried a  list of future  impacts from                                                                    
ACA. Ms.  Wing-Heier replied  that there was  a hope  to see                                                                    
changes in the ACA to benefit Alaska and the nation.                                                                            
Mr.  Parady  furthered  that  the  issue  resided  with  the                                                                    
federal  government's   payment  of  12.6  percent   on  the                                                                    
anticipated risk base corridor,  which was Moda's impetus to                                                                    
leave the state. He stated that  there was not a huge volume                                                                    
of people  to spread the  high cost  of a limited  number of                                                                    
9:25:15 AM                                                                                                                    
Senator  Olson wanted  to ensure  that the  state would  not                                                                    
have  to  draw  further.   He  queried  preparations  for  a                                                                    
possible revocation of ACA. Ms.  Wing-Heier replied that she                                                                    
did not believe that ACA  would be recalled, rather it would                                                                    
be amended.                                                                                                                     
Senator Olson remarked that  the legislature was continually                                                                    
confronted  with  federal  overreach,   and  the  state  had                                                                    
control over its  response to the situation.  He queried the                                                                    
safeguards to ensure  the issue would not  happen again. Ms.                                                                    
Wing-Heier replied that  she hoped that the bill  would be a                                                                    
Senator Olson stressed that there  was not optimism that the                                                                    
bill would be the last effort  to draw from the general fund                                                                    
to cover the cost of health care.                                                                                               
Co-Chair  MacKinnon  recommended  history  as  requested  by                                                                    
Senator Hoffman.  She remarked  that everyone  was concerned                                                                    
about Alaskans  who had trouble  accessing health  care. She                                                                    
wondered what the other states,  in the 1980s enacted, other                                                                    
than the high-risk pool. Ms.  Wing-Heier replied that almost                                                                    
every  state had  a high-risk  pool, but  most of  them were                                                                    
limited  to  those  who  were  rejected  from  an  insurance                                                                    
company; limited in diagnoses;  and were very expensive. She                                                                    
shared  that many  people were  able to  get insurance,  but                                                                    
could  not  afford the  insurance.  Those  people were  then                                                                    
treated through the emergency room or uncompensated care.                                                                       
9:30:35 AM                                                                                                                    
Co-Chair  MacKinnon stressed  that  the bill  was not  about                                                                    
excluding  anyone from  receiving care  that contributed  to                                                                    
their wellbeing. She  requested a cut sheet on  the 495. She                                                                    
felt  that  the committee  was  familiar  with the  cost  of                                                                    
health  care through  Medicaid  and Medicare  reimbursements                                                                    
for the state.                                                                                                                  
Senator   Hoffman  expressed   concern  with   mobility.  He                                                                    
wondered how  other people  moved from  state to  state, and                                                                    
switch their  coverage under ACA.  He wondered if  there was                                                                    
an  anticipation  of  people   examining  where  they  could                                                                    
receive the  best care. Mr.  Parady replied that  Alaska was                                                                    
not attractive to a highly sick individual.                                                                                     
Senator Hoffman stressed that he  was concerned with all the                                                                    
individuals. He  wondered if people  looked to  other states                                                                    
that would have  better or higher levels of  care than other                                                                    
states. Ms. Wing-Heier replied in the affirmative.                                                                              
9:35:04 AM                                                                                                                    
Co-Chair  MacKinnon  asked  for  a  graph  that  showed  the                                                                    
population in the pool over 20 years.                                                                                           
Vice-Chair Micciche  wondered if  there was a  national risk                                                                    
pool  when  considering  ACA. Ms.  Wing-Heier  replied  that                                                                    
there  were  some  discussions  about  doing  regional  risk                                                                    
Vice-Chair Micciche felt that  the federal government should                                                                    
subsidize that pool, in order to cover the risk pool.                                                                           
Co-Chair  MacKinnon   requested  the  demographics   of  the                                                                    
population that was driving the cost.                                                                                           
9:38:35 AM                                                                                                                    
Senator Dunleavy remarked that there  was an effort to drive                                                                    
down  cost, but  felt  that the  federal  government was  in                                                                    
charge of driving down that cost.  He felt that the bill was                                                                    
only  cost shifting.  He did  not understand  how that  cost                                                                    
would be reduced  in the long-term. Mr.  Parady replied that                                                                    
the legislature did not miss  anything when dealing with the                                                                    
massive effort of the Medicaid program.                                                                                         
Senator  Dunleavy  assumed that  there  was  a risk  of  the                                                                    
providers leaving Alaska. Mr. Parady agreed.                                                                                    
Co-Chair MacKinnon  wondered whether the  federal government                                                                    
expanded the qualified conditions  under ACA. Ms. Wing-Heier                                                                    
replied in the affirmative.                                                                                                     
Mr. Parady  furthered that  ACHIA had  a definition  of cost                                                                    
codes. The  bill proposed  to take the  $53 million  in high                                                                    
cost claims, and hand them to ACHIA.                                                                                            
Co-Chair MacKinnon requested a sectional analysis.                                                                              
9:43:23 AM                                                                                                                    
Ms.  Wing-Heier discussed  the Sectional  Analysis (copy  on                                                                    
     Sec.  1.  AS  22.55.320  is amended  by  adding  a  new                                                                    
     subsection to  require that  the when  a person  with a                                                                    
     disability, (as  defined by Title  XVIII of  the Social                                                                    
     Security  Act) is  to  be referred  by  the insurer  to                                                                    
     ACHIA's  administrator  shall  then  request  that  the                                                                    
     State  of  Alaska's  Department of  Health  and  Social                                                                    
     Services  provide  the  person with  information  about                                                                    
     applying  for  any  federal   benefits  that  they  may                                                                    
     qualify for, such as Medicare or Medicaid.                                                                                 
Co-Chair  MacKinnon  wondered  if   the  section  caused  an                                                                    
increase to the fiscal note.  Ms. Wing-Heier replied that it                                                                    
did not cause an increase to the fiscal note.                                                                                   
9:44:25 AM                                                                                                                    
Ms. Wing-Heier continued to discuss the Sectional Analysis:                                                                     
     Sec 2. AS  21.55.400 amends the duties  of the director                                                                    
     to   allow  the   director  to   formulate  and   adopt                                                                    
     regulations   that   are    reasonably   necessary   to                                                                    
     administer the chapter (ACHIA)  and specify the covered                                                                    
     conditions eligible for  payment through appropriations                                                                    
     from  the Alaska  comprehensive  health insurance  fund                                                                    
     established under AS 21.55.430.                                                                                            
     Sec.   3.   AS   21.55.430  (a)   amends   the   Alaska                                                                    
     Comprehensive  Health  Insurance  Association  (ACHIA),                                                                    
     Chapter  55,  by   creating  the  Alaska  comprehensive                                                                    
     health  insurance  fund  and   by  providing  that  the                                                                    
     Department of Administration,  shall separately account                                                                    
     for revenue collected as insurance premium tax under:                                                                      
     • AS 21.09.210 - Tax on insurers                                                                                           
     • AS 21.33.055 - Unauthorized insurance premium                                                                            
     • AS.22.33.061 - Independently procured insurance                                                                          
     • AS 21.34.180 - Surplus lines                                                                                             
     • AS 21.66.110 - Title insurance                                                                                           
     The  net  proceeds shall  then  be  deposited into  the                                                                    
     Alaska   comprehensive  health   insurance  fund.   The                                                                    
     Department  of  Administration shall  deposit  interest                                                                    
     earned  on the  Alaska  comprehensive health  insurance                                                                    
     fund into the general fund.                                                                                                
     (b) provides  that the legislature  may use  the annual                                                                    
     balance  in the  Alaska comprehensive  health insurance                                                                    
     fund, as established in (a),  to make appropriations to                                                                    
     the  Department of  Commerce,  Community, and  Economic                                                                    
     and  Economic  Development   to  fund  the  reinsurance                                                                    
     program under Chapter 55.                                                                                                  
     (c)   states  that   payment  for   claims  under   the                                                                    
     reinsurance program is subject to appropriation.                                                                           
     (d)  provides that  money in  the Alaska  comprehensive                                                                    
     health insurance fund does not lapse.                                                                                      
     (e)  states   that  the  Alaska   comprehensive  health                                                                    
     insurance fund is not a dedicated fund.                                                                                    
     (f) defines  net proceeds,  as used  in (a)  to include                                                                    
     the  revenue under  the taxes  listed in  (a) less  all                                                                    
     return premiums,  fess under  AS 23.05.067,  errors and                                                                    
     other  adjustments,  penalties  and  interest  on  late                                                                    
     In 2014  the division  collected approximately  $74M in                                                                    
     total  receipts of  which $64M  was  premium taxes.  Of                                                                    
     that   $64M   approximately   $5M  transfers   to   the                                                                    
     Department of Labor as  a Workers' Compensation Service                                                                    
     Fee  as required  under AS  23.  05.067. The  potential                                                                    
     would be  that the legislature could  appropriate up to                                                                    
     an estimated  $59M based on the  division's 2015 annual                                                                    
     The operating  expenses of the division  are restricted                                                                    
     funds and  collected as licensing, surplus  lines, risk                                                                    
     retention  groups,  purchasing  groups  certificate  of                                                                    
     authority, continuing  education, examination expenses,                                                                    
     fingerprinting   and   other   fees  in   addition   to                                                                    
     retaliatory taxes and are not be subject to this bill.                                                                     
9:45:48 AM                                                                                                                    
Co-Chair MacKinnon  wondered if  there was  a nexus  for the                                                                    
tax  collection with  any other  expenses currently  covered                                                                    
from the  general fund. Ms.  Wing-Heier replied  that 09.210                                                                    
was the largest collection from  the division, which was tax                                                                    
on  insurers that  was generally  2.7 percent.  The tax  was                                                                    
approximately $55 million in the year prior.                                                                                    
Co-Chair  MacKinnon queried  the tax  codes. Ms.  Wing-Heier                                                                    
replied that 21.09.210 was tax  on insurers. She stated that                                                                    
33.061 was independently procured.                                                                                              
Senator Hoffman asked for clarification.                                                                                        
Co-Chair  MacKinnon looked  at the  sectional analysis,  and                                                                    
remarked that there was a  list of tax codes. Ms. Wing-Heier                                                                    
replied that they should all be 21.                                                                                             
Senator  Hoffman wondered  if it  was 21  in Section  1. Ms.                                                                    
Wing-Heier replied  in the  affirmative. She  announced that                                                                    
all  codes were  21.09.210 as  tax on  insurers. She  stated                                                                    
that 21.33.055  was unauthorized insurance premium  tax. She                                                                    
announced   that   21.33.061  was   independently   procured                                                                    
insurance. She stated that 21.34.180  was surplus lines. She                                                                    
announced  that  21.66.110  was   title  insurance,  at  one                                                                    
Co-Chair MacKinnon  wondered when  the statutes were  put in                                                                    
place, and whether the taxes  were put in place for specific                                                                    
funding. Ms.  Wing-Heier replied that  she did not  know why                                                                    
the taxes were initiated.                                                                                                       
Co-Chair  MacKinnon queried  a comparison  to other  states.                                                                    
Ms. Wing-Heier replied that the  state's taxes were in range                                                                    
with other states.                                                                                                              
Senator Dunleavy queried  a proposed increase on  any of the                                                                    
taxes. Ms. Wing-Heier replied in the negative.                                                                                  
Senator Dunleavy  surmised that  the tax  would be  used for                                                                    
the fund. Ms. Wing-Heier replied in the affirmative.                                                                            
Vice-Chair Micciche  wondered how many states  had advocated                                                                    
a provider tax.  He asked whether Alaska was  the only state                                                                    
without a  provider tax. Ms. Wing-Heier  replied that Alaska                                                                    
was the only state without a provider tax.                                                                                      
Vice-Chair Micciche  asked whether the state  was below what                                                                    
would  normally cover  the  cost.  Ms. Wing-Heier  specified                                                                    
that she was addressing the provider-premium tax.                                                                               
Mr.  Parady furthered  that  there was  an  analysis by  the                                                                    
Kaiser  Commission   (copy  on  file)  that   addressed  the                                                                    
Medicaid  and the  uninsured. He  agreed to  provide further                                                                    
9:50:52 AM                                                                                                                    
Ms. Wing-Heier continued to discuss the Sectional Analysis:                                                                     
     Sec.  4. AS  21.55.500  (20) amends  the definition  of                                                                    
     "residents  who   are  high  risks"  by   deleting  the                                                                    
     requirement  that  the  person   be  unable  to  obtain                                                                    
     insurance coverage substantially  similar to that which                                                                    
     may  be  obtained  by  a person  who  is  considered  a                                                                    
     standard risk. Under  the ACA, an insurer  is no longer                                                                    
     allowed to  deny coverage to  a person based on  a pre-                                                                    
     existing condition  making this part of  statute a moot                                                                    
     Deleting  this language  enables  the  creation of  the                                                                    
     reinsurance  program  and   provides  the  director  of                                                                    
     insurance with the flexibility  needed in designing the                                                                    
     program by  authorizing the director to  supplement the                                                                    
     definition of "residents who are high risk"                                                                                
     Sec. 5. AS 21.96 is amended  by adding a new section to                                                                    
    allow for a waiver for state innovation. Under the                                                                          
     ACA, states may submit  an application to the Secretary                                                                    
     of the United States Department of Health and                                                                              
     Human  Services   requesting  a  waiver   from  certain                                                                    
     provisions  of  the  Act.  In  order  to  receive  this                                                                    
     waiver, the  state must  have enabling  legislation and                                                                    
     Sec.  AS 21.96.120  provides that  the director  of the                                                                    
     Division of  Insurance may apply  for a waiver  and, if                                                                    
     granted,  implement a  state  plan  meeting the  waiver                                                                    
     requirements  in a  manner  consistent  with state  and                                                                    
     federal law.                                                                                                               
     Sec. 6. Provides for retroactivity for section 3.                                                                          
     Sec. 7. Provides for an immediate effective date.                                                                          
9:52:20 AM                                                                                                                    
Ms.  Wing-Heier discussed  the presentation,  "Department of                                                                    
Commerce,  Community and  Economic Development;  Division of                                                                    
Insurance; HB  374 -  Reinsurance Program;  Health Insurance                                                                    
Waivers presented to Senate Finance; Director Lori Wing-                                                                        
Heier; May 31, 2016" (copy on file).                                                                                            
9:52:29 AM                                                                                                                    
Ms. Wing-Heier looked at slide 2, "Division of Insurance":                                                                      
     The  mission  of  the  Division   of  Insurance  is  to                                                                    
     regulate  the  insurance  industry to  protect  Alaskan                                                                    
          • The  division has a statutory  responsibility to                                                                    
          review and  approve rules,  forms and  rates based                                                                    
          on  an analysis  of  whether  they are  excessive,                                                                    
          inadequate, or unfairly discriminatory.                                                                               
          • The division does not have statutory authority                                                                      
          to deny rates because of the financial impact to                                                                      
          the consumer.                                                                                                         
Ms. Wing-Heier highlighted slide 3, "Timeline - Update":                                                                        
     •  September 2014  -  Premera's  average increase  37.2                                                                    
     Moda's average increase was 27.4 percent                                                                                   
     •  August 2015  - Premera's  average increase  was 38.7                                                                    
     Moda's average rate increase was 39.6 percent                                                                              
     • October 1, 2015 -  Letter received that the 2014 risk                                                                    
     corridor  payments   will  be  paid  at   12.6  percent                                                                    
     •  May 2,  2016  - Moda  announces  exit from  Alaska's                                                                    
     individual market beginning January 1st, 2017                                                                              
     • January 1, 2017 - State  of Alaska has one insurer in                                                                    
     the individual market  on/off the federally facilitated                                                                    
     exchange, impacting 23,000+ Alaskans                                                                                       
Ms. Wing-Heier discussed slide 4, "ADN to Governing; Alaska                                                                     
made the News":                                                                                                                 
     Health  and  Human  Services:  Another  Health  Insurer                                                                    
     Abandons Alaska. by Laurel Andrews                                                                                         
     Moda  Health will  exit  Alaska's individual  insurance                                                                    
     market  next   year,  the  company   announced  Monday,                                                                    
     leaving  only  one  health insurance  provider  in  the                                                                    
     state's  market  that,  so far,  has  been  defined  by                                                                    
     drastic  annual rate  increases for  consumers and  big                                                                    
     losses for insurance companies.                                                                                            
     Moda  will  focus on  its  other  group and  individual                                                                    
     plans  in the  state,  it  said in  a  release. It  may                                                                    
     consider  returning  in  the  future  but  "the  market                                                                    
     requires   significant   reform    in   order   to   be                                                                    
     sustainable," the company said.                                                                                            
     The exit  applies only to  Moda's 14,000  customers who                                                                    
     have   health  insurance   plans   on  the   individual                                                                    
     marketplace.  The company's  other  medical and  dental                                                                    
     plans  are not  affected by  the decision,  the company                                                                    
     "Obviously this  is not good news,"  Alaska Division of                                                                    
     Insurance  Director  Lori  Wing-Heier  said  after  the                                                                    
Ms. Wing-Heier highlighted slide 5, "Even the Wall Street                                                                       
     By Anna Wilde Mathews and Stephanie Armour                                                                                 
     May 15, 2016 7:47 p.m. ET                                                                                                  
     Health-insurance  customers  in  a  growing  number  of                                                                    
     mostly  rural  regions  will have  just  one  insurer's                                                                    
     plans  to  choose from  on  the  Affordable Care  Act's                                                                    
     exchanges  next year,  as some  companies  pull out  of                                                                    
     unprofitable markets.                                                                                                      
     The entire  states of Alaska  and Alabama  are expected                                                                    
     to have only one insurer  on the health law's signature                                                                    
     online  marketplaces  next  year,  according  to  state                                                                    
     regulators. The  same is expected  to be true  in parts                                                                    
     of   several   other    states,   including   Kentucky,                                                                    
     Tennessee,  Mississippi,  Arizona and  Oklahoma,  state                                                                    
     regulators said.                                                                                                           
Ms.   Wing-Heier  addressed   slide  6,   "Washington."  The                                                                    
companies  were  losing money  at  least  in the  individual                                                                    
market.  The  state had lost three insurers  in the previous                                                                    
two years.                                                                                                                      
9:54:38 AM                                                                                                                    
Ms. Wing-Heier looked slide 7, "Three R's":                                                                                     
     •  Risk Adjustment  transfers money  among insurers  to                                                                    
     adjust for  the possibility that some  insurers may get                                                                    
     more or  less than their proportionate  share of costly                                                                    
     Risk Adjustment is only:                                                                                                   
          Applied to the individual and small group market;                                                                     
          Permanent program to help stabilize the costs of                                                                      
          the ACA                                                                                                               
     • Reinsurance is  one of the taxes  associated with the                                                                    
     ACA and  is applied  against health  insurance policies                                                                    
     and employer  group health plans. Proceeds  are used to                                                                    
     provide  the individual  market  plans with  additional                                                                    
     subsidies  for   higher-cost  enrollees.   The  program                                                                    
     sunsets in 2016                                                                                                            
          Attachment point in 2014 is $45,000 but will                                                                          
          increase to $70,000 in 2015                                                                                           
          Coinsurance decreases from 80 percent in 2014 to                                                                      
          50 percent in 2015                                                                                                    
     • Risk Corridor provides a  range for profits or losses                                                                    
     for  insurance on  the FFM.  If an  insurer has  higher                                                                    
     than  expected  profits,  the federal  government  will                                                                    
     "claw  back" some  of the  premiums. Conversely,  if an                                                                    
     insurer has  higher than  expected losses,  the federal                                                                    
     government  will pay  the insurer  additional subsidies                                                                    
     to offset those losses. This program sunsets in 2016                                                                       
9:54:49 AM                                                                                                                    
Ms. Wing-Heier  discussed slide 8,  "We are working  to keep                                                                    
the market  solvent." She  stated that  the rates  and forms                                                                    
would originally filed  as early as May 11,  with the cutoff                                                                    
date of  July 15. She did  not have the rates  from Premera,                                                                    
because they were waiting to  see what would happen with the                                                                    
Vice-Chair Micciche looked at slide  7. He wondered if there                                                                    
was a requirement to cover  the difference between the prior                                                                    
definition  for high  risk and  ACA. Ms.  Wing-Heier replied                                                                    
that there was no state obligation.                                                                                             
Vice-Chair Micciche felt that there  was a delta of what the                                                                    
state was covering  and the expansion for  the definition of                                                                    
every high risk  category in ACA. He wondered  why the state                                                                    
would  volunteer with  the expanded  definition of  ACA. Mr.                                                                    
Parady  replied   that  the  issue  was   not  the  expanded                                                                    
definition, rather ACA required universal coverage.                                                                             
Co-Chair  MacKinnon  wondered  if   there  was  an  unfunded                                                                    
mandate to the state if ACA required universal health care.                                                                     
Vice-Chair Micciche  he felt that the  answers were opposite                                                                    
of one another.                                                                                                                 
9:58:55 AM                                                                                                                    
AT EASE                                                                                                                         
10:02:34 AM                                                                                                                   
10:02:42 AM                                                                                                                   
Co-Chair  MacKinnon recalled  a conversation  to refine  the                                                                    
answer to the people of Alaska.                                                                                                 
Vice-Chair  Micciche remarked  that  the federal  government                                                                    
had made requirements  under ACA, and the state  did not put                                                                    
pressure on  the federal government  to cover  that unfunded                                                                    
mandate.  He  remarked that  the  state  had volunteered  to                                                                    
cover the additional risk. Mr. Parady replied with slide 7,                                                                     
and slide 11, "Actuarial Analysis."                                                                                             
Vice-Chair Micciche appreciated that response. He stressed                                                                      
that ACA may not work for Alaska.                                                                                               
Co-Chair MacKinnon requested demographic criteria.                                                                              
10:08:43 AM                                                                                                                   
Ms. Wing-Heier highlighted slide 9, "Funding Mechanisms":                                                                       
     • Version  A of HB  374 funded the  reinsurance program                                                                    
     by  amending  statute to  allow  for  an assessment  to                                                                    
     insurers  based on  total covered  lives. This  funding                                                                    
     mechanism would have  increased costs for organizations                                                                    
     and  businesses  purchasing   stop  loss  insurance  by                                                                    
     approximately  20 dollars  per  covered  life, and  met                                                                    
     with  strong  opposition  by those  impacted,  such  as                                                                    
     school districts.                                                                                                          
     • In version  P, the program is funded  by creating the                                                                    
     Alaska   comprehensive   health  insurance   fund   and                                                                    
     separately   accounting  for   insurance  premium   tax                                                                    
     revenues  which  would  then  be  appropriated  by  the                                                                    
     Legislature to  pay for ACHIA. Previously,  the premium                                                                    
     taxes   lapsed  to   the  general   fund  after   being                                                                    
Ms. Wing-Heier discussed slide 10, "Premium Taxes":                                                                             
     Annual  collections  of  premium taxes  for  the  prior                                                                    
     three  fiscal years  are: $52  million  in FY2013;  $55                                                                    
     million in FY2014; and $64 million in FY2015.                                                                              
          •AS.21.09.210 - Tax on insurers                                                                                       
          •AS 21.33.061 - Independently procured insurance;                                                                     
          premium tax                                                                                                           
          •AS 21.34.180 - Surplus lines tax                                                                                     
          •AS 21.66.110 - Annual tax on title insurance                                                                         
Ms. Wing-Heier addressed slide 12, "2017 Rate Filings":                                                                         
     • Premera must file rates with DOI by 7/15/16                                                                              
     • Rates must be approved 8/23/16                                                                                           
     • Open enrollment begins 11/1/16                                                                                           
     • Is then effective 1/1/17                                                                                                 
     • In order to include the reinsurance program in the                                                                       
     2017 rate filings, the insurer must have two weeks'                                                                        
     notice of the amount (if any) appropriated under HB374                                                                     
10:09:29 AM                                                                                                                   
Senator Dunleavy  queried the time  frame. He felt  that the                                                                    
bill  was cost  sharing.  He wondered  whether the  $195,000                                                                    
insured  in  perpetuity, or  only  the  current issues.  Mr.                                                                    
Parady clarified that  the structure was to  take the claims                                                                    
associated  with  the  cost codes.  He  explained  that  the                                                                    
individual  would continue  to retain  their insurance,  but                                                                    
the  cost codes  would move  to  ACHIA. He  stated the  time                                                                    
frame  was a  one-year treatment  to sustain  the individual                                                                    
market.  He remarked  that the  problem would  not disappear                                                                    
after one year.                                                                                                                 
Senator Dunleavy  felt that there would  be annual continued                                                                    
request of  funding to  continue to  support the  issue. Mr.                                                                    
Parady  agreed, coupled  with work  to be  done on  sourcing                                                                    
from mechanisms other than the general fund.                                                                                    
Co-Chair  MacKinnon  surmised  that  the  legislation  would                                                                    
establish  a fund  by  taking a  current  revenue stream  to                                                                    
charge the fund. Mr. Parady replied in the affirmative.                                                                         
Co-Chair  MacKinnon announced  that moving  the money  would                                                                    
cause a "hole" in the general fund.                                                                                             
Senator   Dunleavy  wondered   what  would   occur  to   the                                                                    
appropriated money  in the general  fund. Mr.  Parady agreed                                                                    
with Co-Chair MacKinnon's comment.                                                                                              
Senator  Dunleavy surmised  that  it was  a cost-shift.  Mr.                                                                    
Parady replied that "there's no free lunch."                                                                                    
Senator Dunleavy felt that the  hole in the general fund did                                                                    
not disappear.  Mr. Parady stressed that  the utilized funds                                                                    
were generated from a nexus associated with health care.                                                                        
Co-Chair  MacKinnon  commented  that she  assumed  that  the                                                                    
taxes were initiated to fund something else.                                                                                    
Senator Olson recalled that there  was a medical malpractice                                                                    
issue in the 1980s. He wondered  if the bill was adequate to                                                                    
ensure more  providers come  to the  state, and  queried the                                                                    
timeline for that effort. Ms.  Wing-Heier replied that there                                                                    
had  been an  examination of  that issue  in the  1980s. She                                                                    
hoped that the bill would not cause the same result.                                                                            
Senator Olson  queried how long  the "pendulum"  would swing                                                                    
back. Ms.  Wing-Heier hoped for  three or four  years before                                                                    
the competition  would return  to Alaska.  There was  a hope                                                                    
for an innovation waiver at that time.                                                                                          
10:15:30 AM                                                                                                                   
Co-Chair MacKinnon  asserted that she was  not familiar with                                                                    
the issues in  the 1980s. Ms. Wing-Heier  replied that there                                                                    
was no  medical malpractice  insurance in  the state  in the                                                                    
1980s. She agreed to provide further information.                                                                               
Co-Chair  MacKinnon  wondered  if   the  state  charged  the                                                                    
doctors  a malpractice  fee. Ms.  Wing-Heier replied  in the                                                                    
Co-Chair  MacKinnon queried  the  opinion on  that fee.  Ms.                                                                    
Wing-Heier replied  that it was  examined as a  solution for                                                                    
the current year. She did not recommend it.                                                                                     
Senator Olson surmised that that  recommendation was not yet                                                                    
occurring. Ms. Wing-Heier agreed.                                                                                               
Senator  Olson   recalled  that  the  high   risk  pregnancy                                                                    
coverage was becoming impossible in the 1980s.                                                                                  
Senator Dunleavy  remarked he was  concerned about  the hole                                                                    
in the general fund.                                                                                                            
Co-Chair MacKinnon remarked that the  hole would be in place                                                                    
in perpetuity.                                                                                                                  
Senator  Olson recalled  that it  took three  years to  move                                                                    
back to normal, without a drastic draw in the general fund.                                                                     
Senator Dunleavy wondered if there  was a hope that it would                                                                    
only  be three  or  four years,  and  the competition  would                                                                    
close that gap. Ms. Wing-Heier replied in the affirmative.                                                                      
Senator   Dunleavy  struggled   with   the   title  of   the                                                                    
"Affordable Care Act."                                                                                                          
10:21:25 AM                                                                                                                   
Co-Chair MacKinnon  remarked that  there should be  a sunset                                                                    
date on  the bill to  encourage the department to  return to                                                                    
the legislature to keep the fund.                                                                                               
Senator  Dunleavy  remarked  that   there  may  be  a  moral                                                                    
obligation that would be impossible to shift.                                                                                   
Senator Bishop  felt that the  legislature should  work with                                                                    
the department to come to a solution.                                                                                           
Senator  Olson  remarked  that   Premera  was  watching  the                                                                    
progress  of  the  bill,  and   would  make  their  business                                                                    
decisions by mid-July.  She wondered whether a  sunset was a                                                                    
positive   or   negative   impact  on   Premera's   business                                                                    
decisions.  Mr.  Parady  shared  that  a  sunset  would  not                                                                    
detract from the overall progress of Premera.                                                                                   
Co-Chair MacKinnon  remarked that  insurance was one  of the                                                                    
most  complex  subjects come  before  any  committee in  the                                                                    
legislature. She stressed that  it was broad, connected, and                                                                    
inter-woven with  many other state and  federal actions. She                                                                    
remarked that there  was a profit at  three different levels                                                                    
of the  bill. She wondered  how, under the rate  filing, the                                                                    
state determined  an acceptable provider when  and insurance                                                                    
provider guaranteed  at least 80  percent. She  wondered how                                                                    
closely the  profits were monitored. Ms.  Wing-Heier replied                                                                    
that the benefits were a contributing factor to premiums.                                                                       
10:30:20 AM                                                                                                                   
Vice-Chair Micciche  stressed that he wanted  to ensure that                                                                    
the people had  the best possible care. He  wanted to ensure                                                                    
that the state did not pay  for care that was not related to                                                                    
their condition.  He felt that  the state needed  to control                                                                    
cost  across  the board.  He  wondered  how the  unnecessary                                                                    
expenses would  be restricted.  Ms. Wing-Heier  replied that                                                                    
those  efforts  often  resulted  in  the  insurance  company                                                                    
interfering with health care.                                                                                                   
Senator  Dunleavy  remarked   that  many  doctors  conducted                                                                    
extreme   diagnostic  work,   because  of   the  malpractice                                                                    
protocols  requirements. He  wondered why  there was  not an                                                                    
appropriation  request.  Ms.  Wing-Heier  replied  that  the                                                                    
original bill  specifically said that  it would be  from the                                                                    
premium taxes. She could not speak to the change.                                                                               
Mr. Parady furthered that the bill was amended in House                                                                         
Finance Committee.                                                                                                              
10:36:03 AM                                                                                                                   
Ms. Wing-Heier discussed slide 13, "Section 1332 Innovation                                                                     
     Alaska should explore a  Section 1332 Innovation Waiver                                                                    
     to allow  the state  to withdraw from  the ACA  if, and                                                                    
     subject  to many  provisions, the  state could  provide                                                                    
     the same  benefits to consumers without  any additional                                                                    
     cost to the federal government.                                                                                            
     States that are working on 1332:                                                                                           
          • Colorado                                                                                                            
          • Minnesota                                                                                                           
          • Hawaii                                                                                                              
          • Massachusetts                                                                                                       
Ms. Wing-Heier looked at slide 14, "Section 1332 Innovation                                                                     
     • Provide  coverage at least as  comprehensive as under                                                                    
     the ACA                                                                                                                    
     •  Provide coverage  and  protection against  excessive                                                                    
     out-of-pocket  expenditures at  least as  affordable as                                                                    
     that provided under the ACA                                                                                                
     • Cover a number of  residents comparable to the number                                                                    
     who would be covered under the ACA                                                                                         
     • Not increase the federal deficit                                                                                         
     • Must be authorized by the State Legislature                                                                              
     • Developed through a public process                                                                                       
     • A  state that  is granted  an innovation  waiver that                                                                    
     restricts access  to premium tax  credits, cost-sharing                                                                    
     reduction  premiums or  the small  employer tax  credit                                                                    
     can be  paid the amounts  that would have been  paid to                                                                    
     its  residents  under  these programs  to  finance  its                                                                    
     waiver program                                                                                                             
10:38:44 AM                                                                                                                   
Mr.  Parady noted  that  the  attempt was  to  build on  the                                                                    
foundation  of  Medicaid   reform;  develop  the  innovation                                                                    
waiver to  provide for possible  future change;  and examine                                                                    
new concepts. He  felt that the sunset as an  impetus to the                                                                    
deeper work was well-founded.                                                                                                   
Senator Bishop felt that all  the discussions boiled down to                                                                    
cost and the  delivery of services. He noted  that there may                                                                    
need to be a working group to examine the issue.                                                                                
Co-Chair   MacKinnon  noted   that  the   original  proposal                                                                    
included  cost-sharing  with  the  rate  payers.  There  was                                                                    
pushback from  the self-insured  on that  proposal. Co-Chair                                                                    
MacKinnon   asserted  that   there  could   be  a   one-time                                                                    
appropriation  and share  it in  the same  structure as  the                                                                    
original proposal.  Ms. Wing-Heier  replied that  there were                                                                    
parts. She  explained that every employee  and dependent who                                                                    
were  either   self-insured  or   fully  insured   paid  the                                                                    
reinsurance of $2.25  per member per month.  She stated that                                                                    
it  was   originally  at   $6  in   2014  for   the  federal                                                                    
reinsurance. She stressed that  the payments would sunset in                                                                    
the current year.  She shared that the  original thought was                                                                    
to have  the payments  directed to  the state.  She remarked                                                                    
that  it had  not been  incorporated into  the 2017  budget,                                                                    
because of  the sunset.  She remarked  that everyone  paid a                                                                    
tax, and  the analysis  showed approximately $30  per member                                                                    
per month for individual plans  and $18 per member per month                                                                    
for employer plans.  She remarked that a  stop loss happened                                                                    
at large  employers self-insurance, so the  premium was much                                                                    
less  than a  fully insured  person. She  stated that  the 3                                                                    
percent  at stop  loss only  was  much less  than the  other                                                                    
10:44:02 AM                                                                                                                   
Mr.  Parady  furthered that  the  proposal  was included  in                                                                    
previous legislation  SB 206,  there were  236,000 suggested                                                                    
covered lives and 160,000 were in the stop loss category.                                                                       
Senator Dunleavy  queried asked  for age  to be  included in                                                                    
the  demographic  information.   Ms.  Wing-Heier  agreed  to                                                                    
provide that information.                                                                                                       
Senator  Dunleavy  wondered  how closely  the  division  had                                                                    
worked with the insurance  companies. Ms. Wing-Heier replied                                                                    
that  the division  had worked  closely  with the  insurance                                                                    
companies to  ensure that the  mechanism of  the reinsurance                                                                    
would work to stabilize the market.                                                                                             
Senator Dunleavy surmised that  the bill would stabilize the                                                                    
market. Ms. Wing-Heier replied in the affirmative.                                                                              
Senator Dunleavy  assumed that the state  would attract more                                                                    
insurance companies  to the  state with  the passage  of the                                                                    
bill. Ms. Wing-Heier replied in the affirmative.                                                                                
Vice-Chair Micciche  understood the  intention of  the bill.                                                                    
He felt  that there could be  to ways to approach  the bill:                                                                    
stabilizing the  market or providing  further cash.  He felt                                                                    
that  there should  be downward  pressure, and  the services                                                                    
offered that  require payment.  Ms. Wing-Heier  replied that                                                                    
there  was not  a clear  answer to  the concern.  She stated                                                                    
that the ACA was in its infancy.                                                                                                
Vice-Chair Micciche  remarked that  there should be  a point                                                                    
of where the  cost codes became adequate  care without being                                                                    
an "open checkbook."                                                                                                            
Senator Dunleavy appreciated the summary.                                                                                       
10:49:45 AM                                                                                                                   
AT EASE                                                                                                                         
10:51:35 AM                                                                                                                   
10:51:43 AM                                                                                                                   
Co-Chair MacKinnon  announced that  amendments were  due the                                                                    
following day by noon.                                                                                                          
CSHB 374(FIN)  was HEARD and  HELD in committee  for further                                                                    

Document Name Date/Time Subjects