Legislature(2015 - 2016)BELTZ 105 (TSBldg)

04/12/2016 01:30 PM Senate LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 203 Out of Committee
Heard & Held
<Bill Hearing Canceled>
Heard & Held
Moved SCS HB 314(L&C) Out of Committee
Moved SB 206 Out of Committee
Moved HB 254 Out of Committee
Moved CSSB 55(L&C) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
-- Public Testimony --
        SB 206-REINSURANCE PROGRAM; HEALTH INS. WAIVERS                                                                     
2:06:57 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration of  SB 206.  She noted this  is the  second hearing                                                               
and public  testimony is closed.  She relayed the intent  to hear                                                               
from the administration, take questions,  and look to the will of                                                               
the committee.                                                                                                                  
2:07:36 PM                                                                                                                    
FRED  PARADY,   Deputy  Commissioner,  Department   of  Commerce,                                                               
Community and  Economic Development  (DCCED), stated that  SB 206                                                               
addresses  the fragile  condition of  Alaska's individual  health                                                               
insurance  market.  This  segment  of the  insurance  market  has                                                               
experienced  back-to-back increases  of about  36 percent.  There                                                               
are just  two remaining insurance  carriers in the state  and one                                                               
has  been  significantly  stressed  this year.  He  said  SB  206                                                               
provides a restructure  of the ACHIA program that  is grounded in                                                               
prior Alaska statute.                                                                                                           
CHAIR COSTELLO welcomed Senator Stevens.                                                                                        
MR. PARADY  directed attention  to the  highlighted table  in the                                                               
packets from  the Division  of Insurance  2015 annual  report. It                                                               
shows 236,000  covered lives; the  federal reinsurance  program -                                                               
Affordable  Care Act  2016 annual  fee  per member  per month  of                                                               
$2.25;  and a  3 percent  tax that  averages $30  per member  per                                                               
month for  an individual and $18  per month for a  group. For the                                                               
purposes of  the analysis, those two  items sunset at the  end of                                                               
Page  2  reflects a  $19.36  per  month  assessment -  the  rough                                                               
equivalent to the expiring federal taxes  and fees for ACHIA - on                                                               
the 236,000 covered lives that  would generate about $55 million.                                                               
The premium  impact on the  individual market would  reduce costs                                                               
to individuals  roughly 15  percent to  18 percent.  The division                                                               
anticipates another  year of 36  percent to 40  percent increases                                                               
so  SB  206  would  substantially  moderate  those  ongoing  cost                                                               
increases  for  the  22,000  Alaskans that  are  insured  in  the                                                               
individual market.  SB 206 offers  a straightforward  and doable,                                                               
but not perfect, solution.                                                                                                      
CHAIR  COSTELLO  mentioned  the   $19.38  per  member  per  month                                                               
estimated  reinsurance  limit and  asked  Ms.  Wing-Heier if  the                                                               
division had  identified the higher  cost codes it  would capture                                                               
through the reinsurance.                                                                                                        
2:11:19 PM                                                                                                                    
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce, Community  and Economic Development  (DCCED), explained                                                               
that the  division asked the insurance  companies and reinsurance                                                               
companies that were writing in  the individual market at the time                                                               
to submit their  claim data and they quantified it  for the first                                                               
10 highest cost claims,  the top 20, the top 30,  and the top 40.                                                               
Those are the claims  that are identified as set 1,  2, 3, and 4.                                                               
The  final  page  of  the set  of  documents  titled  "Annualized                                                               
Adjustment  Estimate" shows  all  the data  combined. The  claims                                                               
themselves are  identified by hierarchical claim  condition (HCC)                                                               
code throughout  the document. On  each of  the last 4  pages, 10                                                               
more conditions are added; those are top drivers in the market.                                                                 
CHAIR COSTELLO  asked her to  describe the nature of  the problem                                                               
and what SB 206 attempts to achieve.                                                                                            
MS.  WING-HEIER   said  the  bill  was   introduced  because  the                                                               
individual  insurance market  in  Alaska is  very  small and  has                                                               
experienced nearly 40 percent rate  increases the last two years.                                                               
There is  no reason to believe  that there won't be  a third year                                                               
of  rate  increases in  the  individual  market  of close  to  40                                                               
percent. There are  two remaining insurers in Alaska  and one has                                                               
been financially  stressed this  year. The insured  population is                                                               
about 23,000 and  there is no reason to think  it's going to grow                                                               
at this  time. Alaska has  had a high risk  pool for a  number of                                                               
years, and  the idea is to  take the individuals that  would have                                                               
been in  the high risk  pool had it  not been for  the Affordable                                                               
Care Act, and place them back  into the high risk pool. They will                                                               
be funded in the high-risk ACHIA  pool as they were funded before                                                               
the  Affordable Care  Act. This  will  spread the  cost over  the                                                               
entire  marketplace  (covered  lives)  as  was  done  before  the                                                               
implementation of  the Affordable  Care Act. What  that hopefully                                                               
will do  is drive the  cost down of  the individual market  or at                                                               
least stabilize it  so people can afford to  keep their premiums.                                                               
She acknowledged  that for some  there may  be a few  dollars per                                                               
month  increase, but  for those  in the  individual market  there                                                               
will be a  stabilization. Hopefully this will  result in insurers                                                               
staying in the market in Alaska or attract other business.                                                                      
She  shared that  since SB  206  was introduced  it has  received                                                               
press in  the Lower 48.  She listed  the states that  have called                                                               
asking  what is  being done  with this  reinsurance bill  because                                                               
they are experiencing the same struggles.                                                                                       
2:18:08 PM                                                                                                                    
At ease                                                                                                                         
2:18:48 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting  and invited Ms. Tallman to                                                               
comment on the bill.                                                                                                            
2:18:59 PM                                                                                                                    
SHEELA TALLMAN,  Legislative Policy  Manager, Premera  Blue Cross                                                               
Blue  Shield of  Alaska,  testified  in support  of  SB 206.  She                                                               
described the individual health insurance  market in Alaska as in                                                               
crisis. The average benchmark plan  premium is the highest in the                                                               
country at  over $700 per month;  the next highest cost  state is                                                               
$468 per month. Premium increases of  40 percent for the past two                                                               
years have  a significant impact  when the premium is  already so                                                               
She  said   the  subsidies  will   help  many,  but   over  1,200                                                               
individuals with  Premera coverage do not  qualify. She expressed                                                               
concern  that premiums  will  continue to  skyrocket  due to  the                                                               
small size of  the individual pool and the  small but significant                                                               
number   of  individuals   in  the   pool  that   have  high-cost                                                               
conditions.   These   individuals   destabilize  the   pool   and                                                               
dramatically impact costs.                                                                                                      
MS. TALLMAN  noted that  while some insurers  have opted  to exit                                                               
the individual market, Premera and  MODA Health have been working                                                               
collaboratively  to  come  up   with  a  sustainable  option  for                                                               
Alaskans. Premera  supports a balanced  assessment that  will not                                                               
place undue  burdens on  the group market  and will  also provide                                                               
some relief  to the individual  market. SB  206 aims to  do this.                                                               
She urged the committee to support the legislation.                                                                             
2:21:16 PM                                                                                                                    
JASON GOOTEE,  Director, MODA  Health, Anchorage,  Alaska, stated                                                               
that MODA supports SB 206 as  a way of addressing the variability                                                               
inherent in the  Alaska individual insurance market.  He said the                                                               
expansion of  the individual market  has been difficult  for many                                                               
insurers  because  the health  of  the  population nationally  is                                                               
worse than  expected and  Alaska is  no exception.  Of particular                                                               
concern in  Alaska is  the relatively small  number of  people in                                                               
the individual market over which to spread the risk.                                                                            
He  reported that  MODA  has collaborated  with  the Division  of                                                               
Insurance, Premera Blue Cross Blue  Shield of Alaska and ACHIA on                                                               
a reinsurance program aimed at  helping to stabilize this market.                                                               
MODA  and  Premera have  provided  detailed  claims data  through                                                               
ACHIA  to an  actuarial consulting  firm to  model the  impact of                                                               
such  a  program.  MODA's  actuaries   have  been  reviewing  the                                                               
analysis and  providing feedback to  ensure that the  results are                                                               
sound. He  restated support for  SB 206  as a means  of improving                                                               
the  predictability of  the individual  pool when  setting future                                                               
2:23:11 PM                                                                                                                    
CHAIR COSTELLO  closed public testimony  and solicited  a motion.                                                               
She noted the bill has a finance referral.                                                                                      
2:23:48 PM                                                                                                                    
At ease                                                                                                                         
2:23:59 PM                                                                                                                    
SENATOR  GIESSEL moved  to report  SB  206, labeled  29-GS2126\A,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
CHAIR  COSTELLO  announced  that  without objection,  SB  206  is                                                               
reported from the Senate Labor and Commerce Standing Committee.                                                                 

Document Name Date/Time Subjects
CS SB 118 - Ver. E.pdf SL&C 4/12/2016 1:30:00 PM
SB 118
CS SB 156 - Ver. I.pdf SL&C 4/12/2016 1:30:00 PM
SB 156
HB 314 - Supporting Document - EDA Investments.pdf SL&C 4/12/2016 1:30:00 PM
HB 314
HB 314 (L&C) - Ver. P.pdf SL&C 4/12/2016 1:30:00 PM
HB 314
HB254 - Fiscal Note -DCCED-CBPL-03-17-16.pdf SL&C 4/12/2016 1:30:00 PM
HB 254
HB254 - Fiscal Note -HB254-DCCED-CBPL-04-01-16.pdf SL&C 4/12/2016 1:30:00 PM
HB 254
HB254 - LBA Audit.pdf SL&C 4/12/2016 1:30:00 PM
HB 254
HB254 - Legislation 29-LS1309A.PDF SL&C 4/12/2016 1:30:00 PM
HB 254
HB254 - Report-Economic Impacts of Guided Hunting.pdf SL&C 4/12/2016 1:30:00 PM
HB 254
HB254 - Report-SLC 1 19 16 Division of Corporations Business and Profess....pdf SL&C 4/12/2016 1:30:00 PM
HB 254
HB254 - Sponsor Statement.pdf SL&C 4/12/2016 1:30:00 PM
HB 254
SB 118 - Background Information - DNR Survey Work.pdf SL&C 4/12/2016 1:30:00 PM
SB 118
SB 156 - Response Q&A.pdf SL&C 4/12/2016 1:30:00 PM
SB 156
SB 206 - Claims Data.pdf SL&C 4/12/2016 1:30:00 PM
SB 206
SB206 Supporting Documents - Consumer Impacts.pdf SL&C 4/12/2016 1:30:00 PM
SB 206
CS SB 55 (L&C) - Ver. I.pdf SL&C 4/12/2016 1:30:00 PM
SB 55