I call the House Labor and Commerce Committee to order.
The time is 3.16.
Members present are representatives.
Carrick, Freer, Fields, Paul, Nelson, and Sadler.
We have a quorum, please silence your cell phone.
Feel free to pass a note through our committee aid,
Evan Anderson.
Thank you, Andrew, Madison,
and Chloe for committee and teleconference support.
We had two items on the agenda.
First up is an informational hearing about what is driving increasing costs of health care.
We have two expert presentations followed by invited speakers who have experienced these steep costs increases.
And after that, we'll have a first hearing on a house bill 243 by Representative Carrick on Barber's Hair Dressers.
An aesthetic licensing.
First step in the informational hearings is Jared Kosen, CEO of the Alaska Hospital and Health Care Association.
Mr. Koesen, thank you for.
being here and giving this presentation.
All right, thank you. Can you guys hear me okay? All
right. For the record, my name is Jared Kosen. I am the president CEO of the Alaska
Hospital and Healthcare Association, and today I'm going to talk about the
expiration of enhanced premium tax credits. And in doing this, I'll really talk
the impact on costs and the pressure that it ultimately puts on the health care system.
So my comments will be brief, happen to answer questions throughout or at any point as you see
fit. And so to start, I would like to just really set the context for what this is,
because honestly, it gets pretty confusing. The first thing to
start with are advanced premium tax credits. Advanced premium
are essentially the subsidy that was created for people who are in poverty,
according to the federal poverty level, that need to buy insurance coverage on the
Affordable Care Act exchange. The advanced premium tax credits were set up
to create a subsidy so basically people can afford it, depending on your poverty status.
or they were increased. And that's what we're really talking about today is those enhancements
expired on December 31st due to inaction from Congress. Now I do want to recognize I think it's
really important to acknowledge Senator Sullivan and Senator Murkowski both voted to extend the
enhancements and we appreciate that. They both obviously understand the issue and the importance.
But due to the majority of votes, the credits did not get extended.
And so looking at this, these enhancements dropped off.
And the question is, what are we left with?
What is the impact?
And I know you're going to hear from the Division of Insurance today.
They did a fantastic white paper last year back in March that they presented to Senate
Finance.
And that information shows us that around 27,000 or 28,00,
depending on which set of information you're looking at,
Alaskans basically get some type of subsidy
to buy their coverage, okay?
So that's the population we're dealing with.
If you look at the enhancements,
those increased credits compared to the original credits,
So stated a different way when those enhancements
Expired just a couple weeks ago
Alaska lost $43 million in subsidy support
I can pause to further how about a representative let some why don't we go to the end of the presentation then do questions, okay?
Thank you
So, when you talk about $43 million, obviously we're used to talking about budgets and things
like that.
When you look at it at the consumer level, what that translates to is those 27,000, 20,00
people who use these subsidies in one way, shape, or form.
It's a sliding scale.
For a lot of those people, we are talking a doubling and tripling of insurance premiums.
really expensive. Imagine your premiums doubling and tripling and cost. That's
what we're talking about. When you have a doubling or tripping of insurance
premiums, you basically people are being put in the position, regardless of how
they got there, of whether or not they can afford it. What we know will happen
you know, from a system act standpoint, just yet.
But we know people are gonna be forced into a decision of,
okay, we either pay for this coverage or we forego coverage.
Our primary concern at the Hospital
and Healthcare Association from the system standpoint
are those that are put in the position of foregoing coverage
The reason we're concerned about it is
when someone foregows coverage,
This isn't just affecting them individually, of course it is, but it's actually affecting all of us, all right?
When people do not have coverage, they still need healthcare, and they ultimately will get healthcare.
But the cost of providing that care is completely uncompensated.
And when uncomponsated care goes up, essentially providers, regardless if we're talking about hospitals,
They're putting a position of doing one of two things or a combination of both.
They either have to shift those costs on someone who can compensate them or pay for them.
In this situation, we're talking about if uncompensated care has gone up, I can't shift
that on to Medicaid and Medicare.
Really I just shifted onto private insurance.
We're going to ultimately pay more to cover those folks that are uncompensated.
The other option the providers are faced with is cutting services.
You see that in service providers that offer a diverse set of services, they have to let
some things go because they just can't absorb all those costs.
Both of those things, in our opinion, are bad outcomes.
And we talk about this situation where people are forgoing care
Really what this turns into from our perspective again at the Hospital and Healthcare Association is
You have some people that are just gonna say okay. I'm gonna forgo coverage.
I am not gonna get health care
Okay, that might work for a while, but inevitably people get sick
The problem with that is eventually you will get too sick to stay away
and by the time you need services, you're going straight to the emergency department.
And the unfortunate situation there is by
the times you come to us to see us,
you are a lot sicker than you would have been before.
We're the most expensive environment of care in the entire healthcare system,
and now we're gonna have to dedicate more resources to you because you
are in a sick or more frail state.
That's not a good outcome for you, not
a great outcome of providers.
The second thing that will happen and does happen every day is you need health care.
You don't want to wait until you're going to get too sick, so you'll go get health
care where you probably not going find anyone to take you and so your going
to go to the one place that we'll and that again is the hospital emergency room.
We have a duty and a lawful requirement to see everybody that comes to
the door and we will do so.
Let's think about what's going on right now.
I don't know if any of you have been to an emergency room lately.
It's on record.
I know the state epidemiologists talked about this.
You read about every hour.
This is a horrible flu season right
now we have higher volumes of flu.
And it's much more severe than it has been in past years.
And so if you're deciding that, hey, I need health care,
I'm going to go to the emergency
room again.
We're in the situation of where we
precious resources, even if this is for a little cut on your
finger, time and staff have to be dedicated to you away from
others that need you. And so in really wrapping up the
concerns we have just on a policy standpoint is we're
talking about tens of thousands of people that are going to
be in this position. How many will choose to forego? How
many we'll choose the emergency room in the fashion? It
but the potential is absolutely there and we don't really have room right now to deal with that.
I brought this up. I met with a group of our nurse leaders from around the state last week
and uh we talked about this issue and the first thing someone said is they groaned and said oh
great we're going to have people coming here to use us as a primary care provider and they were
truly exhausted because they're just getting crushed by serving people with the flu.
And so what I would leave with before I open up for questions is the cost of healthcare is too high.
We're the first to acknowledge that. We have high labor costs, we have increasing supply costs.
We've extreme worker shortages. The idea of seeing people not have coverage,
the idea that that will somehow save money in our opinion is a falsehood.
when you want to bend the cost of healthcare,
you actually want increase access to care.
And I can understand how that sounds like,
well, that seems to contradict itself.
The more access you provide people,
the more efficient they can access the system.
namely we can have people go to the primary care providers urgent care much cheaper and we
can catch things before they become more severe and drive up all the costs of our healthcare system.
So in closing you can hear we're extremely concerned about these premium tax credits
expiring. We're very grateful that Senator Sullivan and Senator Murkowski both for supporting
very real consequences when you're talking about 43 million dollars and lost subsidies
support and a double and interpolant of health care premiums for thousands of Alaskans.
So I'll stop there and happy to answer any questions. Thanks, Mr. Croson. Representative
Gloam and actually Representative Gray, who's in the audience, got to hear it.
320, and I might suggest we have Representative Sadler, Representative Kerrick,
and then we do have four small business owners online, so why don't we
do these questions and hear from the Division of Insurance and maybe hear
from small businesses owners just to respect their time,
and if Mr. Kosen and Ms. Carpenter can stick around and take more questions,
that would be wonderful Representative sadler.
Thank you, Mr. Chair, thank you Mr Kostin for being here.
You know, the topic of a meeting is the rising cost of health care, but most of all of your
presentation was on the rise in cost health healthcare insurance.
And so a question is, so we had the Affordable Care Act was created to make healthcare affordable,
but apparently it was not sufficient so had to have enhanced subsidies.
We had subsidies, and we have enhance subsidies so what I really don't hear any discussion
about how we can reduce the cost of healthcare.
You're talking about the costs of health care insurance.
And yes, there is interplay between people seeking care
or not seeking because of the cause of insurance,
but I think mostly we're
talking the high cost to healthcare insurance
is that a fair question or a first statement?
Through the chair, Representative Sadler,
it's a really good question.
Because it is interesting when you talk about healthcare
and really you're right, I just talked about insurance
in our system, the two are so interrelated
that one drives the other.
And so what I would say to you, these subsidies,
it wasn't about the Affordable Care Act being created.
And then, well, that's not enough.
We have to enhance them.
This was largely driven during the pandemic.
And when inflation increased, I think
those were the decisions that drove
the idea of enhancing them, but I
would answer to me to drive down the cost of care.
So to get it, the root of all of this.
it's really providing ready, efficient access to services.
And the only way of doing that is in our healthcare system,
the way it set up is to increase coverage.
And so what I am saying is the two are interrelated
and essentially we need people to have coverage
so they feel free and queer to go to the doctor
at the appropriate level rather than
not having coverage in trying to make decisions
maybe based on financial consequences
or other and neglecting their care.
So I don't know if that answers your question,
but hopefully it doesn't.
I guess follow up and a question.
So, I really don' t see an end of the process.
If healthcare is expensive,
then healthcare insurance would need to enhance it more,
and you save more health insurance for everybody's way to bring.
I can't see it at the end
of this process until everyone's got free healthcare
insurance as a way
to address the high cost of.
You know, health care, and that's probably more philosophical
thing.
What actually can we do to address the high cost of health
care itself?
We have insurance mandates.
We say we should provide coverage for this and for that,
and people demand a...
state-of-the-art services. I mean, that's independent of the insurance cost, but what can we do to
actually reduce the cost of healthcare other than subsidized insurance for it? Yeah. Through the chair,
Representative Sadler, just to, it, can they answer the philosophical thought.
I'm not saying that the answer is free healthcare for everybody, and I don't know if you're saying
that, But what I am saying is, yeah, you really, this is the type of situation where you essentially
the investment has made in the way that's been given time to pay itself back.
So for me, in Alaska, we have a lot of services that don't exist.
We have complex behavioral health services, that doesn't
exist
we have primary care that is hard to access, if you can cure those access points and create
post-acute environments where people can discharge to. I actually think if we had more
healthcare infrastructure and corresponding workers, because we've a severe worker shortage,
so you just can't just build everything.
So you need an investment there. You need investment in infrastructure
This is a multifaceted issue that can't be answered with well
It's just subsidized insurance and call today
This, is the piece an important piece but it's not the only piece and i could talk for hours on this i assume that
Committed is not want me to do that at this time but certainly would be happy to talk more at your discretion
Well, why don't we go represent sailor while we return to this I just want to make sure we get to the small business owners
So let's go to Representative Carrick, and then we can come back to Mr.
Kosen after the business owners, okay?
Thank you through the chair, Mr Ksen, thank you so much for being here today and
for walking through it, like I'm an elementary school, I think it's really
helpful.
I feel like you spoke right to me because I just had a constituent pass away who
did not have coverage and had to forgo coverage from the flu.
So your example is extremely real, especially in this.
this particular flu season apparently. I just wanted to ask you of the 27 to 28,000
Alaskans who you mentioned had this with the subsidy end.
I've had to either make ends meet some other way to afford coverage or for going coverage.
Do we know approximately how many Alaskans fall into each of those buckets or is that very hard to ascertain?
Through the Chair, Representative Carrick, thank you, great question.
I think it is broken out.
The Division of Insurance will be able to comment.
Choose to add more color to your your point and your story and I'm not making this up for the record
Certainly can't right. This is on the Record
But I just left a meeting with someone they were asking me what I was doing here
What I must test fine on and they immediately chimed in and said oh my daughter is
Married and has one child so a family of three and she just lost her subsidies
So she fell in the bucket of the enhancements where
Originally, she was giving zero dollars in the subsidy under the original advanced premium
tax credits, but over the last couple years, the enhancements have been subsidizing quite
a bit of her insurance.
And now, starting this year, their premiums truly have tripled, and you'll see that in
the Division of Insurance's materials.
This is very real stuff, it's sad in consequences.
So to answer your question very directly, I think the division of insurance has it broken
So they could probably provide more information for you.
Well, thank you, Mr. Kosen, for sticking around to answer more questions
after the other testifiers.
And thanks, Ms. Carpenter,
for being here, and you can stay right there if you want.
I'll go back here.
You guys can call me back out.
Thank you committee.
Good afternoon, Chair Fields and Co-Chair Hall.
For the record, my name is Heather Carpenter.
I am the Director of the Division of Insurance.
And I was asked to come to provide a refresh
of a presentation the division provided last spring
on our 1332 waiver and just an overview
on the tax credits and the situation we're seeing.
When we talk about
health coverage in Alaska, we like to start with
grounding you on what the division is
regulating and covering.
The division has a smaller piece of the pie
where that yellow sliver you see, that's 15% of
the market, with 85% being all other payers.
So that means when you're looking at insurance bills
in Title 21 statute,
that is impacting the individual market
the small group and the large group.
So moving to slide three, I wanted to ground you
into some information about the individual market.
After those who may not know, when we talk
about individual markets, Alaska is on the federally
facilitated exchange that is run by CMS.
Some states have state-based exchanges, we do not.
So our initial enrollment for calendar year 2026
that was released from the Centers for Medicare
consumers who have paid their first month's premium or the
effectuation of the policy. We'll get that information we hope in
the next few months. In the Next slide, we'll have these
numbers for you. Overall, our rates decreased on average
for this calendar year. A really important note is the Alaska
Reinsurance program, or ARP, has lowered our rate by 40% and it
does continue to bring some stability to our market.
However, as you heard, Mr. Cozen shares, many consumers are now paying more because Congress
did not extend the enhanced premium tax credits or EPTCs, and this has created some uncertainty.
So moving to slide four, you can see here, this is information that was just recently
released from CMS.
for this calendar year coverage.
Again, that does not include how many have actually paid
that first month's premium.
To compare last year, so for 2025,
those who actually pay that premium
and effectuated their coverage were 26,732,
and that equaled a rate of 93% for an effect-weighted rate.
Moving to slide five, and I apologize when I was looking at these this morning, I realized I should have put this in a different order.
For those of you that have been tracking the rates of insurance over the years, this chart will look familiar to you.
So in 2014, that was the first year of the Affordable Care Act in action and with new rates on the individual market.
So this chart is showing rates for Primera and Moda,
who are two insurers in the individual market now.
Couple of things I want to point out on this.
You saw some high increases in 2015 and 16
that led to legislative action about our waiver
that I'm going to get into in in next few slides.
2017 was the first year of the Alaska Reinsurance Program
with state funding, and then 2018 was
the 1st year we had federal pass through funding
that had a decrease.
And while there is a slight decrease in rates in 2026,
that does come after three recent years of rate increases,
which are now being felt more after the expiration
of the enhanced premium tax credits.
So moving to slide six,
I'm gonna dive into the reinsurance program
and just give a brief history of how it was created.
So the Affordable Care Act allows for states to apply
for what we call a Section 1332 State Innovation Waiver.
You may remember that under former director Wing Hire,
she proposed that the division apply for one of these waivers
to fund a state-based reinsurance program that would help stabilize the market.
In 2016, the legislature passed House Bill
374, which enabled the Division to actually apply
for the waiver with the federal government. And we apply through
the United States Department of Health and Human Services, through CMS,
And again, we call this our Alaska Reinsurance Program or ARP.
And that first year, the legislature funded $55 million
of an appropriation conditioned on the division,
further seeking the waiver and federal funding.
That means that there are 35 high risk and high cost conditions that if somebody has
one of those conditions, their costs are ceded to the program.
So a practical example, someone could be on the list who has hepatitis C and if they
get an ear infection and need to go to urgent care, all of the claims for that and any claims
is not paid by the insurer, so Primera or Moda,
it's actually ceded to the Alaska Reinsurance Program.
And that helps bring stability because it takes out
those high costs for those individuals from the market.
The ACA provides individual market consumers with subsidies.
Those are called advanced premium tax credits,
and they are based on their income.
waiver application proposed that the government would fund our reinsurance program by awarding
the difference between the original tax credits and our lower tax credit thanks to our waiver
which is called pass through to the state.
So moving on to slide eight.
The division of insurance was awarded our waver in 2017 and we were the first state-based
Our waiver was extended for an additional five years
at the end of calendar year 2022.
And I'm proud to say through calendar, year 2025,
the waiver has brought in over $800 million
back to Alaska in the reinsurance program.
And again, that is lowering the individual market rates
by 40% annually.
Our current waiver expires at
the End of Calendar year 2027.
And the division will start preparations
to apply to extend the waver at
the ends of this calendar.
Moving to slide nine, I wanted to show you a little bit of how this funding works and
how the federal government figures out what these savings would look like.
So each year the division submits rates with and without the waiver.
to CMS and to the Treasury.
So they take that and come up with a calculation
that you see on this chart that projects
what those advanced premium tax credits would cost
the federal government without the waiver
and what it would costs the Federal government
with the waver.
Then they come with what that projected savings is
and the division ends up being awarded a portion
of those savings as our pass through funding.
Moving on to slide 9, this is another chart that may look familiar to those who have tracked
the reinsurance program over the years.
The second column here is the original projection by our contract actuaries Oliver Wyman.
This was in our original waiver to CMS on how much we thought we would need each year
for the waiver.
Calendar year 2026 is last year they projected, so we'll remove that column starting next
The third column is the actual program amount set by the division.
What that means is that's the amount that insurers can submit for reimbursement to the program.
And if they have claims that exceed that amount, they do not get reimbursed above that
amount.
Every year our insurers, so Primera and Moda, have exceeded the
The next column is the federal pass-through funding awarded by Treasury.
I will note you start to see from 21, 22, and 23 some pretty large awards
that the state was given that far exceeded the program amount.
I wish I could say that was going to continue, but that is a little bit of a fluke
in the CMS and U.S. Treasury formula that benefited the states.
rectified that formula and we are no longer seeing program or funding,
pass-through funding that's going to exceed our program amount.
And I will note the state contributions only that first year in 2017 was general funds.
The other years have been from our Seated Premium account,
which I'm going talk about in the next few slides, and those excess pass through funding.
The last thing of note for this, the division actually has to set our
program amount before we know what our pass through funding will be and part of
that is because our insurers have to start submitting their rates in June of
each year and we go through negotiations with them and CMS reviews those rates
as well and our rates go on a calendar year. I will not know our 2026 federal
It's always a little unknown when CMS and the Treasury will tell us that.
All right. Moving on to slide 11, our seated premium account.
So, insurers who are participating in the market.
are required to seed consumer premiums and pharmacy rebates, any federal high risk cost
pool payments they get with individuals that have those 35 conditions.
They seed that money to the Alaska Reinsurance Program and it is held by the Alaska Comprehensive
Health Insurance Association or ACHEA.
That way it does not hit the division's budget.
We aren't requiring extra general funds or anything like that.
It was the source of the state portion in 2018.
And the legislature also appropriated $10 million.
It is two $5 million appropriations of
the seated premium funds to the Division that we passed along to
the Department of Health in 24 and 25.
And that was used for Medicaid programs including the Medicaid.
rate study that you may be familiar with.
For calendar year 26 and 27, again,
like I said on the last chart,
we anticipate that federal award pass through funding
will not equal our program amount.
That being said, we plan to use seeded premium
to make up that difference.
And our current estimates are that 85 million
for the two years will be needed,
which we do have in the account.
Moving to slide 12 is about advanced premium tax credits.
Mr. Cozen gave you a fairly good overview of how that works.
And the Affordable Care Act does require that a contribution to premium from consumers be
based on their household income and size or that federal poverty level.
The amount that they get is a very technical formula, and it's between the second lowest
cost silver plan and the consumer's contribution amount,
and that's the subsidy. As Mr. Cozen said, during the pandemic in 2021, the American Rescue Plan
increased that contribution and put in place what they called the enhanced premium tax credits.
Those tax credit were extended through another piece of federal
Federal Law, the Inflation Reduction Act, but those expired December 31st, 2025.
And then moving on to slide 13.
The division has been asked numerous times over the last year to provide specific examples
of what a consumer will pay with the expiration of the tax credits.
And this slide and the next slide give examples based on the updated 2026 rates.
We provided you, you know, three different federal poverty levels to give you an example,
and we included 401% as one of those points because that is the point.
Anything over 400%, there is no longer any tax credits that a consumer qualifies for.
So this example here is a single adult, and then on slide 14, we provided some examples
And, Mr. Chairman, I also provided to the committee a white paper.
We updated that provides lots of information that we've been asked just technical questions.
How does this work?
It also answers Rep.
We provided you an example of what's the actual income based on federal poverty levels.
So there's a lot of information that may answer just basic questions about how all this works.
And with that, Mr. Chairman, I'm happy to take any questions.
Great.
Let's go to the testimony of small business owners and then return to questions, yes, Representative Sandler.
I think there are a lotta technical information went by here.
I fear that in the, after the presentation by the small-business people.
the time to ask questions about this presentation will no longer be right.
Is it possible to answer this carpenter some questions now?
Let's just take a short, let's say a couple minutes but I do want to respect
just the business and understand who are waiting.
Absolutely. Go for it, Representative Santa. Thank you, I appreciate it Mr. Chairman.
So through the Chairman, Mr Carpenter, a lot of technical insurance money going
back and forth and back-and-forth. So helping to understand in general terms
Alaska accepting money from the federal government to help pay for insurance or help provide benefits to a lot of technical terms
But what's the money flow here? I did see one fifty five nine dollar general fund expense, but I'm not sure where the rest of this money is coming from
Representative Sadler through the chair, you are correct.
So just like it is with the Medicaid program
and when they apply for a waiver to do something innovative,
that is exactly what happened here.
The division on behalf of Alaskans
applied to the federal government
to basically pull down federal money
to help add money back and reduce rates
for our Alaskans on the individual market.
So the reason the feds are willing to do that
is because it does save the money.
In essence, they're not gonna give us all of the savings.
They receive by us having this program,
but a portion of those savings
and I did see the cumulative between 2017 and 2025,
$803 million about how much is that per year?
I don't know if there's an average per a year kind of thing.
This is on slide eight, your third bullet point.
Representative Sadler through the chair, I moved the presentation back to slide 10
because that fourth column has each year what that federal pass through award has been.
Under federal passage, so past year being federal funding come to the state,
so between about 60 to 120 million dollars a year.
Correct.
Okay, very good.
Okay.
And if the follow up again, if
APR, we're coming from the seated premiums and it looks like that.
Seated premium money may be needed elsewhere.
What's the source of funds for the ARP administrative expenses going forward?
Through the Chair, Representative Sadler, and again, this is Heather Carpenter for
the record, that-
If the seated premium is used for another purpose, that would bring a question back to the division, to
the legislature, or to our department, on how would we fund this program?
Because, yeah, there would need to be, right now, the Division, our budget is through receipt services,
on when people have a license through us. That's how we find ours.
Administrative expenses aren't a lot,
but again, it's that now we're gonna have to start paying
that higher state contribution,
and that's what will be different moving forward.
Okay, thank you.
I appreciate that, Mr. Chairman.
There's many more questions,
but one aspect of everyone's time,
including the committee members.
Please proceed.
And thanks for sticking around, Ms. Carpenter.
At this time let's go to Shay Lateague
with Arc Insurance Solutions to talk about your experience
with rising health insurance costs.
Hello, I'm Shayla Teague, a licensed health insurance broker here in Alaska.
I've worked primarily in the individual and family market since 2019 at one point I assisted
with approximately 10% of the Alaska's marketplace enrollments and I currently sit on a committee
with CMS providing feedback on how the marketplace functions in Alaskan.
What the expiration of the enhanced tax credits means in real practical terms for Alaskans.
When the Enhanced Tax Credits were in place, many of my conversations began with surprise.
Small business owners and self-employed individuals often assumed health insurance was simply unaffordable for them.
I worked with many people who had gone years without coverage and were relieved to finally have access to affordable health
insurance.
I also frequently worked within individuals.
who had been harmed by the subsidy cliff that 400% in the past typically these are self-employed
Alaskans with unpredictable income who estimate to the best of their ability only to later
find out they exceeded the threshold and owed tens of thousands of dollars back to
the IRS. The enhanced tax credits and the elimination of the cliff provided something
They made coverage affordable, reduced the number of uninsured Alaskans, and stabilized
enrollment for households with variable incomes.
This most recent marketplace open enrollment was the most difficult of my career.
Many clients were in shock and some were even in tears.
Enrollment conversations that typically take about 30 minutes often required two or three
Many clients delayed making a final decision until the last possible moment,
hoping the enhanced tax credits would be extended, or that another solution would
be announced. They simply could not believe that they were being asked to pay
double or even triple what they had paid in prior years.
I also saw significant confusion among consumers due to widespread headlines about tax credits
expiring.
Many people believe that all financial assistance was ending, which led some to disengage completely
from the enrollment process, even when they did still qualify for some level of support.
This confusion and premium shock were not isolated and one example illustrates
what many Alaskans are not facing. I worked with a married couple in their
late 50s with an annual household income of approximately $115,000. Now in
Alaska that is a solid middle-class income but it's not exceedingly high yet
because it broaches the 400% of the federal poverty level for a household of
Their monthly premium will increase from $600 in 2025 to approximately $3,300 in 2026.
This is also not like a platinum insurance plan. It's numbers for the least expensive plan available
to them, which is a bronze. And it still carries a 10,000 annual maximum out of pocket per each of
and their situation is not unique. I saw this time and time again this year. Due to unaffordable
premiums, many individuals will now go uninsured. In fact, we saw about an 11% decrease to marketplace
enrollments this, year and this directly increases uncompensated care in places additional straight
Prior to the enhanced premium tax credits, I still did work with a significant number
of higher income Alaskans who paid the full cost of their health insurance, but at that
time monthly premiums were far more attainable for those households.
For example, a couple in their fifties might have paid around $1,500 per month for coverage.
However, over the last five years, premiums have continued to increase year after year,
and today those same households are facing costs that are no longer affordable at any
Thank you for the opportunity to share what I'm seeing firsthand and for considering how these changes are affecting Alaskans
Thank You are there questions for mrs. Teague. Yes. Go ahead represent Santa. Thank
You to the chair mr. teague sorry didn't know he were until I
So you're in the business this year kind of an insurance expert broker, have you any
solution?
We've heard a couple of folks and I suspect we're going to hear some more explain the
dire situation they face in dealing with the high cost of health insurance and healthcare.
Have you had any solutions?
Where do you think we should be heading to come up with a solution to these problems?
Any ideas?
I don't have any solid solutions.
I think that extending the tax credits would have bought us some time to find those solutions
but I do think it's a good place to look at expanding availability for health insurance in
the small business area. If more small employers are able to affordably offer health
insurance to their employees, there may be less of a need for these tax credits on the marketplace.
Thank you, and thank you Mr. Chair. Okay, not seeing further questions at this time.
Laura Butcher with CNL Creative. Ms. Butcher, thanks for being here.
Hi, my name is Laura Oates Butcher. Thank you so much for this opportunity to testify.
I truly appreciate being able to share how losing the health care subsidies has impacted my family.
I'm a small business owner, my husband and I have owned C&O Creative, a marketing and
video production company for the last 10 years.
My husband is a third generation Alaskan.
His family has lived in the West Side, Sponard area of Anchorage since the 1940s.
I've lived here for last 25 years, we have two teenage children and we love calling
Last year, we were paying $1,400 a month to ensure all four of us.
This year our rates jumped to $4,250.
That is $51,000 a year just for the premiums.
While the price going up threefold was indeed shocking, that was half the story.
If we opted for that cheapest bronze plan, the cost still would have been more than $39,00
It all of a sudden now increased to $15,000.
That's $56,00 out of pocket before insurance would make any
kind of meaningful contribution to our healthcare costs.
When we did the math, we simply couldn't make it work.
We are currently uninsured.
It's an awful feeling and it's one that we don't take lightly.
We aren't ignorant to the fact that you can't prepare for the worse.
We were beyond grateful for the insurance that supported us so we landed in the emergency room
twice. We then referred to see a much needed specialist Alaska did not have so
we ended up at Seattle Swedish Hospital.
We had numerous follow-up visits with amazing providers right here in Anchorage.
That medical emergency surely would have bankrupted us had we not had insurance.
We know it can happen again.
In fact, a necessary follow-up visit would test the last
of an hour just two weeks ago without same provider
and Anchorage without insurance.
It cost us $1,000.
My daughter, my teenage daughter had an annual
well-child checkup visits.
That costed us several hundred dollars.
This was routine, preventative.
No issues going into the visit.
No new issues being diagnosed.
While the cost of out-of-pocket care in Alaska has been
We still wouldn't be close to that $15,000 deductible,
even if we could afford the insurance premiums on any of the plans.
I ask you, how many Alaskans do you know that can easily afford almost $38, 000 to $51,00 a year
to pay their premium and still must pay out of pocket beyond that because of a high deductible?
What is our other choice?
health-sharing programs that you see advertised, you know, they're especially in Alaska,
really expensive at our age. They're also difficult to be accepted into and extremely
difficult, to find providers and hospitals that will work with the program because they
technically aren't even considered insurance. We have contacted and shared our story with Alaska's
Today, I'm so grateful for the opportunity to share our story and our testimony with
this committee and all of you today.
We are hardworking and we love Alaska, but for
the first time ever, we truly have started considering living out of state, where the
cost of health care is more affordable.
In places where even without subsidies,
we could probably manage easier and have much better health outcomes.
We appreciate the opportunity to share our story with state leaders like this committee.
We know positive change can happen and we're not going to give up hope.
Small business in Alaska is at the heart of so many communities across the state.
We invest our time, our money, and our skills to make a difference.
Healthcare costs are now making it almost impossible for people like us to call Alaska home.
Thank you so much for listening to my testimony today.
Thanks, Ms. Butcher. Are there questions for Ms Butcher?
Yeah, Miss Butcher when we met with Senator Sullivan, Senator Murkowski last year
We urge them to include extension of enhanced premium tax credits in the budget reconciliation bill HR 1 because that was the only opportunity to get the
Extension of that program passed a filibuster of course
That did not happen hence lack of extension and I'm sorry about the impact to your family
Thank you for the recommendation
Next up in testimony is Mark Robikoff, owner of AKBARC.
Mr. Robakoff thank you for being here today.
Good afternoon.
My sincerest thanks to this committee and its chair for allowing me this opportunity to testify.
For the record, my name is mark Robokoff and I am a small business owner in Anchorage.
I submit my testimony today, not in reference to any specific bill before the legislature,
but as a desperate plea to my local representatives to help in any way they can.
My financial situation has been turned on its head.
Small businesses like mine are often referred to by two anatomical metaphors.
in reference to their critical importance to the body of the city, state, and nation.
Our citizens and politicians are universally supportive of Alaska's small businesses in their
public pronouncements. All seem to want more of them, not fewer. No Alaska politician was ever
elected on the platform of wanting more and stronger behemoth conglomerates that funnel our dollars
My store is called A.K. Bark and offers retail pet supplies. Our slogan is intensely Alaskan.
Not only is it locally owned, but we also feature and promote products from over 30 local suppliers who are also Alaska small businesses.
We buy from national and international suppliers only when quality locally made options are not available.
Our most profitable category is pet treats and exclusively features products from Anchorage,
Matsu, and the Kenai Peninsula. There are already many barriers to starting a small business.
When I started mine 10 years ago, I invested my life savings and worked six days a week without
pay for over a year. All this while knowing that half small businesses don't last five years,
Prior to the COVID shutdown in 2020, my earnings from my new store were low enough to allow me to purchase health insurance through the Affordable Care Act at a reasonable rate.
As my store gained traction and my earning went up, the ACA subsidies kept my premiums manageable, though they were still two to three times to those of my friends and counterparts in the lower 48.
I accepted this as one cost of living in such a beautiful and rugged state.
My wife is employed by another Anchorage small business and does not enjoy subsidized health care from them
and buying health-care coverage for us both through the ACA since its inception.
Our combined monthly health insurance premium in 2025 was 953 dollars.
On January 1st our new premium more than tripled.
The $2,886, a nearly $2000 monthly increase from the same level of coverage.
In 2025, my little store seemed to hit its stride. Revenue was up around 25% from
the previous year. It was time to consider expanding. Residents of the Matsu Valley
air banks and kingite peninsula begged us to open stores in their communities.
It seemed the natural next move to grow my business and expand our Alaska footprint.
All of those plans have now been shelved. The funds that would have been invested in expansion
are now needed to pay my family's insurance premiums. This increase literally targets small
no differently than a tax increase that is narrowly applied to us.
Imagine a bill that levies a huge new tax specifically on small businesses.
Who wouldn't support such a Bill?
It would be broadly rejected, and any politician supporting it would
be shunned and voted out.
My accountant, my wife's employer,
and most of those 30-plus local suppliers
all find themselves in the same catastrophic predicament.
Some of those suppliers are among the many local businesses that have decided or been
forced to shut down.
I'm sure that most anyone who is considering starting a local small business
has similarly shelved those plans.
They cannot afford to consider leaving a job that provides health insurance
assistance that is otherwise unavailable.
This bombshell of a change has already and will continue to change the very
More small businesses will founder and fail to the benefit of outside mega corporations.
More and more of our residents' earnings will flow beyond Alaska's borders.
Some of those small business owners will instead choose to drop their coverage to stay in business.
As I understand it, as coverage is dropped, more primary care is handled by urgent care.
And more health care goes uncompensated.
Bribing up the cost of all health care, not just insurance premiums, or all Alaskans.
My family's health is too important for me to consider dropping our insurance coverage.
I plead with our Alaska representatives, including members of this community,
who have ever paid lip service to the lifeblood and backbone of the economic body.
Our lives and well-being have been severely impacted and we need your help not inward but deep.
Thank you again for your time and attention.
I wish you all the health and security that I wished for my family, my state and my community.
I'm happy to respond to any questions that committee may have thanks, mr. Robicoff
There are a couple questions represent cologne and represent a settler. Yeah
Representative mister Robocoff is that right? Yeah, thank you for your test. Thank you
For your testimony testimony. I want to clarify
You're pleading with your state legislators.
I am just trying to clarify what exactly do you want us to do to fix this situation?
And I mentioned that I'm not addressing any specific proposal or bill before the legislature.
I have just run out of options, and I am pleading with any representative that
I may reach to understand the situation I in, out affects the economies of my local community
and of the state, to search in any way that they can, or some assistance to help undo
Okay, thank you.
Representative Zadler.
Representative Clomass, my question.
Okay.
Thank you, Mr. Robicoff.
Okay?
Thank You for being here and sharing your experience, Miss Robicauff.
Next up is Janice Fleischman.
Thankyou, Ms. Fleishman, for Being Here.
Oh, ThankYou for having this meeting.
I think Laura, Shayla, and Mark have done an amazing job of talking about how this has
impacted small business.
well-trained bakers over the years.
So I'm Janice Fleischman.
I own Fire Island Rustic Bakeshop.
We're in a little bit of a different situation.
So what I started saying is we've lost a lot of bakers
that we trained because they moved to
private, bigger places in order to have health insurance,
which we couldn't provide.
We decided this year based on the fact
that the premiums, the enhanced premiums
were being eliminated that many of our
staff would no longer have the ability to have coverage.
We were also impacted by the state ballot measure one,
which says that in order to use your sick leave,
you have to provide a doctor's note after three days.
Urgent care centers, because almost none of my employees,
I have 75 employees have a primary physician
that's out of their reach.
So they have go to an urgent care to get a note,
that they were using their sick leave. Well, that's not fair. That's $200 to be able to utilize
a ballot measure one sick lead. So we moved to ensure this year and we started our insurance
with Primera on January 1st. The rate that we were required to, the maximum we could require
a calculation and it was $280 or $3,200 a year per employee. Many of our young employees who we
urged in the past to be on the exchange and they were on exchange made a decision not to
how tight their budgets are because of the cost of housing and everything else.
So we ended up ensuring 18 of our eligible employees, a number of employees dropped
down below the employer level of 32 hours so that they could have still be on the exchange.
So we have a current cost to the business of $13,500 a month to ensure and it is a very good policy,
and that's $162,000 a year on a small business. As you probably know, Fire Island has been
successful and has a big contributor to community. However, we've no idea how we're going to afford
the cost of the baked goods in our shop. It's a tremendous cost and it doesn't even
accomplish what I hope which would be to encourage everyone that works at Fire Island to have
coverage. We love our employees and if someone has a catastrophic accident or illness we'll
probably end up reaching into our own pocket to help but that will not be adequate because
quickly becomes hundreds of thousands of dollars um so i appreciate this meeting i didn't really
know i would be giving testimony i thought it was a bigger crowd and i'd be mostly listening um
so uh i'm ready for questions if there's anyone that has any questions for me
um well thank you for sharing miss fleshman um are there further questions
Sure, go ahead represent care. Thank you through the chair. I think my question is for Heather Carpenter
And you are both welcome to just come back
Yes
And while you're getting situated the question I thank is on slide five of the presentation
Just looking at the 2025 difference in Primera and Moda to 2026 and I believe this question was answered by our small business owners that testified
But you had said the
Well earlier in the presentation you have mentioned that the costs
The rates decreased on average in 20 26
But that isn't made up for because of the end of tax credit
And is that what we're seeing on this chart on slide 5 or are we seeing something else here?
And then I have a follow-up question
For the record, this is Heather Carpenter director of The Division of Insurance
Through the chair representative Carrick
I wanted to make sure folks understood, you know, what they were seeing about the rate
So I think your interpretation is fair
We are
I was very pleased and worked very hard with the insurers to have an average reduction,
so that average production was a negative 2.2% for the rates this year.
But that was after three years of an
average of about a 15% rate increase each year, and those years that those rate increases
are paying more of their premiums than they were pre-COVID.
And it's just the numbers and facts.
And then just a brief follow-up through the chair.
Is it fair to say that even with those rate decreases,
the premiums would still be relatively unaffordable
to small businesses purchasing on the open market?
failure to extend the enhanced credits makes that even more unaffordable or were we approaching
a place where some of the small businesses that testified today could have potentially
covered these costs.
It sounds like they were insuring themselves and that those rates decreasing was helping.
I'm just trying to get a sense of how dramatically aside from the individual examples we've heard
rates increase with the failure to extend the credits and the fact that the rate decreases
while good didn't insulate from that effect.
through the chair representative,
Kerrick, and again, this is Heather Carpenter for the record,
that's going to depend on a number of factors.
So it's gonna depend if these small businesses were getting their insurance
on the individual exchange, which is where the tax credits
in the enhanced premium tax credit exist.
The one testifier talked about covering their employees
and that would have been on this small group market
where there's not tax-credits to insulate that.
And then it will depend on what is their income.
You know, some small businesses, their incomes still going to be under that 400% and they're
going qualify for advanced premium tax credits.
So it's all going be based on each individual scenario and I don't want to give a broad
stroke of saying everybody's the same because it truly is what's their
income and what insurance are they getting.
Okay, next up, Representative Klom.
Thank you, Chair.
So, Ms. Carpenter, I was just looking on your website and says that the Division of
Insurance fulfills our mission statement by protecting consumers, promoting competitive
insurance market, and ensuring the financial stability of our insurance.
I don't think any of those things are happening.
I mean, you're the gatekeeper for us, for the state.
companies. It says consumer protection. I guess I would like you to let me know what
are the efforts to keep the rates down for consumers to be protected for like this is
an outrageous situation and we all know it. And the more the government gets involved,
the higher it goes and the bigger the mess and businesses are just a tip of the iceberg.
to primary care for an emergency she had private insurance and Medicare and they wouldn't take her
like it's outrageous and so I see state departments you're the gatekeeper you are the one that can
fight for us every single insurance policy that I have has skyrocketed home insurance medical
life insurance, car insurance.
Everybody's policies are going up.
Every's premiums are goin' up,
the medical costs are outrageous.
I mean, I really appreciate the people testifying today,
but this is not anything I didn't know.
I hear this from my own constituents.
So I'm trying to figure out,
what is the division of insurance doing
to mitigate all these,
and why do you keep approving all of these rate increases
for your people?
Through the chair representative clone and again, this is Heather Carpenter for the record
Thank you for sharing that and your frustration is noted and shared by many. I will say
When we're looking at health insurance, it's incredibly fragmented
And my first slide that showed the different percentage of the market is a good example of that
The division of insurance has 15% of The market, so when we are looking At rates, we looking out those rates for The individual market
the small group and the large group. We have to review when the insurance companies submit rates
we have check that they're following all of the rules set by the federal government and
the Affordable Care Act including those enhanced benefits and including you know anything that's
what we call an essential health benefit it has to have all those.
If they're proposing and why at one point in my chart,
I showed you that Moda left the market,
it's because financially they were not okay.
Their rates that they came in were too low.
And the reason the division went after the 1332 waiver
is we were on the verge of losing Primera from the Market
because insurers are businesses.
So they are not out to make a lot of money.
I will say the Division,
Well, I will say in Alaska, let me share the consumer protections.
Former Director Wing Hire, and this has continued with when I was looking at rates this year,
we don't allow a large contingency of profit in the rates that they file with us for health
insurance.
It's very, very low, like 1 to 3%.
The things we're also looking on is to make sure their financials are sound, because what
have an insurer who files and says, I don't need to pay X, Y, and Z.
And then they go bankrupt because they're not getting enough premiums
to actually pay out the claims that are there.
We don' t have a backstop like the state of Alaska, for example,
in our insurance estate employees that is peppered throughout the estate budget.
So we don t Have employers fronting that where the
state employees, our contributions went up, but much less than what
Our market is paid up by people paying insurance out of their own pocket, and our market
is feeling that.
I will note Mr. Cozen's shirt earlier, we see cost shifting.
That is also a part of what we're dealing with.
And so when our federal payers are too low, Medicare.
And you described how hard it is to get Medicare access in this state.
When those payors are to low and providers don't accept it because they can't break
Then we have a problem or if they do accept those federal payers then they're cost shifting that
To private insurance, which is our market or self-insured
So it's incredibly complicated. The state is looking at this. We're looking out the rural health care transformation program. What can we do?
the division is
Reviewing proposals to look at primary care. How can be sure that up across payer's?
unfortunately
there's no simple answer and no easy button,
but the division has to look at when a rate package comes in,
is it justifiable?
Are the rates, you know, set for many factors?
We have to make sure they're not excessive,
but that it is accurate.
And we use Contract Actuaries to help us review
all of that math as well.
I can have a follow-up, sure.
Yeah, so who benefits from these tax credits?
Who financially benefits from that and the subsidies again Heather Carpenter for the record
Through the chair rep clone who benefits. I would say it's it probably two part
It's the individuals who are on the individual market who qualify for tax credits. So their premiums are less each month
But someone gets that money who gets the money
Then it's going to come to the insurers.
So the federal government is going
to contribute that to
the insurer's on the consumer's behalf.
The insurance companies and the premiums go to
the insurance company's and I understand the balance,
but it is a hard sell for me,
that they're just barely making a profit in Alaska.
I really have a tough time with that and we're
about to just be an uninsured state.
I mean, regular people can't afford it.
Poor people who can afford
it low income, high income business.
It's untenable.
And to me, like the insurance companies
are the ones that are benefiting.
And whether it's medical insurance
or my home insurance just went up 80%, why?
because the state approved the rate increase so you guys my understanding is that you have
to approve these premiums for all insurance rates and if your mission is consumer protection
I wish that there would be some different angle and please tell me if there's statutes that need
to be changed I'll carry them because something is I mean we're all worried about people leaving
Yeah, yeah, there's school issues, but if you can't afford health insurance, you're out of here.
I mean, we can just be an uninsured state.
So I appreciate all the work that you guys do,
but I'm super frustrated.
It's a year after year, this has been going on, and every year I don't,
you could give me all of the tables you want.
I am telling you, everybody's getting priced out the market.
Everybody.
It doesn't matter what situation you are.
It's just like, for my mom to have Medicare and private insurance,
they won't accept because she's on Medicare,
but they don't except Medicare.
I mean, it's like there is no, in my opinion,
no landing spot where you can say,
for sure, I'll be covered if I do this.
It is not there.
And the business owners,
I thought, we're really good at articulating that.
But it's not just business owners, it says everyone.
So thank you for the latitude.
I appreciate that.
Go ahead, Mr. Coz.
For the record, my name is Jared Coza.
I do not work for The Division of Insurance.
I just want to make sure I clear that up.
But I want just to add one thing, because I agree with everything
you just said, Representative Colomb.
And I kind of want go back to what Representative Sadler
was asking earlier.
Because so much, everyone's finger pointing.
Well, I don't know if they're doing it or it is their fault.
One thing I would point out in Miss Butcher's example is a case in point where she talked
about her daughter needing a wellness exam, thankfully she opted for it, but she had to
pay hundreds of dollars.
If you look at the cost structure in our Medicaid program, if you're looking at Medicare and
but there's the 80, 20, 70, 30, 90, 10, it's one of those ratios, let's just take 80-20,
20% of the population is driving 80% the cost. So why aren't we focusing on those 20%,
and why are they driving all the costs because they have chronic conditions and comorbidities?
Why? Because their care has not been managed well enough from the beginning.
So, if Ms. Butcher did not take her daughter to her wellness exam and God forbid, you
know, things got missed or you're not keeping up on that, we're just perpetuating this problem.
And you know Ms Carpenter, well, I agree with, by the way, for the record on insurance and
the insurers and I don't really get the math either, but she is right about Medicare.
and she's right about Medicaid and our budget's been flat funded for years and I'm not asking for
more money but the point of making is if you have 20% or 10% of the population driving all the costs
there's got to be better use of care management and and service provisions to prevent this explosion
Representative Sathler had a question.
Thank you very much, Mr. Chair.
You know, I appreciate the passion
and the frustration expressed by my colleague
from South Anchorage.
There's a tremendous amount of unfocused anger,
if not despair, and frustratedly we've heard
from the officials, bureaucrats,
and from people who are insured
and insured insurance recipients.
It is frustrating.
And again, go back to a point I made earlier
through Mr Kosen.
I do keep hearing about how health insurance
is very expensive and healthcare
has become a shorthand for health
insurance and health care.
And I guess we're only peripherally talking about the cost of health care itself, not insurance,
mind you. Although there is an interplay, you know, why is health cares expensive? And you just
touched on Mr. Kosen. It's the sickest among us. The end of life care is driving that.
And the health insurance cost is a downstream effect to that because it gets
assumed into the entire pool. So I was going to ask the question as well to represent
committing to the high cost of health insurance because they're not trying to,
but continue over on slide five of this carpenter's presentation entitled Alaska
Individual Market Rate History. This is not a measurement of healthcare costs,
but it's an indirect reflection through the health and insurance premiums.
Looking back, 32 percent increase, 39 percent increased, 7 percent
22% down, 6%
down. But then there's a lot of big increases and not a
lot decreases. I guess my question to Miss Carpenter
would be first why the huge increases are there more
claims, are they more expensive services, is it
bigger insurance profits? And then looking toward a
solution, what allowed us to receive the decreases?
How's that for a question?
Through the chair, Representative Sadler, again, for
the record, this is Heather Carpenter.
you pose a great question and the rates again are we look at them every year when
they're filed with us and we comb through you know the factors that play into it
unfortunately we have a fairly sick population and that plays into if you
have any sicker risk pool and you have higher costs higher claims you're you
Um, so several of these years, that's what we saw. It wasn't only the pandemic,
though that was, you know, part of it. Um also after 22, 23, 24,
you had folks who delayed care during the 2020 and 2021, then that pent up care,
you started to see, um, when they then used care and we had claims that exceeded what
we thought. So again, we look at it every single year when the companies file those rates with us.
We comb through, we send rounds of questions to the companies to ensure that what they're sending us is accurate and
actuarially
Justifiable. Again, the rates can't be excessive
One factor, you know that the division tried to help reduce this cost and reduce the continuing increases
Was the repeal of the 80th percentile regulation which did have some downward pressure on the rate?
So it's a number of factors. We're doing what we can to look at it, but this is complicated.
The ACA did not make it less complicated, it made it more complicated a really wonderful thing
of the ACA is pre-existing conditions are covered. That's probably the most popular thing about the
ACA. But that being said, that means you're ensuring folks with some high costs, some
to increase healthcare costs.
So it's, again, it is managing sick care
and it just complicated.
Health policy is not simple.
So we are definitely trying to look for solutions
and again I will pivot a little bit
to the Rural Health Care Transformation Program
where we're hoping that will help us transform
the system across payers and hopefully invest
and see some gains down the road.
Just briefly spin that I do hope we can turn our focus to
Ways we could reduce the cost of the care itself and not just subsidize put band-aids on poor money in insurance company
So yes, that's that the goal represent. Can I have one more question sure?
Thank you chair. So does the state of Alaska tax insurance?
Through the chair representative Colom, again, this is Heather Carpenter. Yes, the state of insurance does have an insurance premium tax
on all insurance companies and the policies they file.
But I mean, but it's the policy that we pay for there's an additional tax to that.
Correct. Through, yes, that has been in the insurance code for many, many years. So by and large for almost every
insurance product, it's 2.7%. There's some factors that change that.
That is the standard. So as my understanding, we get about 80 million dollars in revenue
from that tax. Do you have any idea how much of that is a health insurance policy?
Through the chair, I don't off the top of my head, but I can follow up with that information.
Yeah, because right now it doesn't feel like this is
a really good place to tax people.
So maybe we need to look at that if we're taking 80 million dollars in taxes
And maybe it was there to help fund the division or you know to process whatever
But I'm not sure that this is the area that the state should be
Making more expensive. It's not helping. I'm not saying it's the root of the problem
But I am just saying, it is not this is something that is assisting
Alaskans get to get health care
So but if you could give me the percentage that's health-care, I would appreciate that and through the chair rep column
Just for the record the division is NOT funded at all with the insurance premium tax. We
Pass that along to the Department of Revenue and the Treasury and it it
on other sources. So it's in the revenue source book every year. And what we bring in, one
place that is kind of line itemed is the tax we get on workers' comp insurance gets handed over
to the Division of Workers' Compensation in The Department of Labor. But we are not funded
Representative Sadler.
Thank you.
And following up with that question, so if there is a 2.7% tax which insurance companies
pay on the premiums, that becomes part of their base rate and who and don't taxes kind
of tumble down the stairs to the actual premium payers for this to pay.
That may be one factor in the high cost of health insurance.
Is that fair assumption?
I mean, like all taxes, it's got to be paid by someone.
So how those are then put into the policies and the rates.
But again, I will say, you know,
for the high cost of healthcare in this tax,
it is only on those under the purview
of the division of insurance.
So it not the other 85% of market of health care.
Okay, thanks to everyone, the small business owners
and Ms. Carpenter and Mr. Kosen for being here today.
And, by the way, Representative Bynum has been here since about 355,
so thank you, representative BYNAM for participating.
Next up is a first hearing on House Bill 243 by Representative Carrick
on barber's hairdressers and aesthetics, license, and sing.
Go ahead and begin your testimony.
And did you want us to begin with Mr. McKinley?
I think we'll just briefly introduce it.
Briefly introduce the bill.
Chair of the Board.
Great.
Good afternoon and for the record.
Ashley Kerrick, representative for House District 35
in West Fairbanks, bringing you today,
House Bill 243 by request of The Chair
of Board of Barbers and Hair Dressers,
who has invited testimony in just a couple of moments.
House bill 243, very simply, codifies an existing practice
with the board of barbers in hairdressors
Department of Commerce, Community and Economic Development's CBPL Division.
So, right now, the Board of Barbers and Hairdressers has seven members that are appointed by the Governor.
They, and confirmed by The Legislature.
They serve for four-year terms,
and as with any of our other boards and commissions, these are volunteer positions.
Currently, the board has one licensed barber, two licensed hairdressers or
esthetician license, licensed body piercer tattoo artist, a licensed manicurist,
and one person licensed in something else regulated by the Board, as well as a
non-licensed member of the public. So these are folks working in professions,
often small business owners themselves, who are also volunteering to be on the
Board of Barbers and hairedressors.
The purpose of House Bill 243 is to essentially just prevent the possibility for licensure backlogs or
bottle-necking in our state, ensuring that businesses can continue to provide services without being hindered.
It is currently standard practice for the Board of Barbers and
Hairdressers to delegate their licensing authority to CBPL.
And this legislation just codifies that existing practice as being allowable.
further in our sectional we just add language that conforms to existing practice
right now. I'm sure it was just an oversight at one time when the statute
was originally being composed which just clarifies that the board in section 2
in addition to being able to
Approve licenses or permits can also refuse licenses are permits. They can currently do this
We double-checked that but this just adds that into statute as well. So it's clear that this is within their purview
That is the entirety of the bill and for a little bit more background why we're introducing the legislation
I'd turn it over to Kevin McKinley who is one of my constituents and also the chair of The Board
Thanks for being here mr. McKinlee, please proceed with your testimony
Thank you. For the record, my name is Kevin McKinlay. I am the chair of the Board of Barbers and
Hairdressers. And I'm also a business owner.
I own a tattoo and body piercing company that has four locations, one in Fairbanks,
one at Palmerton in Anchorage.
And, I've been open for 35 years now.
And at some point in time, I decided to be more efficient
by doing this.
The Department of Law suggested that we create a checklist
and put that into our regulations
so that the division could use that to review
and approve applications.
Recently, the Department Of Law came to us and said,
you were given bad information.
What you need to do is one of two things either review these applications yourself or
There needs to be a statute change
The board unanimously
voted to
go and have a statue change and
We feel that this will be one the most efficient ways of processing
applications and
If this does not pass, the backlog will be very substantial.
The license applications for 2025, we did 971 applications.
That would be difficult for Board of Seven that are volunteers to approve.
So as Representative Carrick says, what we're looking to do is cut it by.
what we have been doing and keep this process
being as smooth as possible that way that we're not delaying anybody from going to work or hiring
people to do work. So I encourage all of you to vote for this bill. Thank you and I'll keep my
Questions for Mr. McKinley or the bill sponsor,
Representative Sadler.
Thank you.
Through the chair, Mr McKinly,
I'm not sure if your attorney,
you might have asked in turning down the answer.
Has the, understand that the desire here is to sanction
or kind of sanctify existing practice.
Does the practice here to for create any clouding or cloud
on the license of those who've been issued their licenses
before the statute might take effect?
Through the Chair, Mr. Sandler,
I'm not sure that I understood your question.
Thank you, Chair.
I was just saying, so you're trying to make sure
that the things you've all done according to the oil
have things not been done
according the oils so far,
raise any questions about the validity
of the licensing actions taken so for?
Through you Chair
Representative Sander,
that maybe a question
or division director
Rob, Sylvan, Rob.
That makes a lot of sense to me.
Director Sylven Rob is here.
Thank you for being here to help answer this question.
So Ms. Rob just to restate, has anyone on the board
sort of put themselves at risk by?
Engaging in this practice up to this point and if so do we need to think about that. Thank you
Thank You mr. Chair for the record Sylvan Rob director of the division of corporations business and professional licensing
Yeah, through the chair to Representative Sadler,
I don't think that any of our current licensees are in jeopardy.
This is just since this has come to light,
it felt like it was important to not continue
once it had been brought to our attention,
but we certainly don' see any jeopardy
for any nearly 7,000 current licenses.
So we don t want them to worry.
I want to make sure I get that the record so no one got nervous.
That's great.
Represent, Clom.
I'm not sure if this is for the sponsor or you.
I guess I'll just throw it out here.
Anybody wants to ask that.
So my understanding is that so the licensing
would go through the department instead of the board.
Through the charter representative,
Clome, it still preserves the ability for
the Board to do licensing functions.
This just codifies that
theboard is within its right, I suppose,
defer that responsibility to CBPL and that is currently one of the things that the board has
done to manage those 7,000 licenses. So if we tend to follow up, if the department's doing the
Through the Chair to Representative Clomme, I'm glad you asked that question.
I would say no emphatically and a large part of that is because the board does a lot more
than just issue licenses.
They're also the Board that regulates all aesthetician professions in Alaska.
I think they serve an incredibly important purpose and having those business owner seats
the profession in general. A lot of people think the board of barbers and hairdressers just covers
hairedressing, which has its own complications and challenges and potentially risky procedures,
but it also covers tattoo artists, as you heard from board chair Kevin McKinley who owns a tattoo
shop, and it, also, covers manicuring and podiatry and other professions. Okay, great. Thanks.
All right. Further questions for the bell sponsor, or most of McKinlee,
I'm not seeing any. We will return to this bill, so let us know if you have amendments
let the bill sponsor know.
We'll next meet Wednesday, the 26th first hearing from Department of Labor and Workforce
Development on workforce issues and next turning to the first finance subcommittee meeting
around 415. It is 445 and Labor in Commerce is adjourned.