Two years have passed since the Legislature enacted Alaska’s Clear and Equitable Share (ACES), a new way to ensure Alaskans get our fair share of revenue from our oil. Today the benefits of this legislation are apparent.

When the Legislature took on oil taxes in 2007, it did so in the shadow of the 2006 Petroleum Profits Tax (PPT) bill, which many viewed as tainted by the Veco corruption scandal. ACES provided a fresh start on dividing the revenue from Alaska’s most valuable commodity.

How has ACES changed the state’s oil income?

The Department of Revenue says that, since its inception, ACES has brought in an additional $4 billion over PPT. With this revenue, we have been able to forward-fund education, invest in renewable energy projects and fund home weatherization for Alaskans all around the state. In 2008, with record high oil prices, we were also able to save billions for a rainy day, which arrived a little sooner than many expected when oil prices plummeted later that year.

This revenue increase for the state has taken place alongside healthy profits for the major producers. For example, Conoco Philips’ financial statements reveal that the company collected almost 29 percent of its total worldwide profits from its Alaska wells, which make only 12 percent of its total production.

Think about that for a moment. Twelve percent of Conoco Phillips’ oil production produces nearly 30 percent of its profits. The inescapable conclusion is that Alaska oil production is more profitable than other parts of the world.

How can this be?

The answer lies in ACES’ combination of only taxing net profits, and a robust set of tax credits for certain types of expenditures. Instead of taxing on gross revenues, the bill recognizes that production costs are substantial and should be factored into the tax rate. For more challenging developments, like heavy oil production with its much higher costs, or extended-reach horizontal wells, the law lets those costs be deducted from revenues before a dollar of tax is paid.

The tax credits in ACES work as incentives for new developments and exploration. Together, the net profits tax and the tax credits make the state an investment partner with the producers. Just as we reap the benefits from our natural resources, under ACES we share in the risk of developing those resources.

What about jobs? Some critics of ACES call it a “job-killer.”

The facts, however, present a much different picture. Recent numbers from the state labor department indicate that employment in the oil industry is at record levels. BP, for example, employed about 1,650 people in 2006. Today the number is just short of 2,000. That’s 350 more well-paying jobs. Overall employment is equally robust: For the first three quarters of this year, the average monthly job count in the oil and gas industry was 13,111, compared to 12,677 for the same period in 2008.

ACES has not hurt oil production, which has been declining steadily since North Slope production peaked in 1988 at just over 2 million barrels of oil per day. The Department of Revenue estimates that the decline curve, which for years has been 5 percent to 7 percent a year, has improved to only a 2 percent to 3 percent decline since ACES was passed. To be fair, though, one must keep in mind that in 2006 production took a serious hit when much of Prudhoe Bay shut down after long-neglected corrosion problems caused major gathering lines to spring leaks.

Finally, there is ACES’ effect on exploration and development. While long lead times are necessary for most North Slope projects, two years of data gives reason to be cautiously optimistic. Since the legislation passed, exploration capital expenditures have increased by about 20 percent.

What’s the bottom line, then? The state is getting a fair share for its oil. Company profits remain strong. Jobs are up. The oil industry continues to invest in the fields they lease from the state. In sum, ACES is a big success.

Sen. Hollis French represents West Anchorage in the Alaska Senate. He is an officially declared candidate for governor in 2010.

After months of work, Senator Baucus (D-Montana) and the Senate Finance committee have released a bill. Today, they are considering hundreds of amendments.

On the spectrum of health reform options, the Baucus bill most closely mimics the 2006 Massachusetts reform. Unlike the House Tri-Committee legislation (the other leading proposal in front of Congress), it doesn’t include a government administered public option. The subsidy levels, in initial release, are set lower than those featured in the house bill – so low that Sen. Olympia Snowe (R-Maine) has voiced concern that they’ll place an unfair burden on middle class Americans.

When the bill leaves committee, we’ll take a look at how it compares to the House Tri-Committee legislation. Until that happens, though, I wanted to share with you some details about the uninsured population in this country.

The Uninsured

Sizing up the population of uninsured Americans is difficult but important when tailoring legislation to increase health access.

Recent estimates place the number of people without health coverage in America around 46 million, based on data collected by the US Census Bureau. For the census statistic, recipients of Medicaid, Medicare and employer provided or individually purchased health coverage are considered insured. Individual who lack all health coverage, or only receive Indian Health Service (IHS) benefits, are counted as uninsured.

The US Census bureau estimates the number of people who lack health insurance at any given time, and this most recent data is from March 2008. By its measure, Alaska has 133,000 people who lack coverage. There is, however, more than one way to size up our uninsured population. Using a completely different technique, if you measure the uninsured by including anyone who had a lapse of coverage over a two year period, the number is 209,000 for our state.

What the numbers show is that there just isn’t one correct way to measure our uninsured population. And while the numbers may differ, one thing they agree on is a trend. The trend is that Americans are losing health coverage faster than they are gaining it.

The Working Uninsured

Health coverage is often tied to employment in America, but this doesn’t mean that most of the uninsured lack jobs. In fact, over 8 in 10 uninsured Americans today are members of working families. While programs like Medicaid may help those with extremely low incomes, those hardest hit by our medical financing system often live in working households.

Here is an example of what an employed uninsured family may look like. In Alaska, minimum wage is $7.25 an hour. A household of four, with two employed adults each working full time for minimum wage, will earn $30,160 per year. The federal poverty level (FPL) for Alaska has been set at $27,570 for 2009. This places our hypothetical family of four at 109 percent – or just above – the FPL.

While the children in this household would probably qualify for Denali Kid Care, the adults probably wouldn’t qualify for Medicaid. A variety of factors are taken into account for determining eligibility for each program, but generally, for Denali Kid Care, the rough cutoff is 175 percent FPL. For Medicaid, the rough cutoff is 85 percent FPL for adults, with additional hurdles such as asset tests.

Our hypothetical family isn’t an outlier – in fact, if you compare all uninsured households by income, the example above falls roughly in the middle. Kaiser estimates that 37percent of the uninsured make less than 100 percent FPL annually, while 29 percent make between 100-199 percent FPL. 25 percent of the uninsured have household incomes between 200-399 percent FPL, while only 10 percent of the uninsured live in households with incomes above 400 percent FPL.

The Uninsured, By Age

Adults are more likely than children to lack health coverage in America. This can partly be explained by S-CHIP (Denali Kid Care in Alaska) programs which often insure children up to 250 percent of the FPL. Medicaid programs for adults have lower cutoff standards, rarely covering people above the federal poverty level. In our example above, the children would likely qualify for Denali Kid Care, even though our state has one of the lowest cutoffs for that benefit (175 percent FPL). The parents, however, probably wouldn’t qualify for Medicaid.

Young adults, ages 19-29, make up 29 percent of the uninsured population in America. Kaiser credits this partly to the lower wages paid to recent graduates of high school or college, while others claim that younger adults often consider themselves invincible, and not needing health coverage. The reality is probably a combination of the two factors.

Students are another chunk of the US population that often lack health coverage. Recently AETNA provided my office with a chart which estimates that roughly 25 percent of college students lack health coverage, comprising 10 percent of the total uninsured population.

Insured vs. Uninsured: Health and Financial Outcomes

The financial hurdle of seeking medical treatment without health insurance is insurmountable for many Americans. Kaiser reports that 25 percent of uninsured Americans couldn’t afford a prescription drug in 2007, while only 4 percent of those with private insurance had the same difficulties. 41 percent of the uninsured went without preventative care in 2007, while only 6 percent of public or private plan recipients skipped preventative attention. On top of skipping needed care, more than half of personal bankruptcies in this country are partly due to medical bills.

While programs exist that cover the youngest and poorest residents in America, young adults and the working poor often fall through the cracks. Health reform aims to increase health access by reducing the number of uninsured in this country. With the passage of legislation, our country can reduce the number of uninsured families like the one described in the example above.

In our next update, barring any drastic development by Congress, we’ll take a look at the insured and underinsured populations in America, and how reform could affect them.

Sen. Hollis French was first elected to the State Senate in 2002, and he represents District M, which includes the Turnagain and Spenard areas of Anchorage. He has promoted health reform legislation since 2007, and presently serves as chairman of the Senate Judiciary Committee. Sen. French has filed to run for governor in 2010.

More than 100,000 people in our state lack health coverage. Last year 18 percent of Alaskans had trouble paying for needed medical attention. Half of personal bankruptcies across America are caused by medical problems. At current rates of growth, the amount of money we spend on medical attention will almost double in the next 30 years.

Statistics like those show where we are at today. Individually, each fact may raise an eyebrow. Viewed together, it becomes painfully obvious why there is such a sense of urgency to this years’ reform efforts.

Even Harry and Louise – the duo from the industry sponsored ads that derailed Clinton’s health reform efforts in the 90’s – are rethinking reform. Today, they support changes to the status quo, in a new series of ads sponsored in part by the very same lobby that trashed earlier efforts to revamp health insurance.

While the troubles in our health financing system have pushed health care reform to the forefront, recent policy innovations have also made health reform less of a giant leap. These new proposals do not call for the replacement of our current health care system with a new and untested product. We aren’t reinventing the wheel, and socialism isn’t creeping around in the shadows. The new approach can even attract bipartisan support. As an example, the Heritage Foundation – a leading conservative think tank – was instrumental in helping Republican Gov. Mitt Romney and Democratic lawmakers come together to pass comprehensive reform in Massachusetts. That state now has the lowest percentage of uninsured residents in the country – below 3 percent – with health access up by numerous metrics.

The new model of reform also allows us to protect the best parts of the American medical system while also fixing the loopholes that an increasing number of Americans fall through. A key principle is shared responsibility. Health benefits and employment have a long history of being tied together in this country, and employers rightfully acknowledge the benefits they receive from a healthy workplace. To this end, newer leading proposals do everything in their power not to tamper with existing coverage that works. And the potential for success isn’t theoretical. In Massachusetts, the percentage of residents insured by employer-based coverage has actually increased since reform.

However, it’d be foolish to think that employers alone could solve the problems we face today. For many small businesses, the cost of coverage is simply too high. And many of Alaska’s workers enjoy seasonal employment, whether it is fishing, guiding, tourism, or construction work. To this end, proposals must carefully consider the interests of all stakeholders – including industry groups, medical providers, and employers – to ensure that reform acknowledges and supports the unique ways that Americans – and particularly Alaskans – earn their paychecks.

And shared responsibility includes individual responsibility. While reform recognizes that the government has a role in shaping the health insurance landscape, it identifies the individual as the person most able to see to his or her own basic needs. Under most proposals being considered by states and Congress today, the so-called “individual mandate” requires each person to acquire some basic form of health insurance. In exchange, the bills require that insurance companies accept these new customers the way they find them and cannot make exclusions due to preexisting conditions. These two changes go hand in hand to make certain that reform works for us.

Opponents warn of acting too fast on health reform. Yet solutions for today’s problems have been debated for decades, and now Congress or individual states must act, precisely because they haven’t been responsive historically. Fixing our broken system in the midst of a recession won’t be easy, but the economic downturn makes it all the more crucial that health access issues are resolved. According to a Families USA report, in these tough times, an estimated 480 Alaskans have been losing their health coverage every month.

We must also remember our main goals, and what health reform should achieve. First and foremost, reform must improve the quality of life in this country by ensuring that people don’t have to choose between medical attention or avoiding bankruptcy court. Structured right, it can also create incentives which pay doctors for keeping healthy people healthy. And it can dramatically reduce the cost shifting that occurs where people with health insurance pay extra to cover those who do not.

Universal health care is achievable! We must reject the approach of lawmakers who wish to simply apply a band-aid to the problem. Using new models of health reform, we can keep what we like about our medical system while attacking the roots of the issue. And when we finally reach a sustainable solution, we’ll look back and wonder what took us so long.

Sen. Hollis French was first elected to the State Senate in 2002, and he represents District M, which includes the Turnagain and Spenard areas of Anchorage. He has promoted health reform legislation since 2007, and presently serves as chairman of the Senate Judiciary Committee. Sen. French has filed to run for governor in 2010.

President Obama says a public health insurance option would give Americans “a better range of choices, make the health care market more competitive, and keep insurance companies honest.” Opponents argue that offering Americans the chance to buy health insurance from a government plan will undermine competition, increase costs, and eventually crowd out private health insurance.

Over the past three years, I have researched the track record of numerous health care reform initiatives. Based on that work, I am confident a properly constructed public insurance option will not harm the private insurance industry.

Yes, a public insurance option must be carefully constructed to ensure healthy, long- lasting competition. Participation must be truly optional for both medical providers and consumers. Public and private plans must compete on a fair playing field.

Fortunately, as originally drafted, the leading congressional proposals have passed these tests. The leading bills under consideration require a public insurance option to follow the same ground rules as the private plans they’d compete against.

Most important, the proposed public insurance option will not be subsidized. Each version of the legislation requires a public insurance option to be supported by premiums, just like a private plan. Congress would provide short-term funding to pay out initial claims, but each proposal requires this funding to be paid back with dollars collected through premiums.

The draft House Tri-Committee bill specifically disallowed future government fund transfers from supporting an established program.

It is true that need-based subsidies — financed with public dollars — would be available to help cover public insurance option premiums. But these same subsidies would be equally available to pay for private insurance.

Opponents of a public insurance option also argue that “informal” subsidies will unfairly prop up a public offering. AHIP — America’s largest health insurer lobbying group — notes that public programs today pay less than the private sector for medical procedures. That forces private plans to subsidize the discrepancy. They predict similar cost shifting from a public insurance option, leading to a “death spiral” where everyone moves to government-run plans.

But comparing a public insurance option to existing public programs is comparing apples to oranges.

Here’s why: Choice changes everything.

Suppose a public option tries to underpay doctors or hospitals. Under each bill, there is no requirement that a provider accept patients with public insurance if its payment rates are too low.

In that case, patients with public insurance would not find a doctor or specialist to serve them. They’d quickly seek out coverage from a private plan that pays more realistic reimbursements. Who would sign up for inadequate public coverage if they had another affordable choice?

Traditional marketplace forces — fair competition between competing business models — will still apply to health insurance.

But suppose medical providers were to accept lower reimbursement rates offered through a public insurance option.

That would put competitive pressure on private insurers to negotiate equal or lower service rates, or find ways to save administrative costs.

On the other hand, the private insurer may choose to charge more by offering a better product, with more benefits or higher quality service.

Again, that is how competition works. In the end, it can only benefit consumers.

Small businesses in particular could benefit from competitive forces in the insurance marketplace.

According to AHIP’s “Small Group Health Insurance in 2008″ report, Alaska has the highest premiums of all states. The average monthly premium for single employees is $504 and the average for families is $1,329. The national average is $346 for individuals and $913 for families.

There can be little surprise, given these extremely high costs, that Alaska small businesses have been pushed out of the health insurance market. They offer health insurance to their employees at the lowest rate in the nation. Only 25 percent of Alaska businesses with under 50 employees offer coverage. The national average is 43 percent.

Those arguing against a public insurance option say that the private sector is more efficient and does a better job than the government when administering health benefits. If that’s the case, they shouldn’t fear proving it on a level playing field.

State Sen. Hollis French is a Democrat who represents the Turnagain/Spenard area of Anchorage.

What has been labeled as a “decisive two-week period for the nuts and bolts of health-care reform legislation” by politicos is coming to a close, and new versions of leading congressional proposals are being released in rapid succession. The House Tri-Committee leadership released this latest bill draft on Tuesday. Wednesday the Senate Health, Education, Labor and Pensions Committee passed its version of the legislation.

One complex area of the legislation relates to regulation of health insurance. In this commentary, we’ll evaluate how some of the proposals would change insurance laws applicable to Alaska.

Individual vs. group market
The regulation of health insurance is quite complex. While there are many nuances, an important distinction is whether a health plan is issued within the group or individual market.

Generally, group plans are available to individuals because of their affiliation with an employer or association. In contrast, individual plans are issued directly to a person and aren’t tied to employment or other group affiliations.

Federal regulation is strongest over group health benefits, since employers often cross state lines. In many cases states cannot enact regulations that operate on group health plans. Within the individual market, however, states have much more leeway when crafting insurance law.

Adverse selection
The historic rationale for differences between group and individual market regulations can be partly attributed to “adverse selection,” where an individual seeks coverage when they expect their health claims to be greater than the cost of their premiums. In other words, “adverse selection” occurs when people wait until they are sick to buy health insurance. In the individual market, a person must make the decision to seek and apply for coverage, whereas in the group market, enrollment is sometimes automatic.

There also can be differences in the cost of group and individual coverage. In the group market, premiums are often subsidized by an employer or association. Federal tax benefits also reduce the cost of employer-based health coverage. Purchasers of individual plans often face paying entire premiums on their own. When faced with the full price of a health insurance plan, healthier people are more likely to forego coverage than their medically needy peers. These factors make adverse selection more likely in Alaska’s individual market than in the small group market.

Reform will likely bring individual and group regulations more in line with one another, despite the variation seen today. Under the health reform proposals being considered by Congress, a requirement that individuals acquire health coverage will reduce problems associated with adverse selection within the individual market. If lawmakers decide to tax employer-provided health benefits to pay for the reform, another difference between group and individual market insurance will erode.

A comparison
One caveat: The comparisons below are based on how proposals are shaped today, and they may change in future months. “Congressional proposals” refer to the Senate HELP Committee and the House Tri-Committee bills.

Guaranteed insurance
Current law: Guarantee-issue laws require that a health insurer offer coverage to any applicant, regardless of the health status of an individual or individuals. Today guarantee issue laws apply to plans sold in Alaska’s small group market but not in the individual market. As a result, if someone seeks traditional individual health coverage not connected to a group, they may be rejected due to preexisting medical conditions. However, if an individual is rejected from traditional individual plans, the Alaska Comprehensive Health Insurance Association (ACHIA) is required to offer them coverage, though premiums can be as high as 150 percent of “standard risk premiums.”

In congressional proposals: All plans offered in individual and group markets must be offered to any qualified applicant, regardless of health status.

Pre-existing conditions
Current law: A pre-existing condition limitation places restrictions on the health benefits covered by a plan due to the insured’s underlying medical conditions or a likelihood of developing a condition.

Under current Alaska law, pre-existing condition limitations of any length are permissible within the individual market, though they are capped at six months for plans issued by ACHIA. In Alaska’s small group market, pre-existing condition limitations can extend up to 12 months.

In congressional proposals: Pre-existing condition limitations aren’t allowed in both individual and group market plans, meaning that insurers can’t place restrictions on future health benefits because of underlying medical conditions of applicants.

Rating Restrictions
Current law: No explicit restrictions are placed on how insurance companies can calculate premium rates in Alaska’s individual market, other than that they cannot be “excessive, inadequate or unfairly discriminatory.” In the small group market, premium variation due to the health status of the group cannot exceed +/-35 percent of a base rate.

In congressional proposals: When calculating premiums, insurers can only vary what they charge applicants by geographic location, family composition and age (or ages) of the applicant. Tobacco use can be considered as well in the new Senate HELP Committee version. The variations in premiums due to age cannot exceed a 2-to-1 ratio.

Benefit caps
Current law: Alaska law currently allows individual and group plans to establish lifetime or annual benefit caps. ACHIA offerings feature a $2 million lifetime claim maximum.

In congressional proposals: Annual and lifetime benefit caps are not allowed.

In sum these details will determine whether the health care bill passed by Congress is a real step forward or just another missed opportunity.

Hollis French is a state senator from Anchorage and has worked for years on health insurance legislation.

Dear President-Elect Obama,

Greetings from Alaska, and congratulations. We, like all Americans, wish you great success in overcoming the challenges you face as you take office. Certainly one of your most pressing concerns must be stabilizing our nation’s economy. The unravelling of the financial markets, a sharp rise in unemployment, and a nationwide mortgage crisis all make for a daunting challenge for you, and for us as a country.

Alaska’s vast natural resources can help bring our economy back to life. And nothing will do the trick faster than the construction of a natural gas pipeline from the North Slope of Alaska to the Lower 48.

We know that you supported the gas pipeline during your time in the United States Senate, and during your campaign for president. Indeed, this is what your campaign Web site still says about this important project:

“As president, Obama will work with stakeholders to facilitate construction of the pipeline. Not only is this pipeline critical to our energy security, it will create thousands of new jobs.”

We couldn’t agree with you more. We in Alaska have been working diligently to get this project ready for construction. We have created a competitive environment for building the pipeline that has resulted in serious planning and permitting efforts by two separate entities. One is an independent pipeline company that is working within a framework established by the state; the other is a joint venture between Conoco Phillips and BP Alaska.

Keep in mind that this project will eventually deliver a volume of clean burning natural gas sufficient to warm thousands upon thousands of American homes. Permit us a bit of Alaskan pride when we say that natural gas is better than coal, better than ethanol, and far better than oil imported from the Middle East. There is a 30 to 50 year supply of gas in northern Alaska, and the long term benefits from that stable, reliable supply of energy are a bright spot for our state and for the nation.

We need your administration’s help to make this pipeline a reality. Help with permits, with rights-of-ways, and with completing the complex bureaucratic steps necessary for putting the federal loan guaranties to work.

During the campaign, you spoke of a ‘use it or lose it’ principle for keeping pressure on oil companies to make them actually develop the leases that they were warehousing or else to face the loss of those leases. While it is too soon to say whether this tougher approach may be necessary with the North Slope leaseholders, we share your willingness to take a firm stance to ensure that our gas gets to market.

To support this project, we have identified nearly $2 billion of infrastructure improvements needed before construction of the pipeline can even begin. The Dalton Highway, also known as the ‘Haul Road,’ needs a billion dollars itself. The road will require total reconstruction in many places, as well as new culverts, erosion control, and improvements to its bridges and to the four airstrips that dot its 414-mile length. The Alaska Highway needs $600 million in similar work, and the Richardson Highway needs $300 million.

This year we appropriated some state funds to begin this process, and we will undoubtedly continue to do our share. As you consider long-term federal investments in national infrastructure projects, we ask that you make room for these Alaskan needs in the overall package.

This gas pipeline is a win-win project for our state and for the United States. From nearly every perspective — economic, environmental, and geopolitical — this project will improve our country’s security. We, like nearly all Alaskans, are committed to seeing that this pipeline is actually constructed. Alaskans are a persistent people, and you can expect to hear more from us in the future as well as from the thousands of others here who are looking forward to the day when we start ‘turning dirt’ and welding steel.

Hollis French and Bill Wielechowski are Democratic state senators from Anchorage.

Recently, the Senate Judiciary Committee passed a new version of the governor’s ACES bill. Gov. Palin praised our bill as a “reasonable” solution. The comments we heard from the public greatly shaped the direction we took. Many of you were concerned Alaska was not getting our fair share. A few were concerned that increasing our valuation rate might discourage investment. Still others wanted to ensure that we didn’t allow excessive deductions. We believe we addressed all three concerns.

Here’s an overview of our bill.

Valuation Rates: We carefully balanced getting Alaska’s fair share with making sure we remain an attractive state for investment. The bill we passed is a fair compromise. While one expert told us we could increase our base rate to 35 percent, we took the more reasonable step of setting the rate at 25 percent. But the key change was an increase to the progressivity rate — when the value of oil is high. Our bill generates an additional $1 billion annually for the state over the current PPT at $65 per barrel.

Future Investment Is Protected: It is projected that 70 percent of all future oil development on the North Slope will occur in Prudhoe Bay and Kuparuk Units. This is not exactly wildcatting, though, because about 80 percent of the wells drilled there find oil. These are “world class” fields, and Prudhoe Bay is considered one of the “crown jewels” in the oil world. Even assuming costs triple, the big producers will still generate between 72 percent and 123 percent rates of return on their infill drilling investments.

Future exploration outside Prudhoe Bay and Kuparuk is enhanced because our credit system is among the best in the world and greatly incentivizes future investment in Alaska.

Saving Surpluses: Many Alaskans expressed concern that we would just let government grow if we increased oil revenue. That’s why we amended the bill to save a huge portion of the additional revenue we receive from this bill. This will help us ease any economic downturns in the future.

Allowable Deductions: We tightened deductions, including provisions clarifying that lobbying, public relations and advertising expenses can’t be deducted. “Indirect: costs — such as health club memberships or expensive dinners — may no longer be deducted. And costs related to spills, shutdowns and shoddy maintenance may not be written off either, under our bill. New language in the law will benefit the state by not allowing more than a reasonable deduction for transportation costs, which alone will save the state $160 million per year.

Reporting, Auditors and Penalties: We added provisions requiring major producers to declare their Alaskan revenues and expenses. It seemed like common sense to us that under a net valuation system, the public needs to know what each companies’ net income amounts to. We added more auditors, so the state can closely monitor deductions. Whistle-blower provisions were added that allow someone who reveals cheating committed by the industry to receive a portion of the amount that is recovered as a reward. New stringent penalties were added for underpayment of taxes, as a way to enforce early compliance. We learned that it can take many years for the state to complete an audit, so we increased the statute of limitations for collecting our revenue from three to six years.

In-state Gas: We added a provision that reduces the taxes paid for in-state use of natural gas. This provision is expected to spur future exploration and industry in Alaska and lower in-state natural gas prices.

The Way Forward: Many of us remain skeptics of a net profits system. However, the additional auditors, penalties, and disclosure provisions make a net system more viable.

We think we have a fair bill and hope most of these components prevail as they merge with the work of other committees. Working together, we can have a system that gets Alaska our fair share and spurs future investment.

Sen. Hollis French , D-Anchorage, is the chair of the Senate Judiciary Committee. Sen. Bill Wielechowski, D-Anchorage, is a member of the Senate Judiciary and Resources committees.

A wave is beginning to build in state capitols across the country. In the face of inaction by the federal government, Maine, Massachusetts, Oregon, Vermont and now California are leading the effort to promote universal health care coverage among their citizens. In May 2006, Gov. Mitt Romney signed a bill that ensures health care coverage for all Massachusetts residents. California Gov. Arnold Schwarzenegger recently proposed a similar plan for the people of his state.

In the past, powerful interests have opposed universal health coverage. However, recent policy innovations have convinced many business and political leaders that fears about health care rationing and restricted access to doctors and hospitals are no longer valid.

These new plans do not call for the replacement of the current health care system with a new and untested model. This is not socialized medicine. Indeed, it is not the so-called single-payer system sought by the most progressive reformers. Instead, policymakers are taking the more pragmatic approach of retooling health care delivery methods that are currently in use.

The first principle of this new wave of health care legislation is individual responsibility. These laws impose a duty on each citizen to acquire some minimal form of health insurance coverage. This key idea recognizes that while the government has a role in shaping the health insurance landscape, ultimately it is the individual who must see to his or her own basic needs. This provision also ensures that the cost of health care is shared as broadly as possible.

Another major change in the law calls for employers who do not offer health insurance to their employees to contribute to a fund that would help pay for coverage of the working uninsured. This is a particularly needed reform here in Alaska. While many small business owners would like to offer health insurance to their employees, the cost is often out of reach. Some subsidy will be necessary to help those who work for very small businesses.

A comparison between Alaska and Lower 48 small businesses reveals the necessity of this reform. A March 2006 ISER study showed that only a third of Alaska businesses with fewer than 50 employees offer coverage, compared with 43 percent nationwide. The ISER study noted that 91,500 of the state’s 224,500 private industry employees work for small businesses, meaning that over 60,000 working Alaskans do not get health care insurance through their jobs. This study helps defeat the notion that only the lazy or the poor are not covered by health insurance.

This reform does not have to be expensive. For example, the California plan requires businesses that do not offer health insurance and that have 10 or more workers to pay 4 percent of their total wages to a state fund that would be used to subsidize the purchase of health policies.

Another innovation redistributes Medicaid coverage in a couple of ways. The first is simply to expand Medicaid eligibility guidelines for children and adults and add enhancements such as dental and vision benefits. The other change is to take the Medicaid dollars currently being spent to reimburse hospitals and other providers for the free care they provide to the uninsured, and use the money instead to subsidize health insurance for those who cannot afford it. Stop for a moment and consider what a good idea this is: Take the money spent on hospital bills each year for the uninsured, and buy health insurance instead.

These policy changes all lead to the goal of covering every citizen with a basic form of health insurance. I believe it is time for Alaska to take up the same challenge. I plan to introduce legislation that uses these enhanced policy tools to pave the way to universal health care coverage for all Alaskans.

Changing the health insurance system is not easy. Yet I am certain that someday we will look back on this era and ask ourselves, “What took so long?” There is no reason not to begin what will certainly be a spirited debate.

Hollis French is a Democrat who represents northwest Anchorage in the Alaska Senate.

With the release of the proposed gas line contract, it is time to re-examine the issue of whether we can, consistent with our state constitution, provide the long-term tax certainty requested by the producers. The short answer is “no.”

Some believe that we should simply wait for a court to rule on this question. The danger in not confronting this crucial constitutional issue lies in the cost of delay. We must not take a course that is likely to lead to failure. Embarking on a gas line project that depends on a ruling in favor of tax certainty from our state supreme court is not wise. The overwhelming weight of constitutional history, past and present legal opinion, and established case law points to a ruling from our supreme court that hews to this general legislative truth: One Legislature cannot bind the next.

The debate centers on our constitution’s explicit prohibition against surrendering, suspending or contracting away the power of taxation. I refer to this provision as the “no surrender” clause. Many state constitutions have them. Our constitution does allow for exceptions to this rule, provided that the exceptions are done by “general law.” The exact sentence reads: “Other exemptions of like or different kind may be granted by general law.” There are no other avenues for providing long-term tax certainty. If it can’t be done by “general law,” then it can’t be done at all.

Our courts have consistently defined “general law” to mean “statute.” Here is an example from the Alaska Supreme Court: “The basis for a home rule charter may be either a constitutional grant of authority, a general law enacted by the state legislature, or a combination of both.” The obvious point to remember about laws enacted by any given state legislature is that they can be changed by the next one.

A statute enacting a contract does not solve the problem, if the contract provides long-term tax certainty. Former assistant attorney general Jack Griffin put it this way: “To the extent the Legislature may ‘contract away’ the taxing power, it may do so only by general law, which is to say that the ‘contract’ is subject to repeal or modification by any future Legislature.”

The policy behind the “no surrender” clause came from overly generous long-term tax exemptions granted by 19th century state legislatures to banks and railroads. When subsequent legislatures tried to alter these exemptions, the affected business interests went to court, claiming that their exemptions amounted to contracts, and that the proposed alteration was in violation of that contract. These cases resulted in rulings favorable to the businesses from the U.S. Supreme Court.

The reaction to these rulings was a series of state constitutional amendments designed to prevent the granting of these long-term tax exemptions. Some 19 states adopted “no surrender” clauses. Alaska did so when its constitution was drafted in Fairbanks during the winter of 1955-56.

Since statehood, there has not been a direct court challenge to a long-term promise of tax certainty. Yet there are many signals from our court that all point in one direction: A statute that makes a promise of a long-term tax freeze will not survive in the face of our “no surrender” clause. This line of thought was captured by our supreme court when it wrote, in a tax dispute between the oil industry and the state, “the state could not, and did not, contract away its power as a sovereign to tax.” While not a final statement of law on this subject, this sentence spells trouble for those seeking to bind the state to a promise of tax certainty for a decade or longer.

It is not just courts that view a long-term tax freeze skeptically. Many experienced Alaska legal observers have expressed grave doubts about the legality of the long-term tax promises desired by the producers. The Legislature must not authorize a contract that is based on a false promise.

Hollis French is a Democratic state senator from Anchorage.

Seven hundred million dollars is a lot of money, at least where we come from. It’s also the difference between what Alaskans would receive under the oil tax reform plan the Legislature’s international oil tax expert recommends, and the lower tax rate passed by the state Senate on Monday.

Today we’re locked in debate about how to provide Alaskans with a fair share for the oil all Alaskans own in common and how to provide incentives for future development. Republicans and Democrats in the House will serve the state well by passing a stronger oil tax reform law than the Senate passed. Debate starts again after Memorial Day.

Straying too far from the expert recommendations we’ve received will come at a cost to future generations. It will dampen our hope for real improvement in our schools, better college and job training opportunities, better access to health care, and better law enforcement to protect our citizens from crime.

Here are some details that might give you better insight into the debate in Juneau.

The advisers the Legislature hired demonstrated that Alaskans could maximize long-term revenue and development if we finally started taxing near the world average. The Senate bill raises 10 percent to 15 percent less revenue than if we taxed at the world average.

The Legislature’s lead adviser, internationally recognized oil tax expert Daniel Johnston, recommended we adopt a modest 25 percent oil tax rate. And the governor’s own tax adviser also supported a 25 percent rate. But after meeting with oil company executives, the governor introduced his bill at a 20 percent tax rate, costing the state $500 million a year at $60 a-barrel oil.

On Monday, the Senate passed a 22.5 percent tax rate. At today’s oil prices, Alaskans lose roughly $100 million for every percent decrease in this tax. Compared with the recommended 25 percent rate, the Senate’s 22.5 percent proposal costs Alaskans $250 million per year at today’s oil prices.

The other crucial element of the bill is known as “progressivity.” This ensures the tax rate will rise as oil prices rise. The state should share fairly in the windfall profits oil companies enjoy at high prices.

Mr. Johnston recommends that the tax rate rise by roughly one-third of a percent for every dollar the price of oil increases above $40 per barrel. The House reached a compromise number of one-quarter of a percent above $50 per barrel. The Senate chose the weakest approach yet — a one-tenth of a percent increase that doesn’t apply until oil reaches roughly $50 per barrel.

What does that choice mean in terms of dollars? At $60 per barrel, this costs us more than $500 million per year when compared with what the Legislature’s lead consultant recommended. It costs the state roughly $150 million per year compared with the House compromise.

The Legislature has seen better moments. In March, the Senate Resources Committee adopted a proposal that came close to what Mr. Johnston recommended — a 25 percent tax, with a rate that increased one- fifth of a percent for every dollar the price of oil rose above $40 per barrel. That left the state just short of reaching the world average tax rate. That bill was a fair compromise and would have provided the state with $700 million more, at $60 per barrel, than the bill passed by the Senate.

The Senate bill also raises $100 million less, at current prices, than the version it passed just 2 weeks earlier. If oil falls to $20 per barrel, the bill raises $250 million less than we receive under the current oil tax rules and loopholes we all agree must be fixed. We’re going downhill fast.

We have many other concerns about this bill. For example, one provision lets oil companies reduce their taxes by roughly $100 million per year for past investments they’ve made over the last five years, even if they don’t increase their level of investment in Alaska. We think tax incentives should promote future development, not reward past decisions.

But fixing the tax rate would make this a much better bill.

This is a debate about the future of our state. It’s likely to involve give and take. It will hopefully result in action by legislators to improve upon what’s been passed so far.

Hollis French is a Democratic state senator from Anchorage. Les Gara is a Democratic state representative from Anchorage.