Legislature(2007 - 2008)Anch LIO Conf Rm
09/10/2007 01:30 PM Senate HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| SB160 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 160 | TELECONFERENCED | |
SB 160-MANDATORY UNIVERSAL HEALTH CARE
CHAIR JOHNNY ELLIS announced the consideration of SB 160.
1:35:25 PM
SENATOR FRENCH introduced SB 160 with an overview of the
problem, an overview of the bill, and a review of a web site
created as a guide for Alaskans.
The Problem:
Fifteen percent or 100,000 Alaskans do not have health insurance
yet 60,000 of that uninsured population do have jobs. They are
simply working for employers that can't afford or choose not to
provide health insurance. The uninsured do not go without
medical care. They simply pay out of pocket for what they can
afford and what they can't afford is passed on to someone who
can pay. To help cover the cost of that uncompensated care,
Alaskans who do have health insurance pay what is essentially a
14 percent tax on their policies. Every year that translates to
increased medical premiums of about $1,000 for a family of four
and $19 million for the State of Alaska.
SENATOR FRENCH reminded members of the speech Mark Foster from
the Institute of Social and Economic Research made about the
disadvantages Alaska faces when competing with other states and
nations for health care business because of the high cost of
medical care here. Part of the overspending for health care is
due to the large uninsured population in the state.
1:38:36 PM
The Overview:
SENATOR FRENCH explained that SB 160 is roughly modeled on the
Massachusetts plan. It is not socialized medicine and it is not
single payer, both of which are usually features of government-
run health systems. Rather, SB 160 embraces the American values
of competition and individual responsibility. It would require
Alaskans who do not have insurance to get a policy that would be
affordable due to a combination of market reforms and subsidies.
Those who are currently covered by an insurance policy would not
be affected other than to potentially see a decrease in their
premiums.
SENATOR FRENCH outlined three key features in SB 160. It would
create the Alaska Health Care Board, which would be comprised of
11 members who are appointed by the governor and confirmed by
the legislature. The board would define essential health care
services and certify private insurance plans that meet the basic
criteria that the board sets out. The second feature is the
Alaska Health Care Fund, which would be made up of state,
federal, and employer contributions. The fund will issue
vouchers to assist qualified individuals in purchasing a health
insurance policy. The third feature is the health care clearing
house, which is where individuals would take their vouchers to
select an insurance policy. Essentially it's a marketplace that
efficiently matches buyers of insurance with sellers of
policies.
SENATOR FRENCH referenced a chart dividing the uninsured Alaskan
population into three categories: those whose income falls below
100 percent of the federal poverty line; those whose income
falls between 100 and 300 percent of the federal poverty line;
and those whose income falls above the federal poverty line.
Alaskans who are below 100 percent of the federal poverty line
and are not covered by Medicaid would qualify for a voucher from
the health care fund to take to the clearinghouse and purchase a
health insurance policy. Alaskans who are between 100 and 300
percent of the federal poverty line would be on a sliding scale
where the fund would issue a voucher for part of the policy cost
and the rest would come out-of-pocket. Alaskans who are over 300
percent of the federal poverty line would be on their own to buy
a policy. They could receive a beneficiary fund that is
deposited by employers, he added.
SENATOR FRENCH gave a brief overview of the web site that, among
other things, has a calculator that uses the Massachusetts plan
to help individuals determine their expected monthly out of
pocket costs for a policy. For example, a family of three that
has no health insurance and has a gross income of $3,000 per
month would pay about $120.
1:46:25 PM
SENATOR CON BUNDE asked the following: 1) if the board members
would be state employees or similar to the Board of Regents who
are reimbursed for expenses, 2) how essential services would be
defined, and 3) if there would be credit for a healthy
lifestyle.
SENATOR FRENCH responded: 1) the members would be more like
Board of Regents members, 2) rationing is not anticipated
because the bill doesn't use socialized medicine or single
payer, and 3) healthy lifestyles should be rewarded.
SENATOR COWDRY mentioned prescription drugs and litigation and
asked what's caused the increase in cost for medical care.
SENATOR FRENCH said he didn't have a short answer, but Americans
do enjoy some of the best medical care in the world and they pay
for it.
1:49:53 PM
MICHAEL TANNER, Director of Health and Welfare Studies, The Cato
Institute, noted that he had submitted written testimony. [See
the bill file.] He said that when considering health reform it's
important to recognize that the United States provides the best
health care in the world and in large part the quality stems
from the free market health care system. He cautioned members to
take care and not damage the high quality system when making
reforms. Just deal with the real problems such as cost, number
of uninsured, and uneven quality. In many ways we should be
guided by the Hippocratic Oath, which is to do no harm, he said.
MR. TANNER said that SB 160 takes good steps and is particularly
valuable because it is not a single payer or government run
health care system. Every government run system in the world
rations and denies care, which has a cost in terms of human
lives. In 2005 the Canadian Supreme Court struck down part of
its health care system stating that many of the 800,000 people
on the Canadian waiting list would live in chronic pain and/or
die while waiting for care. "That is not the type of system that
you want to bring to Alaska," he said.
1:52:51 PM
MR. TANNER said he has serious concerns about the employer
mandate called for in the bill. As a matter of economics,
employers are indifferent to the type of compensation they
provide their workers, he said. It doesn't matter if it's wages,
health insurance, or retirement benefits; the employer simply
pays a certain sum per worker. If the cost per worker increases
and productivity does not, the employer will have to find some
way of reducing the cost. That can be done by cutting other
benefits, not paying as much into retirement, lowering wages, or
reducing the number of employees. Ultimately, the increased cost
to the employer will be borne by the employee, he said.
MR. TANNER said he also has serious concerns about the
individual mandate because it's a serious intrusion on
individual liberty and decision making. The 47 states that have
mandatory auto insurance haven't found it to be very effective
even though it's relatively easy to enforce. Enforcing an
individual mandate for health insurance would not be easy.
Inevitably it would require a series of new regulations leading
to greater government control and involvement. Although SB 160
establishes a board that will determine what constitutes
essential health services, he guaranteed that special interest
groups would descend asking for inclusion. As a result, the cost
of that health care product will rise and either the subsidy
will need to be increased or premiums will need to be capped.
Capping premiums leads to rationing care, he stated.
MR. TANNER said he also has trouble with the subsidy level going
up to 300 percent of the federal poverty level. That amounts to
about $62,000 for a family of four, which is above the median
income in Alaska. Essentially that expands welfare well into the
middle class. "Doing so you create an enormous constituency for
people who want ever more subsidies." Citing Medicaid as an
example, he said there's a "crowd out" effect when subsidies are
moved to that level. People who buy their own insurance or
employers who offer health insurance to low wage workers simply
stop doing so.
MR. TANNER described the proposed health care board as a huge
regulatory agency, which will ultimately add to the cost of
insurance. It would be similar to the Massachusetts board that
has already used its regulatory power to require that all state
health insurance offer prescription drug benefits. It has also
prohibited health insurance from offering high dollar deductible
plans, which is the type of insurance people should really buy,
he stated.
MR. TANNER said although the problem with health insurance is
real, most of what state government can do would make the
problem worse. The problem should be addressed in Washington
D.C. with changes to the federal tax code and federal antitrust
laws. He suggested that what Alaska can do is: repeal mandates
rather than add them; make the purchase of insurance across the
boarder legal; allow associated groups to band together to get
benefits available to large employers; and try to bring down the
cost of insurance.
MR. TANNER said that the reason most people don't have insurance
is because they can't afford it and the mandates and other
regulations that states add make health care policies expensive.
2:03:39 PM
REPRESENTATIVE CARL GATTO asked how preexisting conditions are
handled and if it's correct that about 90 percent of a person's
lifetime health expenses occur in the last year of life.
MR. TANNER said the figure is actually about 50 percent. With
regard to preexisting conditions, he said there are two answers.
First, you want people to buy insurance when they're young and
healthy so that they'll have it when they're old and sick.
However, the young healthy population won't be inclined to buy
health insurance if it's expensive so make it affordable.
Second, take the small number of people who are medically
uninsurable out of the insurance pool and subsidize them
separately.
SENATOR BUNDE asked if he's endorsing a health savings plan.
MR. TANNER said partially, but in essence he's saying that you
must recognize that insurance is supposed to spread catastrophic
risk. Today we expect health insurance to pay for routine costs
and that needs to be turned around so that catastrophic
insurance is at the top of the scale and routine low dollar
expenses are paid out of pocket. We don't currently do that
because of the tax code, which rewards first-dollar insurance
coverage and penalizes those who pay out-of-pocket. HSAs are a
way to equalize the tax burden, he said.
2:08:23 PM
EDMUND F. HAISLMAIER, Senior Research Fellow, Center for Health
Policy Studies, The Heritage Foundation, commended Senator
French and the committee for considering consumer directed
healthcare and warned against looking at the Massachusetts Plan
as a detailed template. Alaska is very different from
Massachusetts and its problems are very different, he said.
MR. HAISLMAIER said the basic concept outlined in SB 160 is to
shift from a payer-centered system to a consumer-centered
system. The hierarchy of a payer-centered system has the
employer or payer on top. The payer may or may not interact with
an insurer that may or may not interact with a provider. In
theory this is done for the consumer but they aren't in control.
Single-payer systems are payer-centered where the consumer is
off to the side and in no more control than a dog that is taken
to the vet. Realize, he said, to make a real difference a
fundamental shift in the system is necessary. Simply cutting the
number of payers to one doesn't change the dynamic.
MR. HAISLMAIER explained that in a consumer-centered system the
consumer is in control. The payers help with the funding but
they don't run the system. He said there are two reasons the
state might look to this type of model. First, it changes the
incentives because everyone would be working for the consumer.
Second, it introduces the concept of value, which is the
relationship between cost and benefit. Although value is
inherently subjective, everyone can probably agree that they
aren't getting very good value out of today's health care system
either as individuals or collectively. "Either we feel we're
paying too much for what we're getting or we're not getting
enough for what we're paying." Ideally we'd like to pay less and
get more, but the real question is how to devise a system that
rewards people for delivering better and cheaper health
insurance. The easiest way to control cost is not treat people,
but that doesn't deliver value. The second easiest way is to cut
payments to the provider, but that doesn't produce value.
MR. HAISLMAIER said the most important reason to move to a
consumer-centered system is to create incentives to seek value
and reward doctors or insurance companies that provide value.
Also, consumer-centered systems make it easier to accommodate
economic realities. People no longer work for the same company
throughout their entire working career. In Alaska there are
part-time workers, seasonal employees, people with more than one
job, and people moving jobs. That's a dynamic part of the
economy and as legislators you want to encourage that because
that's where job growth and economic vitality lies. A system
where insurance moves with the person deals with that, he said.
MR. HAISLMAIER said that the national data on the uninsured over
a four-year period shows that few people are uninsured all the
time. Indications are that if insurance moves with the person
instead of sticking to the job, about 40 percent of that
uninsured problem might go away. It's intuitively obvious that
when people stop losing their insurance we stop creating
uninsured people, he said.
2:21:34 PM
MR. HAISLMAIER suggested several revisions to the bill. First,
he warned against regulating employers because it's contrary to
federal law. Although the Massachusetts Plan requires employers
to do certain things, "they were artfully designed to be a
political compromise that had no meaningful effect on a
business." Second, he said that with regard to low income
premium support it's important to remember that this is not an
entitlement approach; it's a defined amount of money. The idea
is to take that pot of money, identify the target population,
and figure out how the money can go the farthest. Third, the
health plan standards should be set, at a minimum, to comply
with federal law. State government already regulates insurance
so there's no need to duplicate that.
2:26:06 PM
MR. HAISLMAIER said there's a sort of logic to asking what you
want the insurance market to look like in a consumer-centered
system. Today there's a group market and an individual market
and creating a hybrid would take the best of each. This would be
offered to employers through an exchange that's much like a
large human resources department. An advantage is that the state
would have one place to send extra money as a subsidy, but it
wouldn't have to design and run a plan.
2:29:37 PM
SENATOR FRENCH asked him to expand on Governor Romney's point
that allowing people to go without health insurance when they
can expect someone else to pay the bill for their treatment, is
essentially a de facto mandate on providers and tax payers.
MR. HAISLMAIER explained Governor Romney's approach was to
address the mandates last. His first point was to say that he
was going to make insurance more affordable for middle class
people. Second, insurance was going to be easier to get. Third,
it would be subsidized with money that was already going to
hospitals but with no accountability. The people that were being
treated would be identified and they would receive a subsidy for
their treatment. Governor Romney said that at that point there
wasn't any excuse for people not to have health insurance.
Although he didn't require compliance, he wanted to make sure
that the people receiving treatment paid their bill so they had
to either put up a bond or put money in an escrow account. If
they didn't do that, their state income tax refunds would be
held back until the escrow account was filled. Plan provisions
also made it easier for providers to collect by providing things
such as automatic wage garnishments. The state legislature
didn't agree and instead said that people who didn't buy a
policy would get an income tax fine equal to half the value of
an average policy. That requirement will be phased in next year,
he stated.
MR. HAISLMAIER said that his point is that there is an inherent
tradeoff between the parameters you set for the insurance and
the need for the mandate. If the insurance that's sold is age
and geography adjusted then it's a better value for younger
healthier people to buy and therefore the need for a mandate is
reduced. The tradeoff is that you will need separate legislation
for reinsurance to address concerns that insurers have with the
high risk population.
MR. HAISLMAIER said Massachusetts has community rating and that
isn't going to change. He wouldn't recommend that though because
it artificially overprices the product for younger healthier
people. He prefers age-adjusted ratings with an accompanying
risk transfer pool to address the concerns that insurers have
about getting stuck with a disproportionate share of diabetics,
for example, once people can pick and choose. "At the end of the
day, that kind of selection in the properly designed market
might actually be a good thing. If you're an insurer and you're
really good at getting the best results at the best price for
cancer care, it would be a good thing if all the people with
cancer went to you."
CHAIR ELLIS asked if it is government's role to educate
consumers about which provider is the most reasonable. He noted
that in Alaska there isn't much opportunity to shop around. "For
most of us, flying to Seattle is the cheap option."
MR. HAISLMAIER agreed that people in Alaska already fly places
for treatment so the question is whether or not you're flying to
the right place for that treatment. The second point is that
simply creating the ability for people to choose changes the
market dynamic from seller-driven to buyer-driven. Making that
fundamental change creates a demand because the consumer makes
the choice about which plan to pick and which provider to go to
for treatment. There's still a role out there for those experts
to help the consumer make those decisions. "We do have
experience in this area," he said. The Federal Employee Health
Benefits Program has run that way since 1960. The government
invites carriers in and people make selections aided by a
variety of private entities.
MR. HAISLMAIER said his final advice is to forget about
designing the ideal system at the onset. Instead, put the
information you have out there and invite interested entities to
suggest improvements.
2:43:17 PM
JEFF RANF, President, Alaska Association of Health Underwriters
(AAHU) and Broker, Wallace Group Services, said SB 160 addresses
a true need in the state, but unlike Mr. Tanner, he doesn't
believe that the solution lies in Washington D.C.. He opined
that Alaska is a diverse state with needs that can only be
answered by Alaska citizens.
MR. RANF said AAHU agrees that monitoring the insurers will
bring forth quality and affordable products. The Alaska Health
Care Board is a crucial element for the success of SB 160, but
it must have the authority to make hard decisions along with
solid recommendations. It would need to include employers,
providers, federally funded program officials, public health
officials, state chamber officials, the insurance industry,
legislative members, and executive branch members. Furthermore
it must have a clear and concise agenda capable of making
unbiased decisions based on the true needs of the state. A big
problem in our health care system is that everyone is protecting
their own turf so we're going in a number of different
directions rather than just one, he said.
MR. RANF said that as a society we really don't understand
what's driving up the cost of health care. The uninsured
population is just the beginning. Other factors include an aging
population, increased longevity, rising pharmaceutical costs,
increased technology spending, the cost of medical malpractice,
and a lack of managed care in the state. Once we understand
what's driving costs it'll be easier to determine what it'll
cost to cover the uninsured, but don't kid yourself that it'll
be moderate, he said.
MR. RANF said that funding is the largest concern and he doesn't
believe that there will be a decrease in premiums if this bill
passes. However, if premiums increase moderately instead of the
steady 15 percent trend we've seen it'll be a huge step in the
right direction.
2:50:59 PM
CHAIR ELLIS said it's gratifying to have a productive
conversation because he remembers working on this same issue 18
years ago when the insurance industry opposed every step.
"You've been a constructive positive voice and we want to
continue that with you," he said.
REPRESENTATIVE GATTO asked about a system where everyone
receives 100 percent cost coverage for any kind of treatment. He
asked if that would be devastating to a state or if it's
something like what is done now.
MR. RANF said right now people who want treatment but don't have
insurance go to the emergency room and the cost for that is very
high. However, covering the uninsured isn't going to be cheap.
"Once everyone has coverage, the costs are going to be high."
The reason health care is so expensive isn't because of the
system, it's because we're not healthy as a nation. "We're not
as healthy as other nations are and I thing that's what's
driving a lot of this," he said.
2:53:40 PM
CHAIR ELLIS said he looks forward to working with the executive
branch on health care issues.
2:54:53 PM
KARLENE JACKSON, Commissioner, Department of Health and Social
Services, said that the department is grateful to Senator French
for bringing the issue forward. Although she wasn't prepared to
take a position on actual points in the bill, she did have
several comments. She said she particularly appreciated the
discussion about value in terms of cost/benefits and that the
department will be focus on that carefully. She noted that the
governor's health council is also working to identify short and
long-term strategies to balance the health care system in terms
of access, cost, and quality. When the council finishes its work
in January it may help this and other bills on the same topic.
COMMISSIONER JACKSON advised that DHSS and other departments are
doing fiscal analyses on the fiscal note. We expect to have
future conversations when those are complete, she said.
COMMISSIONER JACKSON said previous speakers raised some of the
same questions she had including the employee and individual
mandates. Those are concerns that need further conversations,
she said. She said she agrees that Alaska is unique and that
it's important to craft a program that works for Alaska. Noting
that the department isn't too reliant on federal funding or
federal policies, she said that Congress is still making
decisions on the SCHIP [State Children's Health Insurance
Program] and that that will certainly impact SB 160. Also, she
asked the committee to ensure that access is more than an
insurance card. Make sure it's actual access to health care for
Alaskans. Finally, she asked the committee to consider changing
the structure of the health care board. The bill places it
within DHSS as a division and she suggested the committee look
at the Mental Health Trust Authority model instead. This is
particularly important given that the Department of
Administration has the Division of Insurance as well as
responsibilities for the state health benefit plan, she said.
2:58:37 PM
DR. JAY BUTLER, Chief Medical Officer, Department of Health and
Social Services, said he has two comments. First, he hadn't
heard any discussion about what perspective a physician might
bring. He noted that the American Medical Association recently
published criteria for a well-functioning health care system. It
provided that there should be care for all, responsible
stewardship of community resources, and personal responsibility.
Second, he said it will probably be impossible to reduce costs
and improve health for Alaskans unless prevention is addressed.
2:59:52 PM
REPRESENTATIVE GATTO commented on the shortage of healthcare
providers in Alaska and said they can't be penalized or the
situation will get worse. He asked if that doesn't figure into
the formula for apportioning health care.
DR. BUTLER said that there is a profound and escalating shortage
of health care providers in Alaska and there are no easy
answers. Current data suggests that physicians take up practice
close to where they completed residency training. Currently
there's only one such program in Alaska and that's in Anchorage.
3:02:00 PM
DUANE HEYMAN, Executive Director, Commonwealth North Alaska
Health Care Roundtable, said the "Roundtable" has been working
on these issues for two years now and the hope is that SB 160
will be a catalyst to focus attention on the health of Alaskans,
how it can be improved, and how affordable quality care can be
offered to all Alaskans. He highlighted the handout "Principles,
Elements and Specific Steps" as a good resource. [Copy in bill
file.]
MR. HEYMAN urged members to keep two points in mind. First, do
no harm. Significant reforms are needed, but don't jeopardize
those who already have reasonable access to health care, he
said. Second, the real goal is healthy Alaskans and not just
insurance coverage. Improving the health of Alaskans is a long-
term many faceted situation. Insurance is just one important
part.
3:05:23 PM
SENATOR FRENCH asked which approaches have consensus among the
Roundtable members.
MR. HEYMAN said the Roundtable favors universal access to health
care, but there are many parts to consider. Insurance, access,
knowledge, accessibility, and maintaining a healthier lifestyle
all play a part. "Prevention ultimately is the best way to try
and stem the increase in costs."
CHAIR ELLIS said he's pleased that the business community is
interested in the issue because that wasn't the case 20 years
ago. He said he appreciates the leadership.
3:07:50 PM
LAILE FAIRBAIRN, Managing Partner, Snow City Café in Anchorage,
said SB 160 is a promising solution to a significant problem
facing many small Alaskan businesses. She said she has been
trying to get health insurance for her employees for a number of
years, but it remains far out of reach. She related specific
difficulties she's faced and noted that many of her employees
are young and believe they'll never get sick so when premiums
doubled, they either couldn't or wouldn't pay the increase.
JESSE COLLENS, Employee, Snow City Café, related the health care
problems he's had as a diabetic.
MS. FAIRBAIRN added that the café would be very happy to pay a
percentage of its payroll to help fund the proposed program. "It
would be far less than any health insurance that we could
purchase right now." This bill is an incredible opportunity for
our state, she stated.
CO-CHAIR DAVIS expressed appreciation that Ms Fairbairn came
forward and congratulated her on the care she shows her
employees.
CHAIR ELLIS said it would be helpful if she were to spread the
word and talk to Rotary clubs and other local organizations.
3:15:43 PM
SENATOR FRENCH stated that small businesses and young people are
particularly difficult to cover, but he and the sponsors are
looking for a workable solution.
CO-CHAIR DAVIS suggested that a bill that she had introduced
might be of interest to Mr. Collens because it extends the age
that young people can be covered by a parent's policy
3:17:42 PM
JOEL GILBERTSON, Regional Director for Strategic Development &
Administration, Providence Health Systems Alaska, applauded the
sponsors for starting the dialogue. This along with the
governor's strategy council has started to put health care
reform back on the radar. He mused that the system has become
extremely complex since 1902 when the Sisters of Providence came
to Alaska and established a hospital in Nome.
MR. GILBERTSON said that Providence Hospital's commitment to
improve health care in Alaska hasn't changed in the last 105
years. Referencing the comment about flying to Seattle for
treatment, he said it's important to remember that 20 years ago
that was the norm for many procedures. Now there are excellent
cardiac and neonatal services available in Anchorage. The
benefits to the patients and their families are obvious, but the
challenge is that of production. "At the end of the day it
always comes down to production." In Alaska it will always be a
challenge to decide which services to offer in state. Those
value judgments always have to be made so it's difficult to make
a bright line comparison between out of state and in state care
because of the volume issue, he stated.
MR. GILBERTSON reported that Providence had over 70,000
emergency room visits last year, a large portion of which were
self pay or uninsured. He noted that the volume of self pay has
grown rapidly on an annual basis, but something expedited that
in the last 24 months. Those who are unable to pay still get the
care, but it's just not in the most efficient manner, he said.
MR. GILBERTSON said when you look at the payer side, there are
only three groups of people who receive health care services:
there are the uninsured; there are those with a government
benefit such as Medicare, Medicaid, or Denali Kid Care; and
there are those that have commercial insurance. The first two
groups are growing on an annual basis while commercial insurance
is shrinking, but the cost of the health care system is
constantly being pushed onto that third piece of the pie to keep
the entire system afloat. Obviously it's not sustainable, he
said.
MR. GILBERTSON stated agreement with Commissioner Jackson that
the largest public health threat in Alaska is limited and
inappropriate access to health care services. Therefore, when
talking about reform, focusing on access is key; it's not
coverage. People can be covered, but if there isn't a provider
willing to provide the care or there isn't a provider willing to
accept the insurance, the coverage isn't worth too much.
MR. GILBERTSON pointed out that health care reform is in its
infancy and that some mistakes and particular challenges should
be expected. He said that state-specific reforms are
overwhelmingly focused on access or coverage expansion, but cost
control needs equal attention. Noting that many states are
holding themselves hostage to federal action, he said he doesn't
agree that it's a federal issue. Furthermore, each state has a
different starting point and a different set of circumstances.
It's a matter of being mindful of where the resources are and
making sure that the proposals are right-sized for each state,
he said.
MR. GILBERTSON said that the solution will be multi-faceted. It
will require an engaged citizenry; require adequately and
appropriately scaled access sites; promote sustainable primary
care; raise the bar on clinical quality; increase individual
responsibility; address workforce issues. Successful change here
in Alaska will depend on whether or not the different groups can
compromise. "Ultimately, cost improvement will come from
decreased utilization and…focusing on ways in which we get more
preventative services in the state…will make legislation like
this ultimately successful."
3:27:09 PM
SENATOR FRENCH asked what percentage of the 70,000 emergency
room visits is self pay.
MR. GILBERTSON said he didn't have that information, but for the
entire hospital about 7 percent of the charges are budgeted for
self pay individuals. He noted that on the inpatient side, about
3 cents on the dollar is collected for self pay. This year self
pay is running well over 9 percent and each percentage point
change adds about $9 million in uncompensated care into the
system. "We have normally run at about $65-$70 million. This
year we're running at a rate that we'll probably be well over
$90 million."
SENATOR FRENCH asked how much of the uncompensated care is
reimbursed by the federal government.
MR. GILBERTSON said he didn't have the information but that
Providence does receive funding for services. Providence doesn't
receive any federal DISH (disproportionate share hospital) funds
for Medicaid or Medicare, he said.
CO-CHAIR DAVIS asked if the hospital can identify what
percentage of the uncompensated care is for services to people
who have insurance but don't use it because they can't afford
the co-pay.
MR. GILBERTSON said there's no central database to see if an
individual actually has insurance or not.
CHAIR ELLIS asked if Providence makes the distinction between
bad debt and uncompensated care.
MR. GILBERTSON explained that it's broken down as charity care
and bad debt. The total represents charges that are not
recovered.
3:31:29 PM
PATRICK HIGGINS, Human Resources Director, North Star Behavioral
Health System, said he had several points to make. First, the
impetus is recognizing that the three groups out there are
individuals with government-provided health care, individuals in
the insurance group, and individuals who self pay. The self pay
group has people who aren't getting help. In large part they are
people who are working but can't afford insurance. They are
delaying health care and when they do finally receive care it
costs more. Obviously, that impacts society in a number of ways,
he said.
MR. HIGGINS cautioned that the impact on insurance for employers
and being competitive goes beyond the small employer. As more
and more employers drop health insurance coverage the insurance
pool shrinks and it costs everyone more. When cost estimates for
implementing this program are made, he hopes that the cost of
insurance to state and local employees and the growing numbers
in Medicaid are taken into account. Look at the balance between
what's out there now, the cost of this program, and the cost
consequences if nothing is done, he said. This is vital work for
Alaskans and for the country. Something must be done as quickly
as possible.
3:35:30 PM
KAREN RHOADES, Owner/Operator, Northern Living Centers, said she
is a stakeholder on several levels. She is a health care
provider, an employer, and a working Alaskan who is uninsured.
She encouraged members not to be afraid of the mandate. If it's
reasonable, people won't object, she opined. She cited a study
indicating that people are willing to pay into a health care
plan if the cost is reasonable. As an employer she isn't afraid
of the mandate, but she would suggest placing a cap. She related
her particular recruitment and retention difficulties and said
that if the state is going to make it impossible to be
competitive then it has an obligation to help her as a health
care provider. She encouraged the committee to use the good
framework provided in SB 160 and pass the bill.
3:42:19 PM
WAYNE STEVENS, President, Alaska State Chamber of Commerce, said
the state chamber looks forward to working with the committee
for workable solutions that don't place undue financial burdens
on employers or employees. Health care is a major concern for
businesses and the primary concern is cost and affordability. He
related that the state chamber has been unsuccessful in putting
together simple health care plans over the last several years.
Essentially, the program that's available isn't acceptable to
the consumer he said. What was offered was a menu of items
including routine check ups, dental care, vision care, and
catastrophic coverage. Health savings accounts were also
encouraged. However, consumers wanted the Cadillac coverage that
is offered to state employees. Clearly, health care issues force
businesses to make hard decisions about how to provide benefits
to employees while remaining competitive in the market. The
fundamental problems are cost, quality, and access.
MR. STEVENS encouraged the committee to look at all the issues
across the spectrum: tort reform; medical malpractice; the use
of emergency rooms as the primary point of entry to health care;
competitive issues; rapidly rising costs of Medicare and
Medicaid; cost shifting; personal responsibility; and health
savings accounts. Encouraging the use of HSAs is a key part in
restoring market discipline, he said. He urged the committee to
use caution as it moves through the process and finds solutions.
Don't force something on the system that doesn't solve the
problem, he said.
MR. STEVENS said that an aggressive public/private partnership
is needed to craft a fix and business needs a seat at the table.
"Health is a personal choice and no amount of government
intervention will fix this portion of the problem." He cautioned
that any mandated health insurance needs to raise enough money
in new premiums or penalties to justify the cost of
investigating employers, determining eligibility, overseeing
premium collection, and identifying collecting penalties from
the uninsured. Make sure that out year costs don't increase
unchecked, he said.
3:47:22 PM
VINCE BELTRAMI, Executive President, Alaska AFL-CIO, presented
data showing the critical state of health care in Alaska. He
said that while nearly all of the affiliate members of Alaska
AFL-CIO have some sort of health insurance, the organization
also speaks on behalf of other working Alaskans who are either
without a union or without basic health insurance. They are
subsidized by those who do have insurance, he said.
MR. BELTRAMI related that when he served as a trustee on the
IBEW NECA Health and Welfare Plan, he saw double digit
percentage increases in premiums with decreasing benefits.
According to recent statistics, retiring elderly couples will
need $200,000 in savings to pay for their most basic medical
coverage. He emphasized the one thing is certain and everyone
agrees, health care costs must be controlled. There's
disagreement about the approach to take in solving the problem,
but what is known is that if the rate of escalation continues at
current trends, the cost of inaction will affect employers'
bottom lines and consumers' pocketbooks.
MR. BELTROMI said he believes that the biggest challenge is to
de-politicize the issue. Regardless of which side of the aisle
you sit on, health care issues are killing all of us. He said he
looks forward to being part of the solution.
CHAIR ELLIS said he's always admired the AFL-CIO for sticking up
for the people who are doing without because it's the right
thing to do.
3:54:02 PM
PAT SENNER, MS, RN, ANP, Alaska Nurses Association, expressed
general support for a bill that shares the cost of health care
between government, employers, and individuals. Throwing out
what she called a radical suggestion, she said perhaps people
should be rewarded for living a healthy lifestyle.
MS. SENNER said that the primary concern she has with SB 160
relates to the makeup of the proposed board because it is not
consumer-driven. As proposed, the board would have 11 members
and just two members would be consumers. All the other members
have a vested financial interest in the health care system. We
need to look at improving that mix or giving the board less
power, she said.
MS. SENNER said it's not clear if active and retired state
employees, Medicaid, and Denali Kid Care would be merged into
the system, but if that's the case, it would represent about
one-forth of the population in this state. That would be a huge
system that would drive what's provided to everyone else.
Furthermore, the board would wield a tremendous amount of power.
MS. SENNER noted that nurses are not included and advised that
they provide about 850,000 patient visits per year. She
mentioned access to care and suggested the committee look
outside the box and think about contracting with primary care
providers to address the issue of billing. She reiterated her
request that nurses be included.
CHAIR ELLIS asked Mr. Tanner and Mr. Haislmaier if they would
like to respond to any of the comments that had been made.
3:59:38 PM
MR. TANNER issued a caution about differentiating between
charges and actual cost when talking about the cost of
uncompensated care. Charges really have nothing to do with the
actual cost that the hospital has incurred and they aren't the
same as the uncompensated care cost. He also cautioned against
saying that more preventative care will save money because
preventative care doesn't save money even though it's very good
for the individual. Third, he said he agrees with Mr. Haislmaier
that an employer mandated system is problematic and won't
survive a court challenge. Finally he urged caution about
overusing the argument that people who don't have health
insurance cost everyone money. It's undoubtedly true, but if you
go too far down that road you'll be mandating certain behaviors,
he said.
4:04:16 PM
MR. HAISLMAIER said he believes the bill sponsors are really
working on single market reform rather than single payer. It's
moving away from trying to get a better deal at someone else's
expense and from the government using its clout to get the
providers to take a lower rate and then passing it along to the
private sector.
MR. HAISLMAIER presented national data on emergency room
utilization that indicates that the Medicaid population is using
ERs nationally at twice the rate as the uninsured and elderly
and five times the rate of the privately insured. That suggests
that if you move more of those people to the privately insured
with premium support you may start to see some changes in
behavior. It also suggests something about a state's Medicaid
policy when the population is using the ER at that level. He
explained that when states are faced with a budget crisis they
have three options on the table. They can throw people off the
rolls, they can cut the benefits, or they can pay the providers
less. None of those solutions is good but paying the providers
less is the least ugly, he said. So if the situation is that
providers are paid less and they get to the point that they
won't accept or can't afford to accept those patients, then the
patients go to the ER. "So my message in some states-maybe here
maybe not-is, are you really saving any money in your Medicaid
program if that's what's happening?"
MR. HAISLMAIER said one more point is that the Federal Employee
Health Benefits Program is the closest thing there is to the
consumer choice market and that system has consistently turned
in cost control better than the large employer plans even when
adjusted for benefits.
MR. HAISLMAIER said he enjoys being an itinerant consultant to
state legislatures because he gets an opportunity to listen to
different stories. When he does that he asks himself if the
person would be taken care of in the design and the answer is
yes. The young man who has diabetes would be covered. Finally,
he said that when he listened to Mr. Beltromi he was reminded
that some of the most popular plans in the federal employee
health benefits plans are sponsored by unions.
4:13:32 PM
CHAIR ELLIS announced that open public testimony would be taken
during subsequent hearings and that all written testimony is
welcome. He thanked all the presenters and noted that 11
legislators were in and out of the hearing, which is a good
sign.
CO-CHAIR DAVIS said this has been a helpful and it sets the
stage for when the committee returns to Juneau
REPRESENTATIVE PEGGY WILSON expressed appreciation for the
information.
SENATOR KIM ELTON said the hearing was most helpful.
There being no further business to come before the committee,
Chair Ellis adjourned the meeting at 4:15:39 PM.
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