Legislature(2013 - 2014)Kenai LIO
07/23/2013 10:00 AM House ADMINISTRATIVE REGULATION REVIEW
| Audio | Topic |
|---|---|
| Start | |
| Affordable Healthcare Act: Presentation and Discussion on the Effect the Federal Law Will Have on Alaska and Alaskans | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
ADMINISTRATIVE REGULATION REVIEW COMMITTEE
Kenai, Alaska
July 23, 2013
10:03 a.m.
MEMBERS PRESENT
Representative Lora Reinbold, Chair
Senator Cathy Giessel, Vice Chair
Representative Geran Tarr
Senator Hollis French
MEMBERS ABSENT
Representative Mike Hawker
Senator Gary Stevens
OTHER LEGISLATORS PRESENT
Representative Kurt Olson
Representative Paul Seaton (via teleconference)
Senator Peter Micciche
COMMITTEE CALENDAR
AFFORDABLE CARE ACT: PRESENTATION AND DISCUSSION ON THE EFFECT
THE FEDERAL LAW WILL HAVE ON ALASKA AND ALASKANS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
MIKE NAVARRE, Mayor
Kenai Peninsula Borough
Soldotna, Alaska
POSITION STATEMENT: Discussed the complexities of health care
during the presentation on the effect the Patient Protection and
Affordable Care Act will have on Alaska and Alaskans.
STORMY BROWN, Director
Human Resources
Kenai Peninsula Borough
Kenai, Alaska
POSITION STATEMENT: Testified during the presentation on the
effect the Patient Protection and Affordable Care Act will have
on Alaska and Alaskans.
AMANDA AMAKI, Staff
Senator Lisa Murkowski
United States Congress
Washington, D.C.
POSITION STATEMENT: Testified during the presentation on the
effect the Patient Protection and Affordable Care Act will have
on Alaska and Alaskans.
J. NELS ANDERSON, M.D.
Central Peninsula Hospital (CPH);
Mayor
City of Soldotna
Soldotna, Alaska
POSITION STATEMENT: Described how the Patient Protection and
Affordable Care Act would affect physicians.
STACEY KRALEY, Chief Assistant Attorney;
General-Statewide Section Supervisor
Human Services Section
Civil Division (Juneau)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: Provided comments on the underlying
litigation and U.S. Supreme Court decision issued last June that
led to the determination that the Patient Protection and
Affordable Care Act was valid.
RICK DAVIS, CEO
Central Peninsula Hospital (CPH)
Soldotna, Alaska
POSITION STATEMENT: Testified during the presentation on the
effect the Patient Protection and Affordable Care Act will have
on Alaska and Alaskans.
ACTION NARRATIVE
10:03:10 AM
CHAIR LORA REINBOLD called the Administrative Regulation Review
Committee meeting to order at 10:03 a.m. Senator Giessel,
Senator French (via teleconference), and Representatives Tarr
and Reinbold were present at the call to order.
^Affordable Healthcare Act: Presentation and discussion on the
effect the Federal Law will have on Alaska and Alaskans
Affordable Healthcare Act: Presentation and discussion on the
effect the Federal Law will have on Alaska and Alaskans
10:05:11 AM
CHAIR REINBOLD announced that the only order of business would
be the Affordable Care Act: Presentation and discussion on the
effect the Federal Law will have on Alaska and Alaskans.
CHAIR REINBOLD said the committee would be holding several
hearings across the state to discuss the Patient Protection and
Affordable Care Act (ACA), also known as "Obamacare." She
offered her understanding that regulations that might be imposed
are still being written at a federal level: 10,000 pages so
far, with a possible 50,000 pages by the end of the
implementation of the Act.
10:06:04 AM
MIKE NAVARRE, Mayor, Kenai Peninsula Borough, stated that he
would discuss the complexities of health care in general. He
said it is next to impossible to find solutions to the issue of
health care costs and coverage "for a resident." He explained
that one of the reasons he returned to politics after a hiatus
was because he got on the [Central Peninsula Hospital (CPH)]
Board and recognized how incredibly fast health care costs have
grown in the last 12 years. He relayed that when he left his
former office as mayor in 1999, the gross revenues for CPH were
$33 million, and now they approach $200 million, partly because
health care costs have been growing far greater than the rate of
inflation, and also because the CPH has expanded its services.
He remarked that costs are much higher than that today.
MAYOR NAVARRE imparted that when he was in the Alaska State
Legislature years ago, he was on a Health Care Task Force, which
was created because the insurance for health care for the State
of Alaska had grown from just under $100 million to over $120
million. He indicated that because of the work of the task
force, Aetna, Inc., did not increase costs for two years, which
Mayor Navarre said he interpreted to mean that Aetna was
overcharging the state in the first place. He said a second
task force on which he served focused on the growing cost of
health care and how to meet the needs of Alaska's citizens. He
said those involved included health care providers, union
members, state Representatives and Senators, and people in the
administration. The focus was on the importance of health care
and a search for ways to combat its rising cost. He said one
idea at the time was to take the money from the Permanent Fund
Dividend and put it into the state's health care system, but
that plan "did not fly." He suggested part of the reason that
that plan was not accepted was because there was, and still is,
no focus on what was driving the cost of health care. He
stated, "Until you can fix what's driving the cost of health
care, you just can't throw more money at it."
10:09:44 AM
MAYOR NAVARRE mentioned studies done by the University of Alaska
Anchorage's Institute of Social and Economic Research (ISER),
which show that over $10 billion a year is being spent on health
care in Alaska. He continued as follows:
In this country, we used to focus on working together
to find solutions. If we were going to - in this
state - spend in excess of $10 or $15 billion a year
on health care, would we have the system we have
today? ... I think the answer is no. And I think
that's what we need to look at in the country and in
this state is not where we are, but where should we
be?
MAYOR NAVARRE said there are many interests that will be
affected by the ACA and the politics surrounding it, including
providers and hospitals, and some access to care will be hurt by
it. He said 65 percent of health care costs in the country are
being paid for by government, including federal and state
government through Medicaid and Medicare, and insurance for
public employees. Mayor Navarre said as an employer, the Kenai
Peninsula Borough has a good health insurance plan for its
employees and negotiates to ensure it can maintain flexibility
in the face of changes coming from the ACA and avoid getting
caught in "the Cadillac health care system." He said the Kenai
Peninsula Borough owns two hospitals - South Peninsula Hospital
and Central Peninsula Hospital - and has a vested interest in
[the ACA], because revenues to both hospitals will be impacted
"one way or another." He said there is a lot of uncompensated
care. He said one thing about Medicaid expansion is that it
doesn't change the dollars going into health care; it just
provides an opportunity to be compensated for it rather than
having to share it among the payers in the system. He said he
spoke with Alaska's Congressional delegation to try to figure
out a way to do a demonstration project on the Kenai Peninsula
to try to show "what health care should look like over time."
He posited that the Kenai Peninsula Borough would be a good
place to do that because there are two hospitals, it is "a
closed environment for health care," and there are many good
providers. He said nobody really understands who pays for
health care and how to figure out a bill. He imparted how much
trouble his father had trying to figure out health care bills
when sick and doing what many people do, which is to wait until
the point a bill is about to go to a collection service before
finally being able to figure out how much is owed, because there
are often "multiple bills that say different things."
10:14:04 AM
MAYOR NAVARRE opined that one goal of the Act not yet
accomplished - simplification in the health care system to allow
transparency in fees charged and health care coverage - should
be a goal of Alaska and the whole country. He said hospitals
should be allowed to charge only the cost of care; but if they
did, they would be penalized, because hospitals "only get paid a
portion of that." He characterized the system as "goofy" and
"complex." He remarked that his comments were more of a
diatribe on the health care system in general rather than on the
ACA specifically. He said he thinks the Act was driven by the
increase in the cost of health care and what is being paid out
by the federal government, and said it is necessary to find ways
to control the costs. He said special interests will be
impacted by a reduction in the compensation for health care -
many negatively.
10:16:08 AM
STORMY BROWN, Director, Human Resources, Kenai Peninsula
Borough, indicated that the Kenai Peninsula Borough employs 300
people and has about 800 "covered lives." The borough has
established health care plans, and recently delved into its
health plan with its union to try to avoid the aforementioned
Cadillac tax. She stated, "We have very few of those employees
that are 30-40 hours that are going to change their benefit; we
had already benefitted them at 75 percent ... if they wanted
it." Ms. Brown said one effect she has seen [as a result of the
Act] has to do with the borough's bargaining process. She
explained that the delay of the employer mandate, announced in
July, "was already too late for a lot of employers and employer
decisions." She indicated that spouses and children of
employees are affected. She continued:
We put things into our contract that redefined a full-
time employee around what was the law, and so now it's
in the contract, but there's a delay of a year. So,
we are going to pay, in that sense; we're going to pay
full-time benefits to employees who, under our
definition, wouldn't have been, but we were working
under ... the understanding of what the law would be
on January 1.
MS. BROWN said employers are doing what they are supposed to do.
She indicated that [the Act] does not change what employers do
from day to day but people "don't really know for sure what's on
the other side of it." She said she thinks some people are
making money claiming to be experts on the ACA, claiming that
the sky is or is not falling; however, she said, "We don't
really know until we're in it." She described the situation as
"laying the track while we're on the train." Ms. Brown said
that from a larger perspective, the borough cares not just about
its employees, but also about how its citizens are going to
manage under [the Act].
10:19:48 AM
MS. BROWN, in response to the chair, described the location and
types of borough employees.
10:21:26 AM
MAYOR NAVARRE stated that "as a private sector employer also,"
[the borough] is under the threshold for the employer mandate of
full-time employees. He related that the borough employs many
part-time employees in the "quick-service restaurant business,"
but it cannot afford to provide insurance for all those part-
time employees, because the cost is prohibitive.
10:22:14 AM
SENATOR GIESSEL asked Mayor Navarre if he knows of small
businesses reducing their employees' hours in order to avoid
paying benefits.
10:22:20 AM
MAYOR NAVARRE said he does not know any directly, but suspects
"there would be people doing that." Further, he predicted that
some companies may split into two, in order to stay below a
mandate level, if the impact of the Act becomes onerous.
10:24:03 AM
AMANDA AMAKI, Staff, Senator Lisa Murkowski, United States
Congress, stated that she addresses health care issues on behalf
of U.S. Senator Murkowski. She relayed that she has read the
ACA, which she estimated to comprise 20,000 pages of regulations
in its unfinished state. She said that according to the
Government Accountability Office (GAO), the October 1 deadline -
the time at which the exchanges need to be in place and
enrollment is to begin - is very likely not on schedule, which
is a concern, given that Alaska is one of the states in which
the federal government is going to be instituting the exchanges.
MS. AMAKI suggested it would be helpful to talk about ACA issues
covered by the media. She relayed the latest news was the July
2 postponement of the employer mandate, which was done through a
U.S. Treasury Department blog post, rather than through a press
release or statement, while President Barack Obama was on a 20-
hour flight from Africa with the entire group of White House
correspondents. She opined that that was an awkward method by
which to make an announcement. She said the mandate was listed
for businesses, not individuals; therefore, individuals would
face a penalty for not having health insurance, but businesses
have been given a reprieve for a year. She said although this
is most likely welcome news for employers, it treats employers
and individuals differently.
MS. AMAKI talked about the 40-hour work week now becoming the
30-hour work week; under the Act, 30 hours a week is considered
full time. She offered her understanding that The Wall Street
Journal wrote about "49ers" as employers who keep the number of
employees under 50 and "29ers" as the number of hours that some
workers will be [reduced to] working in order not to be
classified as full-time employees under the Act. She said
hourly workers making the lowest wage potentially will be "hit
with 11 hours less of employment." She said she does not
believe the Administration, nor any Democrat or Republican,
thinks that is good policy for America. She related that there
are restaurant chain operators, which have said they will have
to reduce the number of hours their current part-time employees
work. Ms. Amaki said the Congressional Budget Office has stated
that approximately 8 million people will stand to lose the
employer-sponsored coverage they have currently. She said Ben
Bernanke, the chairman of the Federal Reserve System, stated
during a July 17 House Committee on Financial Services hearing
that feedback received through commentary at the Federal Open
Market Committee is that employers are hiring part-time
employees in order to avoid the federal mandate. She said it is
a concern that has "risen to the level of really being a factor"
in employment economics.
MS. AMAKI said the May 13, 2013, Gallop Poll showed small
businesses are taking certain actions, such as holding off
hiring, pulling back plans on growing their businesses, and
cutting employee hours. She said U.S. Senator Susan Collins of
Maine has introduced legislation with Senator Donnelly, a
Democrat from Indiana, which would change the definition of
full-time employee back to 40 hours. She said Senator Murkowski
is a co-sponsor. Ms. Amaki related that the labor unions have
come out in full force against the ACA, which she said is
interesting given their position in helping President Obama get
re-elected and their support for the health care law in general.
MS. AMAKI said the consequences of the Act are adverse to the
unions. She mentioned a letter, which was sent in July by James
P. Hoffa, the general president of the International Brotherhood
of Teamsters; Joseph T. Hansen, the president of the United Food
& Commercial Workers International Union (UFCW); and D. Taylor,
the president of Unite Here, which represents the food service,
gaming, and hotels. She said the letter states that the health
care laws will destroy the foundation of the 40-hour work week,
which is the backbone of the American middle class, and that the
employer mandate incentives are shifting workers to part-time
status. The letter directly asks President Obama to "fix this
problem." It talks about how multi-employer Taft-Hartley plans
are arranged between the labor unions and industry. She said
[the unions] believe that although they are helping to
contribute to the health care law and the subsidies in the form
of a Cadillac tax paid on the plans, in the form of the
additional tax that employees are going to have to pay for the
health insurance premiums - "an additional tax on top of that" -
they are not eligible for any of those subsidies. She said the
union leaders also believe that the Act is creating a
disincentive for them to have more work hours and potentially is
making it less attractive to be in a union, because unions
arrange the benefits for their members, so if the benefits
pushed for are not going to exist, then employers say, "We'll
pay the penalty and put you in the exchange." She stated,
"That's a disillusion of the entire structure of how unions help
to support their members with regards to their health benefits."
MS. AMAKI mentioned another letter from Terry O'Sullivan,
general president of the Laborers' International Union of North
America (LiONA!), regarding a tax on insurers that members of
unions are going to have to pay, without being eligible for
subsidies in the health care exchange. She said the United
Union of Roofers, Waterproofers, and Allied Workers sent a
letter withdrawing its support. She related that in May, the
United Food and Commercial Workers International Union wrote in
The Hill regarding its concerns related to the ACA. She stated
that if she were President, she would be concerned about the
number of recent feedback about the health care law as it
pertains to labor unions, given the amount of support the unions
have had for the law and the President.
10:34:13 AM
MS. AMAKI said a GAO report came out in June, which stated that
the exchanges are not on schedule and are not likely to be,
because 85 percent of required program activities have not been
completed, federal and state base exchange court functions have
not been completed, and the United States Department of Health
and Human Services (HHS) has yet to complete critical steps
regarding credits and cost-sharing subsidies. She indicated
that yesterday CNBC LLC reported in an on-line article that only
11 percent of doctors believe that the exchanges will be
available for their patients, and 70-80 percent of doctors were
not familiar with the impact that policies from state exchanges
would have on their businesses, the contracted rates with
payers, patient coverage regarding cancellation policies and
grace periods, and claims processing. As someone who has worked
as both billing and office manager in a medical office, Ms.
Amaki stated that a lot of patients go to their doctors' offices
to get answers concerning health insurance, and with so much
unknown about the law, it is concerning that doctors do not know
how the exchanges are going to work and how claims will be
processed.
MS. AMAKI said there is a new investment tax, at 3.8 percent,
for those earning $200,000 as an individual or filing $250,000
jointly. She remarked, "Which, by the way, if between 200 and
250, jointly filing, you may be better off not jointly filing,
because then it would actually be 400 when you would hit these
threshold amounts." Ms. Amaki clarified that, for example, an
engineer and a fire fighter could have combined earnings of over
$250,000, and for any type of investment income they would be
subject to an additional 3.8 percent [tax]. She said, "We're
not talking about millionaires; we're talking about people who
have regular jobs, but they may have some ... small investment
...." She said that tax is going to raise $123 billion over 10
years "for the health care law." She related that there is a
.09 percent increase under the Act for those earning $200,000 or
filing $250,000 jointly, "so, a total of 2.35 percent." She
continued as follows:
So, two working professionals, each earning 125, if
they exceed that ... they would be paying an
additional .09 percent in payroll tax. That is going
to raise $86.8 billion over 10 years to pay for the
law.
MS. AMAKI said there is no longer eligibility for tax-preferred
purchases through the health savings accounts and flexible
spending accounts unless you have a prescription, which she said
will raise the cost of health care, because in order for a
person to use a flexible spending account, he/she will have to
visit a doctor in order to get a prescription. She stated,
"That's going to raise $5 billion over 10 years for the health
care law."
MS. AMAKI said a 2.3 percent medical device tax went into effect
the beginning of 2013, which exempts items retailing for less
than $100, but would tax items such as crutches, braces, or an
implanted device. That tax will raise $20 billion over 10
years.
10:39:36 AM
MS. AMAKI said there is a cap of $2,500 on flexible spending
accounts. She reminisced that members of the U.S. Senate used
to be able to put as much as they wanted into their flexible
spending accounts in anticipation of any major medical
procedures. She said some use flexible spending accounts to pay
for the care of a special needs child, and $2,500 does not go
far in that regard, nor does it cover much for those with
conditions that require further treatment. She opined that the
cap was arbitrarily set, because there is "no reason policy
should not be set to encourage savings." She said [the cap]
will raise $13 billion over 10 years, solely for the purpose of
raising revenue to "pay for the health care law." Ms. Amaki
said there is a 10 percent "suntan" tax, which went into effect
in 2011. She explained it taxes indoor tanning and would raise
$2.7 billion over 10 years. She said, "It's just a tax to raise
money for the health care law."
MS. AMAKI continued as follows:
... When you have high health ... care bills in
general, you can expense that so long as it exceeds
7.5 percent of your adjusted gross income. Under the
health care law, they raised that threshold to 10
percent of adjusted gross income. So, they basically
made it more difficult to ... claim that deduction;
you have to spend more in health care in order to do
that.
MS. AMAKI said there is an individual mandate, which is 1
percent of a person's income or $95 - the higher of the two - in
2014 if the person does not purchase health insurance. That
goes up to 2.5 percent or $695 by 2016. She said an individual
- working a low-paying, hourly wage job - who does not get
health insurance, could be subject to paying $695. Ms. Amaki
relayed that the employer mandate tax is on employers with 50 or
more employees. She said if those employers do not provide
health insurance to their employees, they will either have to
pay a penalty or provide the government mandated health
insurance benefits. She said the penalty is $2,000 or $3,000,
"depending on what they do." Ms. Amaki stated that the Cadillac
tax would raise $32 billion on plans that are considered
"Cadillac health plans." She stated, "This is probably the
scariest for Alaskans, given that the threshold amount is only
$10,200 or $27,500 for a family." She continued as follows:
So, ... if the value of your insurance is $5,000 -
meaning the employer [sic] contributes $2,000, the
employer [sic] contributes the remainder - that's the
value of the plan. The Cadillac tax says if your plan
exceeds what we consider a Cadillac tax - $10,200 for
a plan - then you're going to pay a 40 percent tax on
top of that. So, based on that Alaska State
employees' benefit plan this year, the lowest pure
benefit available to an individual on ... the economy
plan, which has a $500 deductible, ... would have a
tax of $2,800, because it exceeds the $10,200
threshold. For the mid- and highest-level plans
available to the Alaska State employees, the taxes
would be $3,033 and $5,894.40, respectively. So,
based on today's numbers for Alaska State employees,
they're going to be subject to this tax. Now, granted
this tax doesn't go into effect for another five
years, but it still is worth noting that just based on
today's numbers for an individual policy for an Alaska
State employee, the tax is going to be there.
10:44:12 AM
MS. AMAKI said the [ACA] has $716 billion in Medicare cuts. She
said, "We already know that Medicare is struggling, and to
create a new entitlement on the back of Medicare is probably not
economically sound, but I guess that's for my generation to
worry about." She related that ISER has conducted a study of
how Alaska Medicare beneficiaries will be hurt by cuts in
general and by federal health care reform. She said the studies
were done before the health care law went into effect, so they
are dated, but she opined that a study is not necessary to show
that cuts in Medicare are not helpful for Alaskans or seniors.
She mentioned a Wall Street Journal article, dated July 21,
entitled, A CEO's-Eye View of ObamaCare, written by [Andrew
Puzder], CEO of CKE Restaurants, which is the parent company of
Carl's Junior and Hardee's Restaurants. The article relays that
those restaurants: have 21,000 employees; pay 60 percent of the
benefit given to the 60 percent of the general managers who sign
up; and have only about 6 percent of entry-level workers sign
up. The reasons many of the entry-level workers gave for not
signing up include they are not concerned about illness or
injury, they get insurance through a spouse or parent, and
"emergency room care is free." She said under the health care
law, a person can get insurance whenever the need arises, which
she said is "pretty exemplary of how young people think." Ms.
Amaki stated, "As you all know, this law hinges on young people
signing up for health insurance, and if you have young people
saying, 'Well, I can sign up when I get sick or I need it,' then
that's ... very indicative of where we're going with this health
care law." She reiterated that "the penalty" is $95 or 1
percent of a person's household income, up to $695 or 2.5
percent of a person's household income, by 2016. She said a
general manager working at a Carl's Junior or Hardee's is paid
in the $50,000 range; therefore, the penalty for a manager would
be $500 in 2014 and $1,250 by 2016. Ms. Amaki questioned why
any of the lower-level employees would buy health insurance,
which would cost a contribution amount of $2,000-$3,000 to the
plan offered by CKE Restaurants, when that cost is three to four
times greater than the buying health insurance at the time of
need. She illustrated that for the young crew level workers,
the penalty in 2014 would be $115, rising to $695 by 2016, and
their contribution for insurance would be $1,091.55.
10:49:52 AM
MS. AMAKI said an American Broadcasting Company (ABC)/Washington
Post poll reflects that in 2010, moderate to conservative
Democrats' support of the ACA was at 74 percent, and the poll
indicated that by 2013, that support dropped to 46 percent.
Further, she relayed, the poll reflected that Democrats in
general supported the Act by 68 percent in 2012 and by 58
percent in 2013. The public in general was shown as being 47
percent in support of the Act and 47 percent opposed. Ms. Amaki
said she thinks there is growing concern about how the ACA will
affect the economy, how exchanges will be implemented, and why
employers are getting a reprieve when individuals are not.
10:50:57 AM
CHAIR REINBOLD said Ms. Amaki's presentation was enlightening,
and she asked her to send a copy of it electronically to her
office.
10:52:02 AM
CHAIR REINBOLD read a question from Representative Seaton as
follows:
Is there an estimate to whether Alaska will be further
relegated into last place on a share of income from
federal funds as a portion of our total budget with
our state choices under Obamacare?
10:52:13 AM
MS. AMAKI answered that she does not know. She asked for
clarification if the aforementioned estimate pertains to
Alaska's share of [federal] income.
CHAIR REINBOLD ascertained that Representative Seaton was
available to respond via teleconference.
10:52:30 AM
REPRESENTATIVE SEATON clarified that he wants to know whether
the state choices made under the plan would have an impact on
the percentage of income to Alaska.
MS. AMAKI confirmed she would have to look up the answer to that
question.
10:53:22 AM
SENATOR FRENCH asked Ms. Amaki to expand on the issue of custom
Medicare under the ACA.
MS. AMAKI said the Act cuts $716 billion from various programs
in Medicare, and she offered to provide a chart showing exactly
what is impacted. She added that Medicare Advantage is one area
where there are cuts.
SENATOR FRENCH said he would like that information provided to
the committee.
MS. AMAKI said, "Sure, and that's from the CDL."
10:54:54 AM
REPRESENTATIVE TARR asked Ms. Amaki if she could talk about the
savings that would come from the ACA in contrast with the taxes
she already discussed, because she said her understanding is
that "if everything lines up it should be revenue neutral."
MS. AMAKI replied that there are various measures in place to
"help with cost reduction," such as cuts to the Medicare
program, which she said will be "seen as ... helping to make
savings." She said the Independent Payment Advisory Board
(IPAB) is supposed to make cuts to programs. She remarked that
unelected bureaucrats would be appointed to the board to make
those decisions. She said there are programs that would provide
more residency incentives for primary care, which hopefully will
"help with some of the Nation's problems with getting access to
primary care." She opined that is a good thing, although not a
cost saver. She said there are provisions that will see
reductions in revenue, but at the cost of patient access to care
and cuts to Medicare.
10:56:57 AM
CHAIR REINBOLD related that an elderly couple called her to say
they were alarmed when they were told they had to fill out a 63-
page questionnaire, on which they must record all their
financial information or be fined with a huge penalty. She said
her on-line research confirmed that this form was being given to
elderly people to fill out, but that since then "they've tried
to reduce it to about half a page." She said the couple who
contacted her felt that the form was incredibly invasive and out
of line.
MS. AMAKI indicated that [the form] asks whether the person
filling it out is registered to vote, which she questioned as to
relevancy. She credited the Administration for recognizing the
lengthiness of the questionnaire and trimming it down. She said
the form had a lot of questions on it that "didn't seem right,"
such as questions about income and justification requested from
Native Americans as to their Native status. She said the ACA
requests a lot of information from people. She said dozens of
new Internal Revenue Service (IRS) employees are being hired,
because the IRS plays a large role in the enforcement of the
Act. She said when federal dollars are given to people to buy
health insurance, the government tries to get as much
information as possible to ensure it is providing the right
amount of subsidy per individual. Ms. Amaki posited that the
problem is that with the delay of the employer mandate "we're
now basically on an honor system." She compared it to dropping
off a donation to the Salvation Army and deciding how much it is
worth. She said, "There is no way to check that data when the
employers don't have to report." She stated, "It just gives
another level of scrutiny of your information by the IRS." She
opined that it is all part of a larger problem.
CHAIR REINBOLD encouraged Ms. Amaki to send any other
information she has to the committee.
11:01:54 AM
J. NELS ANDERSON, M.D., Central Peninsula Hospital (CPH); Mayor,
City of Soldotna, said he received a call from legislative staff
member Jim Pound to come testify about how the ACA has affected
physicians financially. He said he has strong opinions about
the Act because of patients that are dying because they are not
covered with or cannot get insurance and do not have the funds
to pay for care. He opined that the Act has "killed discussion
on meaningful reform, which would allow people to actually get
coverage." He said even after the Act is fully implemented,
there will be approximately 20 million people uncovered, about
30 million with only partial coverage, and half the bankruptcies
will continue to be caused by people not having adequate medical
insurance. He added, "More than half of those have, supposedly,
health care coverage - have insurance - we just don't have the
system that I'm very happy with as far as that. So, you
understand where my prejudices are."
11:03:58 AM
DR. ANDERSON credited the late Representative Ted Stevens for
Alaska's having the highest Medicaid reimbursements. He said
the state has the highest Medicare reimbursements and resource-
based relative value scale (RBRVS) multipliers. The only other
places in the country that come close are San Francisco County
and San Jose, in California. He said he has delivered babies of
many Medicaid patients and gets paid handsomely for doing so.
He said the effects of the ACA are merely speculations. The
rules for the insurance exchange and the basic coverage have not
yet been established, and until they are no one knows what is
going to happen, he said. He remarked that every article under
an Internet search for "Obamacare" will be negative, while the
results for a search for the "Affordable Health Care Act" will
be more balanced between support and opposition to the
particular aspects of the Act.
DR. ANDERSON said the Act improves coverage for children,
because they cannot be denied for preexisting conditions.
Insurers are prohibited from discriminating against adults for
preexisting conditions, and young adults can stay on their
parents' plan until the age of 26. Insurance companies are
prohibited from rescinding coverage, from limiting lifetime
insurance coverage, and from having annual limits on insurance
coverage. He said, "They're also affixing the Medicare Part B
(indisc. - rustling papers) doughnut hole." He said physicians
will benefit because they get paid for some of these services.
Dr. Anderson said the Act: provides scholarships and loans for
those going into primary care and for nurses; increases Medicaid
payments to physicians by 10 percent; gives a 1.5 percent bonus
for physicians for quality reporting on Medicare; and provides
coverage for preventive health care services and personalized
prevention plans, such as counseling, which have not previously
existed. He said theoretically if people have counseling and
preventative care "they may be able to cut down costs"; however,
he noted that when Richard Lamm was governor of Colorado, he
argued that smoker's should be thanked for killing themselves,
which reduces the population, thereby reducing health care
costs. He remarked that he has never been able to find Mayor
Lamb's data. He stated, "The fact is we're all going to die of
something sometime, and we're all going to need the system." He
said currently the average Medicare recipient uses between
$250,000 and $400,000 in his/her lifetime, which Dr. Anderson
ventured no single person can "save and account for." He said
the Act also provides coverage for non-patient planning and
review. For example, a family with an elderly person who is
sick would be covered to talk with someone about a plan of
action. He said that has never existed before.
11:08:27 AM
DR. ANDERSON relayed that the Act is supposed to provide for
administrative simplification. Dr. Anderson said family care
physicians currently spend 30 percent of their income attempting
to collect what they charge for their services. He asked the
committee to try to name any other business that does that. He
said he has three people in his office who do nothing but try to
collect from the multiple insurance companies whose main goal is
to make a profit, not to provide care for people. He opined
that insurance is "the wrong way to go" and the Act "will just
add billions more in terms of profits to the insurance company."
He said administrative simplification would be helpful, but
there is no way of knowing if that will actually result from the
Act.
11:09:23 AM
DR. ANDERSON talked about the negative aspects of the Act; a
topic, which he said is covered by "the Heritage Foundation's
web site" or "papers." First: "The rules and regulations will
drive doctors out of practice." He said there are now 12,000
pages of regulations written on the Act, and it is unknown how
many more pages will be written and "how this will affect it."
He said everybody is worried about both intended and unintended
consequences of the regulations that are written. Second: "The
ACA will drive physicians to be employed by hospitals, and
employed physicians see fewer patients." Dr. Anderson confirmed
that employed physicians see about 15 percent fewer patients
than they do when working in private practice. However, he said
he thinks that has little to do with the Act. He explained that
in 2005, about half of physicians were in private practice and
that number is down to 33 percent - prior to the Act taking
affect. He said students coming out of medical school do not
want to run a business, so most are opting to be employed rather
than starting a private practice.
11:11:12 AM
DR. ANDERSON said another concern is: "There are not enough
doctors to see the new patients." Dr. Anderson said his cynical
side thinks "those doctors who are marginal now and can't fill
their schedules will be able to fill them." He said that by
2021, of the 95,000 to 120,000 new physicians, about 15 percent
are "probably going to be caused by the ACA," while the other 85
percent "are caused by Baby Boomers like me aging and the
increase in population." He said in 1997, Congress cut back
substantially on the amount of funds that were provided for
training of new doctors. He said medical training is expensive
and is not something that is going to be taken on by private
enterprise. Dr. Anderson said the Act provides some extra
funds, especially for primary care providers and their training,
"so it begins to reverse that a little bit, but we're still way
behind." He stated, "In my view, that has very little to do
with the ... Act, it's mostly to do with decisions we've made in
the past."
DR. ANDERSON posited that if people have to have health care and
there are not enough physicians and the argument is that "we
can't afford it," then "as of right now we sort of let those
people stay out there and die." He said he does not think
people really appreciate that. Dr. Anderson set up an example
wherein a person is 45, owns a private business, gets Diabetes,
and must pay for medication until he/she is eligible for
Medicare at age 65. He indicated that before the Act was
passed, Senator Murkowski held a public hearing and heard from
parents without health insurance who were spending an incredible
amount of money on medical care for their asthmatic daughter but
could not buy insurance for the child. He offered his
understanding that Senator Murkowski was "frustrated and
flustered because she had trouble understanding why this child
couldn't be seen." Dr. Anderson said he sees many similar
examples in his practice, where patients tell him that they have
to choose between paying for medication or food, and they choose
to eat. He remarked that someone in a car accident would be
taken to the emergency room and treated, but those dying from
chronic disease processes are not being treated, and he said he
finds that "extremely bothersome."
11:14:52 AM
DR. ANDERSON said the perception by the majority of doctors is
that the ACA will have a negative impact on their practices. He
said he thinks that depends on how the question is asked.
Before the Act was passed, a survey showed that more than 70
percent of physicians preferred a single payer system. He said
there is disagreement about how that single payer system should
run; however, about five hundred billion dollars a year could be
saved by going to a single payer system from the current system,
which uses 35 major insurance companies and 12,000 minor
insurance companies. Dr. Anderson opined that that makes sense.
He stated, "All of us have reason, when government intervenes in
things, to be worried about those consequences and what will
happen." However, he said he does not think the changes
mentioned by the previous speaker, regarding people's support
for a system, reflect much of anything; he said he thinks "it
reflects the fact that nobody knows exactly what's going on,
including most of us."
DR. ANDERSON put forth another consideration: Medicaid rates
are lower than private insurance, and because there will be some
people who switch to Medicaid, doctors will get paid less per
patient. In response, he said he has not found that to be a
problem in Alaska, because he said he thinks Medicaid pays
exceptionally well. He stated another consideration: The
Independent Advisory Board will control Medicare expenditures or
make decisions without physician input, and the prospects of
proposed fees without recourse to scientific evaluation is a
serious issue. He concurred with that. He said most
evaluations show that up to 70 percent of x-rays and
radiological procedures and 50 percent or more of heart
surgeries in the country are unnecessary. He offered an
example. He said in a system where the focus is not on what is
cost effective and useful, physicians are encouraged to do what
makes a profit. He said it does not make sense that he gets
paid more for performing a 15-minutes C-Section with no office
overhead cost than he does working a full day in his office and
paying staff.
DR. ANDERSON indicated [the Act] may result in positive effects
for primary care but negatively impact specialists. He said
studies show that to run a medical care system effectively there
should be 80 percent primary care providers and 20 percent
specialists; however, the U.S. has 80 percent specialists and 20
percent primary care providers. He said, "Specialists create
their own needs; if they don't have them, they'll figure out
things to do so that they can get paid." He said the percentage
of people in primary care needs to increase so that the field of
medicine can be run more cost effectively.
11:22:22 AM
REPRESENATIVE OLSON asked Dr. Anderson if he has suggestions for
ways to increase the number of primary care physicians in
Alaska, particularly in larger towns.
DR. ANDERSON said financial incentives work, but bringing a
doctor up to Alaska does not always work unless he/she wants to
be here. He suggested getting more Native Alaskans into the
medical field to hopefully have them return to their villages,
although he said it is not possible to control who stays in
Alaska and who leaves.
11:23:53 AM
REPRESENTATIVE TARR asked for Dr. Anderson's thoughts on
expanding the scope of practice for nurse practitioners and
others who are not physicians but would be categorized as
primary care providers.
DR. ANDERSON responded that the Act does provide funds for
"increasing nursing for nurse practitioners and things." He
said he thinks there is no question that extended providers need
to be used to "help manage a lot of the initial problems," and
that doing so is cost effective. He said Alaska's nurse
practitioners have "a free hand to do whatever they want," and
he said he does not disagree with that.
11:24:59 AM
SENATOR MICCICHE commented that it is difficult to support the
idea that the Act will solve problems and bring down the cost of
insuring individuals. He asked Dr. Anderson to describe how
"we" got "in this situation" and whether he sees solutions for
Alaska.
11:25:50 AM
DR. ANDERSON reiterated his concern with [the Act] is that it
has killed any meaningful reform. He said in 2002, a bill was
before Congress that said states could "take their funds and do
what they wanted with them, as long as they provided coverage
for about the same number of patients that was already being
covered for under federal funds." He said the same bill was
proposed a couple years ago. He opined that until there is a
law that allows states to innovate, "we're going to be in
trouble." Dr. Anderson relayed that he lived under the Canadian
system, where each province had its own system and learned from
each other's mistakes what things worked. He said he thinks the
same needs to happen in the U.S. He mentioned Joe Jarvis, who
runs a health insurance exchange in Utah and is a Republican and
advocate of the single payer system. He related that Mr. Jarvis
said the State of Utah spends $15 billion on health care, two-
thirds of which is paid for by the government, and also
indicated that he could provide health care for everyone in Utah
for the $10 billion without the presence of private insurance;
the insurance companies are taking $5 billion out of Utah. Dr.
Anderson expressed concern that taking a trillion dollars out of
the system to move a single payer system would cause a lot of
people to lose jobs. For example: the people in hospital
administration who do billing; the people he hires in his office
to do billing; all the people working for the insurance company
"fighting not to pay us for what we do." He said Representative
Olson is helping him with a bill which proposes at least a
partial solution to mal practice issues in the state and would
save money. He said he personally would like mal practice to go
to a worker's compensation-type [system] or to use a system used
in other countries where health care court judges are utilized
to look at the system and decide whether a patient has been
harmed and what his/her compensation should be.
11:31:30 AM
The committee [took an at-ease] from 11:31 a.m. to 11:43 a.m.
11:43:52 AM
CHAIR REINBOLD brought the Administrative Regulation Review
Committee meeting back to order.
11:44:10 AM
STACEY KRALEY, Chief Assistant Attorney;, General-Statewide
Section Supervisor, Human Services Section, Civil Division
(Juneau), Department of Law (DOL), specified that while she
could give a short summary of the litigation and decision
related to the ACA, she was not in the position to comment on
any current impacts on the implementation of the Act. She
questioned whether, in light of the chair's stated purpose of
the meeting, her comments would be helpful, or whether the chair
would rather have her yield to Mr. Mills and the public to talk
about implementation issues.
CHAIR REINBOLD indicated that Ms. Kraley's information was
pertinent to the discussion.
11:45:23 AM
MS. KRALEY reviewed that last June, the U.S. Supreme Court ruled
that the ACA was, "through various judicial alliances," valid
and was going to be the law of land. She said there were three
major components to the underlying litigations. One was whether
or not the law could be challenged under the Anti-Injunction
Act, a federal law, which precludes any litigation related to
enforcement of a tax until the tax is actually levied. She said
there was a theory in the underlying litigation that the case
was not right for judicial determination, because the tax
component of the Act would not be implemented until 2014;
however, the U.S. Supreme Court rejected that argument, saying
that the matter was not a tax, but a penalty, and therefore the
Anti-Injunction Act did not apply. The second provision was the
individual mandate, which was challenged in the underlying case,
in which the State of Alaska participated, under the theory that
the individual mandate violated the commerce clause, because the
Act was trying to regulate inactivity rather than activity by
penalizing individuals for not participating in health care as
opposed to regulating individuals who do participate. She said
the U.S. Supreme Court ruled that the Act was unconstitutional
as to the commerce clause, and that the clause did not apply,
because the Act was regulating inactivity versus activity;
however, the court then ruled that the Act, under the individual
mandate, was still permissible, because it was a valid exercise
in Congressional authority to tax. She said this was an
interesting outcome, because there was not a lot of briefing,
argument, or focus on the taxing clause provision of the
arguments; the vast majority of briefing, argument, and
underlying cases dealt with the attack on the commerce clause.
In the end, she said, the court ruled that while it wasn't a
valid exercise under the commerce clause, the Act's individual
mandate components were a valid exercise of Congressional
authority under the taxing power. Finally, she said, the
remaining provision of the Act that was challenged in the
litigation was the Medicaid expansion, which was ultimately
found valid, but with some limitations. She mentioned an
"original theory" that the Act required the states to engage in
a Medicaid expansion that would increase the numbers of
individuals eligible for Medicaid to childless adults, which is
not a current category of coverage, and who are individuals with
income up to 133 percent of the federal poverty guidelines. At
that point, she said, states, including the State of Alaska,
objected that the Medicaid expansion was basically coercive in
nature, because if the states did not agree to include the
Medicaid expansion, they were at risk of losing 100 percent of
their money from the federal government. The U.S. Supreme Court
ruled that it was indeed coercive, but that the provision that
required an all or nothing proponent or outcome under the
Medicaid expansion could be severed. So the court said that
rather than having the expansion be a mandatory component of the
Act, states are now in a position to determine whether or not
they want to expand to that Medicaid population or not. If they
chose to expand, they would have all the benefits of federal
participation and matching dollars in order to expand that
population, but if they choose not to expand, the remainder of
the Medicaid dollars would not be impacted. She concluded,
"That is a very brief summary of the three major components of
the Supreme Court decision and how we got to the point now where
they are implementing the underlying provisions of the
Affordable Care Act."
11:51:05 AM
CHAIR REINBOLD asked Ms. Kraley if it is legal for the President
of the United States to delay part of the law on his own.
MS. KRALEY answered that she has not looked into the
Presidential authority in that context.
11:52:47 AM
RICK DAVIS, CEO, Central Peninsula Hospital (CPH), remarked that
CPH is a 49-bed facility, which is owned by the borough. As a
disclaimer, he stated that he thinks health care is too
expensive, uncoordinated, lacking in pricing transparency, and
unsustainable in the long run. He referred to the patient Dr.
Anderson had mentioned who had open heart surgery while on
vacation, and estimated that that probably resulted in a half a
million dollars paid for by "the system," because there is no
coordination of care. He recollected that Mayor Navarre had
suggested a better job could be done in "coordinating the care
of our members here on the peninsula." He said, "We're kind of
the perfect little model for something like the Accountable Care
Organization model that's been talked about. Whether or not
those actually ... become a mandate or not, I guess nobody
knows." He opined that those system-wide problems are what the
Act is meant to address, although he said he does not think it
will make those changes directly. He ventured that indirectly,
the Act might force better relationships between patients and
doctors. Mr. Davis said primary care doctors make a lot less
than specialists. Someone who goes through eight years of
medical school may make $200,000 to $300,000 annually; whereas
someone who continues with a residency could make $800,000 to $1
million. He added, "I think you could find a lot of people to
help finance that last two years if they could get a cut of the
next twenty years at that kind of income." He said the
structure of the system encourages lots of specialists and a lot
of procedures.
11:56:11 AM
MR. DAVIS said the Central Peninsula Hospital (CPH) is well
aware that measurement, delivery, and reimbursement methods of
health care change rapidly. He reported that CPH is currently
the top hospital in the state in terms of its ability to take
full advantage of value-based purchasing, which he explained is
a combination of reimbursement for quality outcome and patient
satisfaction, as opposed to the current volume-based
reimbursement. He said the hospital associations in Washington
were at the table when reform negotiations took place. He said
in the end, hospitals across the country supported $155 billion
in cuts to Medicare payments over ten years, "in order to help
pay for the legislation," along with certain guarantees that
more people would be covered. He explained the reason "we"
supported that is because "we're mandated to provide emergency
care to anyone who walks into our emergency room, regardless of
ability to pay."
MR. DAVIS noted that Ms. Kraley had talked about the Medicaid
expansion as being "one of the challenges that was successful to
[the] Affordable [Health] Care Act." He said Medicaid expansion
became optional for the states. The individual mandate will
occur, with exchanges "going live" in less than 70 days. The
hospital has accepted that $150 billion cut, with the
reassurance that people would be covered. He said some people
are going to be covered through the mandate, but he reiterated
that the Medicaid expansion is an option for each state, so
"that could leave a pretty big hole in the covered patients who
are still going to come to the emergency department, and we're
still going to care for them."
11:58:50 AM
MR. DAVIS relayed that Enroll Alaska, a new subsidiary of North
Rim Bank, is a private enterprise company that was started to
help enroll eligible members who "now don't have insurance" into
the new coverage. Mr. Davis offered his understanding that for
Alaskans, that coverage would be provided through the exchange
by Moda Health and Premera Blue Cross. Enroll Alaska is asking
hospitals in Alaska to allow it to set up enrollment specialists
in the hospitals to help new members when the new mandate comes
into play.
11:59:47 AM
MR. DAVIS said in addition to reform, cuts in health care happen
every time there is a fiscal crisis in Washington, D.C. He
indicated that the next [fiscal crisis] will be in response to
raising the debt ceiling "in about a month." He said he
suspects hospitals will be part of that discussion. Mr. Davis
said CPH was hurt badly on January 1, 2013. He talked about a
reinstatement just before midnight, on the last day of 2012,
which saved doctors from a 21 percent cut. Hospitals did not
take a huge cut overall; however, rural hospitals took "a pretty
big cut." He said the cut that day, along with a couple other
cuts made about that same time, were about a $2.1 million hit to
CPH. He said currently there is a bill being considered in
Washington, D.C., that would permanently fix the sustainable
growth rate (SGR), of which Dr. Anderson spoke. He described
SGR as a flawed formula from 1997, which is used to determine
Medicare fees paid to physicians. He said, "If Congress does
not override the formula by the end of December, physicians will
face a 25 percent reduction in Medicare fees." He indicated
that Congress has overridden that formula for the last 16 years,
but "at some point ... that might go away." Mr. Davis said
CPH's concern over that is twofold: first, hospitals will be
targeted to pay for the fix; and second, if the fix does not
occur, physicians will stop taking Medicare patients. Either
way, he said, the hospital loses.
12:02:32 PM
MR. DAVIS stated that reform is not the only change occurring in
health care; health care policy as a whole continues to be at
the forefront due, for example, to economic concerns,
transparency, and growing state and federal budgets. As a
result, he said, it will become increasingly difficult to manage
a hospital or physician practice, because of constantly evolving
conditions. He said CPH is one of two hospitals on the Kenai
Peninsula owned by the borough. As a small facility, it must
address issues one at a time and try to do what is best for the
community, which is financially "on the hook."
12:03:32 PM
MR. DAVIS said currently there is a patient in CPH that requires
a procedure that must be done at an academic center; however, no
facility in the Lower 48 will take the patient, because she has
no medical coverage and her condition is not life-threatening.
Mr. Davis said to date CPH has absorbed over $1 million in
medical costs for the woman, who does not qualify for Medicare
or Medicaid and cannot afford insurance. He stated, "We would
very much like to see everyone have some type of coverage."
12:05:53 PM
SENATOR MICCICHE offered his understanding that hospitals are
required to give emergency care only to those who need acute
care, but said he assumes that Mr. Davis' example shows that
hospitals are required to treat a person who comes to the
emergency room for any reason.
MR. DAVIS responded that for every patient that walks into the
emergency department, the hospital is required do a medical
screening, stabilize the person, and release the person once
stabilized or admit him/her if needed. He explained that the
patient to which he previously referred had surgery, but is
languishing and needs more complex surgery. He said a person
who goes to a general practitioner or cardiologist with
complaints of chest pain but no money to pay will likely not be
seen. The same person with the same complaint who goes to the
hospital will be told to stay home, eat better, and exercise,
but when he/she has a heart attack, the hospital will provide
care and a surgeon and have to cover the $250,000 cost. Those
uncovered costs trickle down to other patients. If the patient
had been able to afford the cardiologist, he/she may have
avoided having to have heart surgery.
SENATOR MICCICHE asked how the ACA would help municipalities
with "some of those costs."
MR. DAVIS answered that as more people get coverage, that will
help lower health care costs overall, because having coverage
allows a person to get better primary care, which means earlier
intervention. He indicated that the Act potentially could drive
communities to a system that is responsible for the entire
community; therefore, every member in that community would be
working on getting each other healthy.
12:10:58 PM
REPRESENTATIVE TARR asked Mr. Davis if he is referring to the
medical home model.
MR. DAVIS answered yes.
REPRESENTATIVE TARR mentioned that two facilities were opened in
Anchorage, Alaska, just for Medicare patients. She said she was
under the impression that "moving towards that model was the way
to go," but questioned whether that would have a negative impact
on hospitals that would lose those patients.
MR. DAVIS answered not really. He explained that CPH does not
particularly want Medicare patients to come into its emergency
department, because more chronic conditions are better dealt
with in a physician's office.
12:12:19 PM
CHAIR REINBOLD said she had received a question from someone.
She continued as follows:
In the case of a patient who comes to the emergency
room today ... but right now they can't pay, so you
may need to spread the cost amongst ... other patients
or take a loss: Under the Affordable ... Care Act,
will you receive something and will it reduce the cost
to other patients and do you believe the Affordable
[Health] Care Act is the right solution for today?
MR. DAVIS answered as follows:
... It won't increase what they pay unless Medicaid
expansion is put in place and they're able to get
Medicaid, or if they are participating in the ...
insurance exchange. If they're in the insurance
exchange we'll be able to get something; if ...
Medicaid is expanded to the point where that person
would then be eligible for Medicaid, we would get
something. Where that saves money for the members of
the Kenai Peninsula Borough is it reduces that cost
shifting, because it's kind of ... not really a zero-
sum game. I mean, we have to buy new equipment, we
have to pay our employees, we have to maintain a
certain level of ... revenue. So, however that
revenue gets cut, ... we either decrease services or
try to get the revenue from another source. And so,
that's what the cost-shifting is all about. And this
... should help reduce that cost-shifting. Whether
the Affordable Care Act is the right answer or not, I
don't guess I'm qualified to have an opinion on that.
I'm just trying to ... play the hand we're dealt ....
MR. DAVIS indicated that in an article he read, Senator McCain
made arguments to the effect that the Act was here to stay. Mr.
Davis ventured the Act could be repealed, but said right now it
looks like it's "on its way" and CPH is doing its best to be
ready for it.
[AN UNIDENTIFIED SPEAKER] made a remark regarding viewing
testifiers as experts.
CHAIR REINBOLD said that with so many pages and more still to
come, she cannot imagine being an expert on the ACA.
12:15:23 PM
REPRESENTATIVE TARR offered her understanding that the premise
behind "this" is that the more people who are covered, the lower
the cost would be. She recollected that during its last
meeting, the committee had heard from [Premera Blue Cross Blue
Shield of Alaska] that "it's going to be a bit of a roller
coaster until things sort of even out." She asked Mr. Davis if
he has a timeline in which he thinks "that will happen." She
asked him how he is projecting finances.
MR. DAVIS responded that CPH is budgeting for an annual drop in
its reimbursement rates for Medicare and budgeting Medicaid as
it is now. He said the fiscal year 2013 (FY 13) just ended, and
he said he thinks CPH did $18.6 million in uncompensated care;
$9.8 [million] of bad debt; and $8.6-$8.8 [million] of charity
care. He said the $18 million has to be made up for in other
ways, "to the extent that those people would have some means of
paying ... is what we're trying to ... get to."
12:17:12 PM
REPRESENTATIVE OLSON asked Mr. Davis if he perceives the
hospital will ultimately get into a situation where it is buying
retail and selling wholesale - getting more people, but making
increasingly less money.
MR. DAVIS answered that is exactly what CPH is expecting. He
relayed that he used to be a cattle buyer who said, "I lose a
little money on every transaction, but I make up for it on
volume."
REPRESENTATIVE OLSON said that is his greatest concern for all.
MR. DAVIS said CPH understands that the reimbursement per member
is going to drop, and would like to increase some of the covered
members to offset some of that and continue its mission.
12:18:47 PM
CHAIR REINBOLD asked Mr. Davis if he finds it alarming that the
young may buy coverage only when they need it.
MR. DAVIS offered his understanding that Mr. Davis of Premera
Blue Cross Blue Shield of Alaska talked about that at the last
meeting. He said it is not so much a problem for CPH as it is
for Premera Blue Cross Blue Shield of Alaska, because the
insurance company will be the one to face that problem.
REPRESENATIVE OLSON, having spoken with Mr. Davis of Premera
Blue Cross Blue Shield of Alaska after that meeting, offered his
understanding that Mr. Davis' primary concern is that he has
"lost all his underwriting tools." He continued:
[He] can't discriminate: ... It's not based on age;
it's not based on health; it's not based on life
mechanisms that people may have control over - choice;
but all of a sudden they have a condition that needs
to be treated. They could go in, they could find out
pre-existing conditions on something that may have
been substantially of their making, get fixed, and
drop off.
REPRESENTATIVE OLSON gave an example of someone who signed on
for the highest monthly premium of $1,000, had a hip replaced,
dropped off insurance, and wrote a thank you, stating his/her
intent to repeat the process for the other hip the following
year. Representative Olson surmised that for two hip
replacements, the person paid $2,000, while the state probably
paid $40,000 to $50,000.
CHAIR REINBOLD added that Premera Blue Cross Blue Shield of
Alaska is "running on 1 percent profit margin," so "this" could
really affect the company.
12:22:00 PM
CHAIR REINBOLD opened public testimony for the Kenai Peninsula
area.
CHAIR REINBOLD, after ascertaining that no one wished to
testify, closed public testimony for the Kenai Peninsula. She
specified that although the opportunity to testify orally had
ended, the committee would continue to accept written testimony
from Alaskans across the state until about October 15, 2013.
12:24:53 PM
ADJOURNMENT
There being no further business before the committee, the
Administrative Regulation Review Committee meeting was adjourned
at 12:25 p.m.
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