Legislature(1993 - 1994)
04/13/1993 03:00 PM House HES
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HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
April 13, 1993
3:00 p.m.
MEMBERS PRESENT
Rep. Cynthia Toohey, Co-Chair
Rep. Con Bunde, Co-Chair
Rep. Gary Davis, Vice Chair
Rep. Al Vezey
Rep. Pete Kott
Rep. Harley Olberg
Rep. Irene Nicholia
MEMBERS ABSENT
Rep. Bettye Davis
Rep. Tom Brice
COMMITTEE CALENDAR
HCR 17: Relating to a health insurance pool established
for residents of the Kenai Peninsula Borough.
HEARD AND HELD TO TIME CERTAIN
WITNESS REGISTER
HARLAN KNUDSON, President/CEO
Alaska State Hospital & Nursing Home Association
319 Seward St. #11
Juneau, Alaska 99801
Phone: (907) 586-1790
Position statement: Testified in support of HCR 17
KEN SYKES, Insurance Analyst
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
Phone: (907) 465-2564
Position statement: Testified in support of HCR 17
REED STOOPS, Lobbyist
Aetna Insurance Co.
240 Main St., Suite 600
Juneau, Alaska 99801
Phone: (907) 463-3223
Position statement: Testified in support of HCR 17
PREVIOUS ACTION
BILL: HCR 17
SHORT TITLE: KENAI PENINSULA INSURANCE POOL
BILL VERSION:
SPONSOR(S): REPRESENTATIVE(S) G.DAVIS
TITLE: Relating to a health insurance pool established for
residents of the Kenai Peninsula Borough.
JRN-DATE JRN-PG ACTION
03/24/93 760 (H) READ THE FIRST TIME/REFERRAL(S)
03/24/93 760 (H) LABOR & COMMERCE, HES, FINANCE
04/06/93 (H) L&C AT 03:00 PM CAPITOL 17
04/06/93 (H) MINUTE(L&C)
04/07/93 1057 (H) L&C RPT 6DP
04/07/93 1057 (H) DP: PORTER, MACKIE, MULDER,
WILLIAMS
04/07/93 1057 (H) DP: GREEN, HUDSON
04/07/93 1057 (H) -ZERO FISCAL NOTE(H.L&C/ALL
DEPTS)4/7/93
04/13/93 (H) HES AT 03:00 PM CAPITOL 106
ACTION NARRATIVE
TAPE 93-64, SIDE A
Number 000
CHAIR TOOHEY called the meeting to order at 3:12 p.m., noted
members present and announced the calendar. She brought
HCR 17 to the table and invited Rep. G. Davis to speak as
sponsor.
HCR 17: KENAI PENINSULA INSURANCE POOL
Number 025
REP. GARY DAVIS testified as PRIME SPONSOR OF HCR 17. He
read a sponsor statement which said that the Kenai Peninsula
Borough Economic Development District had established a
Kenai Peninsula Borough Health Care Advisory Council to
develop recommendations for a health care plan for the
borough, and they would like to have the plan implemented as
a model for other programs in Alaska. The resolution asks
the governor to direct the commissioner of the Department of
Health and Social Services to help the borough achieve its
plan for a model region-wide health access and basic care
program.
(Rep. Bunde arrived at 3:15 p.m.)
REP. DAVIS described the Kenai Peninsula Borough Task Force
(KPBTF) as established in 1991, with the same aims as the
federal and some state governments. The resolution
acknowledges the impracticality of relying on federal
programs for cost-effective programs and the probability
that any state health care program was up to five years
away. He said the KPBTF was close to implementing a program
and would have a referendum for implementation on the ballot
in October, 1993. The resolution seeks state government's
help by recognizing the KPBTF proposal and the work it has
already done as a model program, receiving assistance in the
form of money, technical assistance, or capital grants. He
said the borough needs about $290,000 to get the program off
the ground. He noted the resolution carries a zero fiscal
note for general funds, and he felt it was up to him to help
the borough find state money for its project. He said
health care reform was important, and the resolution would
give the state government a chance to allow one group to act
as a model for other plans.
Number 144
CHAIR TOOHEY asked the number of people not then covered by
health insurance.
REP. G. DAVIS answered that about 8,000 of the borough's
40,000 residents were not so covered. He said the KPBTF had
included all parties to the health care issue, whereas the
CHIPRA (Comprehensive Health Insurance Payment Reform Act)
proposal came just from administrators and doctors, but not
insurance companies, other industries and citizens. He said
the state task force (Health Resources and Access Task Force
- HRATF) did not include providers in its review and
research. He said KPBTF had developed a plan for a modified
Health Maintenance Organization (HMO), under Alaska statute.
Number 175
CHAIR TOOHEY stated, "Delivered by whom?"
REP. G. DAVIS answered, saying by those people who signed up
as part of the volunteer organization.
CHAIR TOOHEY said that, assuming 8,000 borough residents
were not insured, whether the remaining 32,000 residents
were covered by other government plans would have to drop
their health insurance coverage.
Number 188
REP. G. DAVIS answered that the 32,000 -- including state,
borough and school district workers, plus North Kenai
refinery workers -- would be the core group needed to
provide the critical mass to get the program started. He
said their inclusion would help ensure that the costs of the
borough health care plan would be competitive with the plans
offered by employers.
Number 203
CHAIR TOOHEY asked whether Aetna, Blue Cross/Blue Shield and
other insurance companies were involved in the program.
REP. G. DAVIS answered that he did not know, as he was not
on the task force.
CHAIR TOOHEY asked if the borough hospitals and doctors and
the residents were involved.
REP. G. DAVIS answered yes.
CHAIR TOOHEY said the key element was the insurance
companies.
Number 214
REP. G. DAVIS said no, the only need for the insurance
companies was for reinsurance. He said the HMO would in
effect perform as its own insurance company, taking in
premium payments.
CHAIR TOOHEY asked whether the $290,000 was seed money.
REP. G. DAVIS answered yes. He said the Department of
Health and Social Services had received a grant from the
borough and had received some money from foundations to
assemble the task force and fund its work. He said
representatives from Tennessee and Hawaii, and a consultant
from Seattle, had traveled to the Kenai Peninsula Borough to
discuss health care plans in their states and help develop
the Kenai plan.
REP. VEZEY said he saw no problem with encouraging a new
procedure, but he said that as some health care statistics
are not accurate, he moved an amendment to change language
on page 1, line 4, of the resolution to delete the words "an
estimated 90,000 residents" and replace it with "a large
number of residents."
REP. G. DAVIS asked if someone in the audience could verify
the approximate accuracy of the term "estimated 90,000
residents" numbers. He said he did not object to the
amendment, but said that he believed that with the work the
KPBTF had put in, the 90,000 estimated number was probably
well-founded.
Number 270
REP. VEZEY said he had heard the number "75,000" and said it
would be better not to use a specific number.
REP. G. DAVIS repeated that the KPBTF had worked hard, and
the number came from detailed research, and he preferred to
leave the number as it was.
REP. BUNDE said he was involved with the task force and it
did impressive work, but he would feel more comfortable with
the term "significant number." General discussion followed
on the advisability of using the word significant instead of
estimated 90,000 with members repeating their previous
positions on the issue.
(Rep. Nicholia arrived at 3:30 p.m.)
Number 300
REP. G. DAVIS agreed to an amendment changing the wording to
"as significant number."
Number 322
REP. KOTT asked why the federal government was mentioned on
page 1, lines 15 and 16, of the resolution.
REP. G. DAVIS said the whereas clause just pointed out the
national significance of what was happening in health care,
rather than supporting one effort over another. He said it
was not endorsing any federal government activity.
Number 343
REP. KOTT asked if the KPBTF would address the same areas of
concern that would likely be addressed by any national
health care plan.
REP. G. DAVIS answered yes, but he did not know to what
degree they would be addressed.
Number 356
REP. KOTT noted the zero fiscal note for the resolution and
asked what financial support the resolution hoped to secure
from the governor.
REP. G. DAVIS said the zero fiscal note indicated the
resolution would require no general fund money, but it could
be possible for the project to receive the benefit of
capital dollars. He said he was not sure.
REP. KOTT said it seemed that the bill did seem to carry
some fiscal impact by asking the governor to direct the
commissioner of the Department of Health and Social Services
(DHSS) to support the program.
REP. G. DAVIS said he would be willing to contribute part of
his discretionary dollars to the plan. He added that there
might be capital funds available in the DHSS as well. He
said if money had been made available to the state HRATF it
should be redirected to the KPBTF as a model project.
Number 377
REP. KOTT commented that a commissioner had a limited supply
of discretionary funds.
Number 384
CHAIR TOOHEY asked if there were any medical doctors (MD's)
involved in the KPBAC.
REP. G. DAVIS answered that there were, but they were not so
identified.
CHAIR TOOHEY said that DDS's and DO's had been identified,
but not MD's.
REP. G. DAVIS said that one member of the advisory council
represented the physicians on the medical staff of the
Central Peninsula General Hospital.
Number 395
CHAIR TOOHEY asked if the task force recommendation was the
same as a plan put forth by Sen. Jim Duncan.
REP. G. DAVIS answered no, the state task force's final
report contained several recommendations, one of which was
included in the KPBTF findings.
Number 408
CHAIR TOOHEY offered a few comments on health care from the
perspective of a former emergency room nurse. She said no
one had ever been turned away from health care, ever, and
would not in the near future. She said she had a problem
with mandating health reform when 85 percent of those
working in the state of Alaska worked for a government
entity, and therefore were entitled to health benefits. She
also noted the public health services, the Indian Health
Service, Native Health Services and Medicaid/Medicare, and
said she did not see that there was such a gap with people
being uninsured. She said she was glad the KPB was
developing its own plan, but wondered whether $250,000 in
general funds for Kenai residents alone was a question. She
said she did not want to tie the entire state to the Kenai
project, because she did not see that much of a need across
the state for such a health care plan.
Number 429
REP. G. DAVIS said many groups were studying the health care
situation and that something, he did not know what, would be
done in the next five to eight years. He said the KPBTF and
the city of Soldotna saw that no one else had tried their
particular kind of plan and they wanted to start doing
something. He said it would be interesting to see what
President Clinton's wife would propose for health care
reform.
Number 442
CHAIR TOOHEY asked whether the state should be involved in
funding such a plan for a specific area.
REP. G. DAVIS said that the Kenai plan was being presented
as a pilot program for the entire state to see if it would
be cost-effective and if it would win the support of all the
necessary groups to operate successfully.
Number 454
REP. BUNDE said he shared Chair Toohey's hesitation about
spending $250,000 for the program, but said he wondered how
much a state-wide pilot program would cost. He said he was
frustrated at the state's seeming pattern of studying
problems, but stopping short of taking action the findings.
He said the problem has been studied thoroughly, and that
action was needed, not more study.
REP. VEZEY said there was no fiscal note and he did not want
to interfere with local decisions by the Kenai Peninsula
Borough. However, he said that medical facilities never
deny care to those that need it, even the uninsured, even
though other insured patients end up footing the bill. He
cautioned that there had been many experiments in providing
life-time medical care over the decades, and that most had
failed in bankruptcy. He said he would be very unreceptive
to any later requests from the KPB for money to pay debts it
incurred through its health care plan to bail it out.
Number 481
REP. G. DAVIS said that, under the proposed regulations, the
tax-paying citizens of the KPB would pay off any debt
incurred under the plan.
CHAIR TOOHEY asked Rep. G. Davis if the KPB plan would deal
with hospitals just in the borough or in Anchorage as well.
REP. G. DAVIS answered that the plan would deal primarily
with hospitals in the KPB.
CHAIR TOOHEY asked if the hospitals could do gall bladder
operations or open-heart surgery in those hospitals.
Number 489
REP. G. DAVIS answered no; the hospitals on the peninsula
did not perform such procedures, but those were not a
primary health care concern in the borough. He added that
there would be approved providers and approved fee levels
for all services.
CHAIR TOOHEY asked if he had a list of such services.
REP. G. DAVIS answered no.
Number 490
CHAIR TOOHEY asked if the plan envisioned tort reform.
REP. G. DAVIS answered no, but then corrected himself,
saying that there had been much discussion of liability, and
that the issue was proposed to be addressed in the plan.
Number 502
CHAIR TOOHEY noted that the HESS Committee had introduced a
CHIPRA bill, and a separate though related bill for tort
reform. She said it was all a good plan and that the state
needed to begin addressing such things, but there was a need
to hear more about the plan.
REP. BUNDE said that the cost savings from the KPB plan
would come from prevention of health problems.
CHAIR TOOHEY noted that there were many old people with
clogged arteries.
Number 517
REP. G. DAVIS said Rep. Bunde was correct, and all those
involved in health care realized that prevention was a key
element of a successful plan. He said the KPB plan
recognizes the high cost of emergency room care, and had
proposed a "gatekeeper" who would direct emergency room
patients to lower-intensity, lower-cost services where
appropriate.
Number 531
HARLAN KNUDSON, PRESIDENT/CEO OF THE ALASKA STATE HOSPITAL &
NURSING HOME ASSOCIATION, testified in support of HCR 17,
saying the key to health care reform was keeping options
open. He said the KPB community-wide approach to managing
health care expenditures was a viable option that deserved
state nurturing. He said Kenai was the only community
studying its health care expenses. He said the KPB plan
started several years ago in Seward, with the support of the
University of Washington, which resulted in a study showing
that there was enough money in Seward to pay for health
care, but it was poorly managed. He said the Kenai plan did
not try to raise more money for health care, but aimed at
improving its health care delivery system, then managing
expenses, and making referrals for high-cost procedures to
facilities which will hold down costs. He said the
association matched the likely direction of federal health
care reform efforts toward allowing states different
options. He said the Kenai plan was one option. He said
the legislature will, in 1994, consider the report of the
HRATF, which proposes a single-payer system. He said the
legislature will also study the CHIPRA proposal, which would
funnel all money through a state clearinghouse. He said
that it would be nice to have the Kenai plan as a third
option. He said he did not know if the plan would work or
not, but it was worth a try.
Number 563
CHAIR TOOHEY asked if there had yet been a vote on the plan.
REP. G. DAVIS answered no, that a vote would be held in
October 1993.
CHAIR TOOHEY expressed a desire to confine the program to
the Kenai.
REP. G. DAVIS said the resolution asked the state to use the
Kenai program as a model for the state as a way to help the
state provide services or alternatives anywhere in the
state.
Number 573
CHAIR TOOHEY said she had seen two polls indicating that
health care was a low priority for the Alaska public, as the
state had so much government employment.
REP. VEZEY asked about the low priority for health care as
opposed to what else.
CHAIR TOOHEY answered employment, the economy, cutting the
budget, and other issues.
Number 583
KEN SYKES, INSURANCE ANALYST FOR THE DIVISION OF INSURANCE
IN THE DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT,
posed several questions concerning HCR 17. He asked:
1) whether the voters had examined Title 21, Chapter
86, containing financial requirements for setting up an HMO
prior to implementation;
2) whether the resolution allowed for an exemption of
taxation under current state statutes and laws;
3) if the officers of the HMO were to be public
officials, which would require a substantial bond be posted
by each such official or director or employee of the HMO.
He said he had heard the figure $290,000 tossed around as
possible seed money, and commented that it was his
approximate recollection that it was necessary for those
establishing an HMO to deposit $250,000 to the state prior
to implementation.
4) if the Kenai task force planners had filed the
contracts they would use with the state Division of
Insurance, or obtained waivers of the need for a contract?
MR. SYKES said it would be good to answer those questions as
a way to avoid conflicts over jurisdiction.
Number 598
REP. G. DAVIS said he would research the answers to those
questions and said that the task force would take no steps
toward implementation before the election on the plan. He
said the $290,000 sought by the task force was seed money
that might allow the task force to seek foundation grants.
He said the task force was familiar with state bonding
requirements. He said he assumed that those involved in the
task force, including public administrators, doctors, and
major industry officials, would be familiar with Title 86
and HMO statutes, but he could not say so specifically.
TAPE 93-64, SIDE B
Number 000
REP. G. DAVIS asked Mr. Sykes to write all of his questions
in the form of a letter.
Number 050
MR. SYKES agreed to do so, and added that he would have to
review the statute (86) as he believed it was impossible for
the borough to solicit seed money before his division had
issued a certificate of authority, meaning implementation of
financial standards.
REP. G. DAVIS thanked Mr. Sykes for his questions and his
input.
Number 024
REP. VEZEY observed that the measure at hand was a
resolution, expressing intent, and did not carry the force
of law.
MR. SYKES said that the Kenai Borough might be violating the
law by going forward with a resolution and implementing the
plan.
Number 035
CHAIR TOOHEY observed that it was just a resolution, not a
bill.
MR. SYKES agreed, but said the resolution demonstrated
intent, and he wanted to pose those questions.
CHAIR TOOHEY observed that the committee could not move the
resolution without coming back with it later.
Number 048
REED STOOPS, A LOBBYIST FOR THE AETNA INSURANCE CO.,
testified on HCR 17. He said the resolve clause on page 3
was specific on intending that the KPB health care plan be a
model for pooling insurance for a community rating for small
group reform for HMOs. He said those were the only models
given for health care reform; and, as the plan had not yet
been enacted or approved by voters, and as no one in the
committee was able to answer detailed questions, there still
remained questions on the nature of the pooling arrangement,
the nature of community rating, and whether small group
reform differed from the version already moved from the
committee. He suggested rewording the resolution to
recognize the experimental nature of the proposal instead of
getting into specifics, some of which might be
controversial.
Number 097
CHAIR TOOHEY called an at-ease, then returned the meeting to
order.
MR. STOOPS suggested striking the word "model" on page 11,
line 3, and inserting the word "experimental," and deleting
the four clauses dealing with the specific nature of the
program. He said that would leave HCR 17 as a resolution to
endorse the KPB Health Care Advisory Council as an
experimental regional area for health care reform. He said
it wold be premature to make the conclusion that the plan
should be a model for reform.
CHAIR TOOHEY asked Rep. G. Davis if he would be comfortable
in making the suggested revisions.
REP. G. DAVIS said he was not comfortable making changes to
the resolution without talking to the chairman of the task
force.
REP. VEZEY pointed out that the legislature was under the
24-hour rule, the five-day rule, and the Thursday rule, and
that it would be necessary to post notice to hear the
resolution again the next day.
CHAIR TOOHEY commented no, the committee could always hear a
bill a day after its first hearing, and that notice of a
hearing on the resolution had already been published.
REP. VEZEY said he believed there should be some
clarification of the rules.
CHAIR TOOHEY asked the committee aide to find an answer to
the question. She said the committee had already given a
five-day notice of HCR 17.
REP. VEZEY noted that the committee was then operating under
23 c) instead of 23 a) and b).
CHAIR TOOHEY called a brief at-ease at 4:04 p.m., and
returned the committee to order at 4:07 p.m. She announced
that the committee would hold HCR 17 until the following
day. She said she would feel much more comfortable passing
the resolution if it were more generic.
REP. G. DAVIS said he did not understand why.
CHAIR TOOHEY said it was because the plan was directed
toward approaches that she believed would not succeed. She
said the plan did not address many issues that needed to be
addressed.
Number 130
REP. G. DAVIS stated, "I think that's, I'm sure the feeling
of the task force is that this is the program that needs to
be put together to work to address all the needs, and to
pull any of them out and restrict them, I just don't see, I
think we should encourage them to do as much as they can..."
CHAIR TOOHEY said that was fine, but she noted that the task
force was asking for state money, making its plan broader
than just the Kenai Peninsula.
Number 143
REP. G. DAVIS said that was the way to get more for your
money. He said he did not want the legislature to restrict
the range of possible expenditures for the plan.
CHAIR TOOHEY said she personally felt good about the CHIPRA
and HRATF programs if elements of each could be combined,
and that was the way the state ought to go. She said she
would have a hard time endorsing either plan, as both were
premature. She said that basic principles were absent in
both.
Number 157
REP. G. DAVIS said he would not want to tell a task force
with two years' work on the issue that a committee of eight
which had studied the issue for one hour had suggested
changes to the plan.
CHAIR TOOHEY said that she had studied the issue longer than
that. She said that while she had only looked at the
resolution for an hour, she had studied the task force's
work for longer. She expressed a desire for less
specificity in the resolution.
REP. G. DAVIS said he would ask the members of the task
force to consider her wishes, and said he thought it was
possible.
CHAIR TOOHEY ADJOURNED the meeting at 4:10 p.m.
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