Legislature(2007 - 2008)Anch LIO Conf Rm
08/28/2007 10:00 AM House HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Health Care Reform Across the U.s. | |
| Presentation: Rethinking Insurance | |
| Presentation: Changing the Health Care System | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE
August 28, 2007
10:04 a.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Bob Roses, Vice Chair
Representative Anna Fairclough
Representative Wes Keller
Representative Paul Seaton
Representative Sharon Cissna
Representative Berta Gardner
MEMBERS ABSENT
Representative Mark Neuman
OTHER LEGISLATORS PRESENT
Representative Mike Chenault
Representative David Guttenberg (via teleconference)
Representative Lindsey Holmes
Senator Fred Dyson
Senator Gary Stevens
COMMITTEE CALENDAR
PRESENTATION: HEALTH CARE REFORM ACROSS THE U.S.
- HEARD
PRESENTATION: RETHINKING INSURANCE
- HEARD
PRESENTATION: CHANGING THE HEALTH CARE SYSTEM
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LAURA TOBLER
National Conference of State Legislatures
Denver, Colorado
POSITION STATEMENT: Presented a PowerPoint presentation titled,
"Health Reform in the States."
DICK CAULCHI
National Conference of State Legislatures
Denver, Colorado
POSITION STATEMENT: During hearing, answered questions.
DR. KENNETH E. THORPE, PhD
Emory University
POSITION STATEMENT: Provided a PowerPoint presentation titled,
"Controlling Healthcare Spending: Role of State Health System
Redesign."
JIM FROGUE, Chief Liaison
to State Policy Projects
The Center For Health Transformation
Washington, D.C.
POSITION STATEMENT: Discussed health care reform.
ACTION NARRATIVE
CHAIR PEGGY WILSON called the House Health, Education and Social
Services Standing Committee meeting to order at 10:04:05 AM.
Representatives Wilson, Roses, Fairclough, Keller, and Gardner
were present at the call to order. Representative Cissna
arrived as the meeting was in progress. Also in attendance were
Senators Dyson and Stevens and Representatives Chenault,
Guttenberg (via teleconference), and Holmes.
^Presentation: Health Care Reform Across the U.S.
10:05:04 AM
CHAIR WILSON announced that the first order of business would be
a presentation on Health Care Reform Across the U.S. and that
this meeting is the second in a series of meetings on health
care reform. She asked several experts to present to the
committee to educate members on some of the issues concerning
health care in Alaska. She noted Commissioner Karleen Jackson,
Department of Health and Social Services, Jerry Fuller, Alaska's
Medicaid and Medicare expert, and Dr. Butler from the Division
of Public Health were present, as well as several other state
employees listening via teleconference.
CHAIR WILSON told members Ms. Tobler of the National Conference
of State Legislatures (NCSL) would provide the committee with an
overview of what other states are doing to address health care
reform. The committee would then hear from Ken Thorpe and Jim
Frogue. They will present different models that change the way
we view health care today.
CHAIR WILSON told members that Ms. Tobler would be testifying
via teleconference. She is a nationally recognized expert on
state health care policy issues and currently serves as the
program director in the health program at the NCSL. She serves
as the lead staff person on health reform, access to health care
and health care safety net issues.
10:08:41 AM
LAURA TOBLER, National Conference of State Legislatures (NCSL),
told members Dick Caulchi was joining her. He works on
financial health care costs and prescription drugs, managed care
and the private market health insurance system for the NCSL.
She began her presentation:
... The first slide just gives you my contact
information and I'd just like to offer to the
committee that NCSL would be happy to help Alaska as
it journeys through health care reform. I am
available by e-mail, phone. I'm sorry I couldn't be
there today but if there's another meeting that you
find would be useful to have someone there in person,
please do call and set that up because we're here to
serve you. So that's my contact information.
The next two slides we won't talk about very much but
it's just really to set the stage of why so many
states are right now contemplating broad based health
reform. The first slide shows the health care costs
per resident by country and it shows that the United
States has the highest of those. And then the next
slide is health care as a percentage of GDP by country
and, once again, the United States is the leader in
that area.
So, health care costs have really driven the
discussion on health care reform but I will also add
that it's not just cost. It's looking at quality and
how to deliver services in a better way. I know Ken
Thorpe will talk about that when he gets up to present
to the committee. This year, probably, I've been
working on health policy for many years and this year
we probably are seeing more of a ground swell of
states looking at broad based reforms as opposed to
incremental reforms, which is really what the states
have been in the business of doing. Incrementally
over the last 15 years states have really changed the
way that they've delivered health care in their
respective states with incremental changes. In some
cases, in some states that has made access to care
easier for people with low incomes and has made it
easier for small businesses to obtain insurance. But,
we're seeing more interest in broad based, broad
reforms so [we're] including not just covering the
uninsured, but looking at quality, looking at
prevention and looking at all the other aspects of our
health care delivery system.
So we'll go to the next slide.
10:13:04 AM
REPRESENTATIVE GARDNER said everyone has heard anecdotal stories
about lack of choices, denied services and long delays with
universal health care systems. She asked if the higher U.S.
health care costs correlate to more choices, access and more
timely delivery.
MS. TOBLER told members the U.S. doesn't actually have the best
health care outcomes; it lands in the middle of the pack when
compared to other countries. She said health care funds in the
U.S. are not providing the best quality of care. The United
States uses more services, which is why it spends more money,
and has a very large health care market so services are readily
available. With regard to the anecdotal information about
universal health care systems, she offered to send the committee
information that compares different systems.
CHAIR WILSON offered to distribute that information to all
committee members.
10:16:08 AM
REPRESENTATIVE SEATON noted a divergence of cost per resident in
different countries after 1980 on the graphs. He asked if that
is related to specific policies adopted by the United States or
the other countries.
10:16:46 AM
DICK CAULCHI, National Conference of State Legislatures, said he
could not provide a good answer to that question because his
focus has been on U.S. health care structure and finance more
than the costs in other countries. He said he could provide the
committee with copies of analyses of other countries' health
care systems. He said in terms of the United States, the line
rises steadily because of the amount of health services
available and provided. In some ways, managed care was
considered to save costs but it drew millions of new people into
an insurance plan so they used services.
MS. TOBLER pointed out that the next slide shows the annual
change in total health benefit costs from 1990 to 2007. That
graph shows a spike in 1990 and 2002. Costs then leveled off
over the last three years at 6.1 percent. Still, the costs
outrank inflation and growth in wages, which concerns employers
and individuals purchasing health care insurance.
10:19:06 AM
SENATOR FRED DYSON, Alaska State Legislature, said when Ms.
Tobler mentioned the amount of money spent and the resulting
outcomes, she neglected to discuss cultural and environmental
conditions that impact the situation, such as smoking and
obesity, etc. He inquired how much of those factor into the
problem.
MS. TOBLER said she would address that question later in her
presentation.
10:20:25 AM
CHAIR WILSON said Americans have a tendency to file more
lawsuits, which seems to cause physicians to do more tests. She
asked if that is a factor in health care costs.
MS. TOBLER said it is. She offered to send further information
to the committee on the drivers of health care costs.
10:21:50 AM
MS. TOBLER then returned to her presentation:
So I'm going to move on to the next slide, which is
just a map showing coverage rates for the total
population uninsured for 2004 and 2005. You'll see
where Alaska - hopefully you're looking at this in
color and you'll see where Alaska falls there. This
is someone who reported being uninsured at any time
during the year. It's the U.S. Census data.
And then if you'll go to the next slide, it shows -
it's just a comparison so it shows what percentage of
those uninsured are near poor, so 100 to 199 percent.
You'll see that that's not the case in Alaska. You
have, you know, a small amount of uninsured that are
in the 100 to 199 percent poverty level.
Moving on to the next slide, I've been looking at
what's going on across the country and there certainly
is a lot of discussion happening across the country on
broad based health reform and, in an effort to be able
to present this in a more organized way, I've
categorized the recent state actions and proposals
into four different categories. And then underlying
all of those categories is really an underlying focus
on cost containment.
So states are looking at reducing the number of
uninsured and that's really what you're reading about
in the paper. So that's what's getting a lot of the
press coverage and that's what's being talked about in
the state of the state addresses. More and more
governors and legislators are looking at programs that
will be able to pull more people into an insurance
product so they're looking at reducing the number of
uninsured, focusing on quality initiatives, so looking
at the care that's being delivered and trying to make
that care more efficient, more effective and produce
better outcomes.
Focus on appropriate care for chronic disease - this
is a biggy and I know Ken Thorpe will talk about this.
It's been a very large component in many discussions
across the country in many states and looking at
making chronic disease management a focal point of
reforming the system. I'll give you some examples.
And then focusing on prevention and wellness
initiatives - this is already - we're seeing not just
broad based reforms and legislation that is broad in
content, but we're seeing many states passing
legislation, even specifically on various items like
reducing obesity, reducing smoking indoors, that sort
of thing, which is a focus on prevention and wellness
and so we'll talk about that. And then concurrently
all of these are looking at long term cost
containment. So we'll go on to the next slide.
10:24:55 AM
REPRESENTATIVE CISSNA referred to a slide entitled, "Near Poor:
Uninsured Rates for the Non-Elderly" and expressed concern that
an Alaska state agency is working on a survey of its uninsured
and has found some unusual factors in Alaska. A large number of
Alaskans work at seasonal jobs, such as fishing. They are
difficult to collect information on, so an accurate assessment
is problematic.
MS. TOBLER said she has not been privy to that information but
it's essential to have good data before developing a plan to
cover the uninsured. The dynamics of the uninsured vary widely
by state so a program that works in one state does not
necessarily work in another. Nationally, the uninsured are the
working poor, generally with part-time jobs. She encouraged the
committee to invest resources to obtain good data.
CHAIR WILSON noted that at the last meeting the committee heard
a preliminary report about the uninsured. She noted Alaska's
Native population has some sort of health coverage through
Native corporations but are counted as uninsured in that data.
10:29:16 AM
MS. TOBLER continued with her presentation, as follows:
I'm going to talk about the first bullet first -
reducing the number of uninsured. We'll go through
several different strategies that states are looking
at to try to reduce the number of uninsured.
The first one that we're going to talk about is the
idea of a connector. Now if you haven't been
following what's going on in Massachusetts,
Massachusetts and Vermont in 2006 passed broad based
reform. In 2003 Maine passed broad based reform but
they haven't been as successful in implementation as
they would have liked to have been because of some
hang ups with financing and then also it's a voluntary
program. I'm going to talk about some of the lessons
learned from Maine when we get to talking about an
individual mandate.
But let's talk about a connector first. You should be
looking at the slide that says, "The Connector -
Health Insurance Exchanges." The idea of a connector
has been around for awhile. The Heritage Foundation
was one of the first organizations that started
talking to states and actually the District of
Columbia about the idea of a connector. Massachusetts
passed legislation last year and part of the
legislation created a quasi-government organization,
division, whatever you want to call it, that's
governed by a board that is multi-disciplinary and
they call it the connector.
What the connector does is it provides a single place
for people to purchase insurance coverage. It also is
the facilitator for their subsidized insurance product
that was also created last year for low income people.
It allows for more transparency so the connector is
really about - they're in the business of educating
people on the things that they need to know about
purchasing good health insurance. The connector was
also very, very much involved in writing the rules and
regs for implementing the health care reform
legislation that passed and they were very involved in
the discussion on affordability and what makes
insurance more affordable. So they've been a real
pivotal contributor to the implementation of the
Massachusetts health insurance reform law but the
connector doesn't have to be part of broad based
reform and we've seen some examples of states, like
Washington, that have passed legislation to create a
connector but they did not include a lot of the other
broad based reforms that were included in the
Massachusetts law. So there are a number of states
now that are examining this in '07 and I have those
states listed.
In addition to connectors, the idea of a connector is
to allow employers and employees to have access to
affordable health insurance. Massachusetts in their
legislation required all employers to offer Section
125 plans. In doing so that allows the employees to
purchase insurance through their employer with pre-tax
dollars and the connector helps to facilitate that.
That's what Washington modeled in their legislation.
Rhode Island and Missouri this year enacted separate
cafeteria plan requirements but they did not enact
connectors so they didn't create a connector or an
exchange. But they are going to require employers to
offer Section 125 plans in an effort to encourage
workers to buy insurance with pre-tax dollars.
10:33:29 AM
MS. TOBLER continued:
The Massachusetts connector, which is the next slide -
we were just recently in Massachusetts because the
NCSL annual meeting was there in August and we had an
opportunity to sit down with some folks and talk about
how the implementation was going. ...Their individual
mandate implementation began...July 1 of 2007 and so
since then they have had 15,000 new purchasers via the
connector and 165,000 newly insured, but that's net
growth so that, you know, it's the only number they
could give us but it...doesn't really indicate that
there are 165,000 newly insured people. It could be
people moving from one plan into one of the six plans
that are available.
The insurers pay a premium fee of 4 percent to the
connector. The other thing that Massachusetts did was
they merged their small group and individual market.
Right now, what they're saying in Massachusetts is by
doing that merger, that there was about a 15 percent
decrease for individual plans, that's the projection
for the price of individual plans, and about a 1.4
percent increase in small group premium costs. So
they're hoping that that makes health insurance more
affordable for people who are out there in the
individual market.
So that's what I'm going to report on the connector.
If you have any questions about that I'd be happy to
take them now.
10:35:22 AM
REPRESENTATIVE ROSES asked if the State of Massachusetts has
been tracking how many individuals are dropping private
insurance to join the connector.
MS. TOBLER clarified that the connector involves private
insurance. She asked Representative Roses if he was asking
whether employers are dropping non-connector insurance to join
with the connector.
REPRESENTATIVE ROSES said yes, as well as individuals who
dropped private coverage to get insurance through the connector
program.
MS. TOBLER said that was not discussed. They did talk about
employers dropping group coverage. She said she would get
information on that topic for the committee. She repeated the
insurance available through the connector is private insurance.
Massachusetts subsidizes insurance for people up to a certain
poverty level.
MR. CAULCHI added that transferring to the connector program
isn't seen as a negative move for people who want better or more
affordable insurance.
MS. TOBLER said she will ask about the number of people who drop
existing policies to join the connector program.
10:38:19 AM
MS. TOBLER continued her presentation:
The next slide is just an example of the connector's
web page. They did a lot of work to try to get the
word out to the individuals in their state about the
opportunities through the connector and they created a
very nice website where individuals can go not only
for information, but to also sign up for insurance.
I'm using this as an example for you all because one
of the things that we've learn over the years is that
how you market a program is so amazingly important in
the success of that program.
New York, when they created some reforms a few years
ago to create a program for small businesses, they
didn't really market it effectively and they had no
participation in the first year or at least none
compared to what they were hoping for. After a good
marketing plan and a little bit more effort to get the
word out, they definitely were able to enroll more
people in that program and they were happier with
their successes. So I think marketing and making sure
that the communication is a direct line to those
people that you're trying to reach out to is a very
big part of not only creating your program but also
making sure that you have financing and resources
built into the program to do an effective job.
So let's go on to the next slide, which is "Reducing
the Number of Uninsured by Requiring All Residents to
Buy Health Insurance." Massachusetts made it to the
first page of all the major newspapers in the country
by passing a law in 2005 that required all residents
to have health insurance as of July 1, 2007 with some
exceptions. So they will provide waivers to
individuals who can prove that they can't afford it.
And proving that they can't afford it is based on a
formula that the connector has come up with that
really equals about six percent of your income.
Although they are saying this is universal health care
and that it is a broad based individual mandate that
everyone will have insurance, there will be
individuals that won't - that will remain out of the
insurance market. It could be because they, at that
time, can't afford the insurance that's being offered.
Those cases will be taken into consideration. The way
that they're monitoring this is through the income tax
reform and so when they file ... their state income
taxes, there will be a question there about their ...
health insurance status.
10:41:31 AM
CHAIR WILSON asked what will happen to people who can afford
health insurance but are "maxed out" with other payments, such
as a mortgage and car payment, so cannot add health insurance to
their budget.
MS. TOBLER commented that affordability is the sticking point.
The cost of health care insurance premiums prevents people from
buying it. Massachusetts had many long debates about
affordability and devised a formula that equals about six
percent of income. She stated:
So if insurance is more than that, then you're waived
out. However, in our discussions with some of the
individuals involved in implementation, I do think
that they are going to consider individual family
situations so, let's say you had a year where there is
a need for that money, you may not have that six
percent but there's a need for that money to pay for
something catastrophic or something comparative. They
are going to take individual situations into
consideration. But I also will tell you this is just
being implemented - the requirement just went into
effect this July. So, next year at this time they'll
have much more experience in determining this idea of
affordability and waivers. Depending upon whose data
you look at, there are some organizations that have
been following this law that are saying that as many
as 20 percent of the citizens in the state will be
waived out of that requirement. So it's really a wait
and see ....
MR. CAULCHI emphasized that the Massachusetts plan has received
a lot of attention but the situation is very fluid. Standards
have been set and regulations have been promulgated but the
numbers being used are subject to change if they are not
feasible. He asserted the Massachusetts 2007 plan is one
example of several. There is no presumption that the structure
or dollar amounts are the permanent answer. He would not be
surprised to see Massachusetts make readjustments in two years.
10:45:30 AM
REPRESENTATIVE SEATON asked if the Massachusetts' formula uses
six percent of net or gross income.
MS. TOBLER believed the six percent formula is based on net
income but said a discussion is taking place right now about
what expenses should be taken into consideration. There is a
movement to include both premium costs and cost sharing. She
echoed Mr. Caulchi's comment that the program's parameters are
very fluid. She offered to confirm the six percent is of net
income for the committee.
10:46:53 AM
SENATOR DYSON opined that mandating state residents to have
health insurance raises concerns about infringement on rights.
He questioned whether any legal challenges have been made to the
Massachusetts law. Second, he asked when the paradigm shift
occurred to the belief that the cure to the health care dilemma
is to force everyone to have health insurance rather than
assuming people would pay their own bills.
MS. TOBLER replied no constitutional challenges to the law have
occurred. She pointed out the idea behind the mandate is shared
responsibility. When the legislature and governor got together
to create this program, the desire was to have the financial
burden shared among employers, the public and individuals. She
stated employers are bearing a large portion of the burden right
now and Massachusetts had significantly expanded its public
programs so the public was paying a large percentage of the
health care dollar. The philosophy was to create a triangle of
shared responsibility. She furthered:
The individual mandate philosophically and politically
does not work for every state, however there are those
out there that would argue that without the individual
mandate, implementing some of the market reforms and
implementing and creating some of the programs that
we're going to discuss today will never be as
effective because of the way that health insurance
works on a pool. By trying to pull as many people
into the pool as possible with an individual mandate,
you expand that pool to the point where it becomes
more effective and you can get some cost reductions
and premiums. Whether or not that's actually going to
pan out and work in Massachusetts, we'll just see.
As far as the paradigm shift and...moving toward
individually mandated insurance, I don't think this is
anything new. ...The law is new but the discussion
around including everyone in insurance has been around
for a long time. I don't know what else you want me
to comment on other than Massachusetts really is the
only state that has an individual mandate for health
insurance right now. It certainly isn't the norm and
the majority of states certainly aren't considering it
right now.
10:50:21 AM
REPRESENTATIVE ROSES asked if Mr. Caulchi said 20 percent of the
Massachusetts population would be exempted from the mandate
because of lack of affordability. He noted the national map
shows that the number of uninsured in Massachusetts is 11 to 13
percent.
MS. TOBLER clarified that she meant up to 20 percent of the
uninsured individuals would receive an exemption, not 20 percent
of the state's population.
10:51:39 AM
MS. TOBLER continued:
So let's move on to the next slide, which is titled,
"Involving Employers in the Financing of Coverage
Programs." This is also something that we're seeing
more states' commissions, committees looking at ways
to involve employers in the financing of programs or
just involving employers in covering more of their
workers.
Evanation, where an employer-sponsored insurance
system - it's been around for a very long time. ...
The majority of people that have insurance have
insurance through the employer system in the private
market there. And so, we have seen in the last three
years some movement legislatively to look at what
states can do to encourage employers, and that
encouragement is happening more at the small employer
level, or to require employers to offer a certain
minimum amount of insurance, or to pay into a pool, or
simply to assess an employer an amount of money for an
uncovered employee.
So let's look at Massachusetts and Vermont as
examples. Before we get into this slide, I just want
to say that Maryland passed legislation in 2005 and
that legislation was moved forward but then was
challenged. The legislation would have required all
very large employers, 20,000 employees or more, to
offer a certain minimum amount of insurance or pay a
percentage of payroll into a pool that then would be
used to cover the uninsured. That is sometimes called
pay or play type legislation and it was challenged by
the National Retail Leaders' Industry Association on
the grounds that it violated [Employee Retirement and
Income Security Act of 1974] ERISA. So whenever we
talk about involving employers in the financing of a
health reform, we have to have a discussion about
ERISA, which - you know, a discussion about ERISA can
go on for days and days.
I'll just tell you the very little bit I know about
what's going on with ERISA and the two states that are
implementing employer assessments.
So Massachusetts and Vermont are in the process of
implementing employer assessments. Massachusetts
hasn't sent out any bills yet or any assessments yet
but Vermont has. According to Vermont, they haven't
collected any yet but they've sent out the
assessments. How this works is that in Massachusetts,
the assessment is $295 per uninsured employee annually
with some exceptions and $395 per uninsured employee
annually in Vermont. So, initially you're looking at
that and saying wow, that's a very, very small amount
of money compared to what it actually costs to insure
an employee and you would be accurate. The idea
behind these assessments is to involve employers in
the financing of the program so, once again, sharing
that responsibility. At this time, there is a very
big question as to whether or not states can actually
involve employers at a higher dollar level without
running into ERISA problems.
So let's talk very quickly about ERISA. ERISA is the
Employee Retirement Income Security Act. It was
passed in 1974. There is one state in the country
that has an employer mandate, and that is Hawaii and
Hawaii passed their legislation prior to ERISA passing
at the federal level so they were grandfathered in.
So Hawaii actually does have an employer mandate and
by all intents and purposes it does help to keep the
uninsured rate down in Hawaii because employers are
required to offer insurance to employees who work at
least 20 hours per week with other requirements.
So, ERISA preempts states or ties states' hands in
regulating employee benefits. Because health benefits
are part of the benefit package, it preempts states
from regulating or influencing the way those benefits
are designed by the employer. The reason for the
small dollar figure in Vermont and Massachusetts
really was to get through the ERISA radar and it was
to create a financial participation that, at the end
of the day, wasn't going to influence the way
employers designed their benefits. So, there you have
it.
Whether or not this will remain unchallenged is still
a big question. To date, there has not been a
challenge in Vermont and Massachusetts. However, we
hear that there are shops out there looking for
plaintiffs so that there are people out there that are
trying to dig up some interest by plaintiffs in taking
this on and making it an ERISA challenge but it hasn't
happened yet. It's not a lot of money and it
certainly isn't comparable to the cost of insurance
but it is a financial contribution and it is a
responsibility that the state's putting on the
employer.
10:57:40 AM
MS. TOBLER continued:
So then the next question that's going to come up is
whether or not there's been any indication in
Massachusetts or Vermont that employers have dropped
coverage because of this, so dropping coverage and
saying well, why should I pay for coverage when I can
just pay $295 per employee and then my employees can
go through the connector and get their insurance. The
experience, in Massachusetts at least, has been that
there is no indication that employers have dropped
coverage. Any questions on that?
10:58:11 AM
MS. TOBLER, upon determining there were no questions, continued:
Let's go on to our next slide, which is "Reduce the
Number of Uninsured by Assisting Employees and
Employers in the Purchase of Health Insurance." This
has probably been the one area where incrementally
states have created many programs for small businesses
to be able to purchase insurance through a state
created or a state run program where they can do buy-
ins. So the employer can participate with the state
or the employee can participate with the state. They
can leverage some public dollars with the existing
employer dollars and try to get as many employees
covered with that partnership.
So I have some examples there. The majority of the
examples are Medicaid examples where states have
created Medicaid waiver programs like the one in
Oklahoma where they expand Medicaid eligibility to
include new people and those new people that come in
have employer offered insurance but they can't afford
that employer offered insurance. The state Medicaid
dollars help that individual employee to pay for their
employer offered insurance. The employee pays a
little bit. The employer pays a little bit and the
public dollars pay the rest. Sometimes you hear them
called three share programs but that's one example of
how you could mix dollar financing streams to cover
new people without using 100 percent public dollars.
The non-Medicaid programs that I have down as examples
are the Montana program. Two years ago Montana
created a small business purchasing pool and they
subsidized that pool on a sliding scale basis. They
use tobacco tax dollars to pay for that. They also,
for those employers who were already offering
insurance, created a tax credit system so that ...
they wouldn't penalize those businesses that were
already out there offering the insurance and they
acknowledged that.
Healthy New York Reinsurance Program is a non-Medicaid
program. It's subsidized by New York dollars and it
is offered to small businesses and it is a partnership
program. And then Cover Tennessee is a new program
that was created in Tennessee and it is also a
partnership for small employers and uninsured workers
and you have to have a certain income level below 250
percent of federal poverty. They're offering a
product that is $150 per month. It's pretty basic
coverage and they are just now getting their feet wet
with that. But these are examples of ways that the
state can create a shared financial responsibility
with the individual getting the insurance, paying
some, the employer participating, paying some and then
public dollars subsidizing for the lowest of income.
11:01:41 AM
REPRESENTATIVE GARDNER asked Ms. Tobler to explain "reinsurance"
under New York's program.
MS. TOBLER said New York is the only state with a subsidized
reinsurance program. Reinsurance exists nationwide; it is a way
to offset high claims. New York, in order to create an
affordable program for small businesses, created a program in
which the state assumes some of the risk of the claims, perhaps
claims between $5,000 and $50,000. That reduces the insurer's
risk so the premium can be offered at a lower rate. Usually,
the state's risk is a window in the middle so that the insurer
picks up the smaller claims and the catastrophic claims. That
motivates the insurer to be effective and encourage good health
among enrollees. If insurers are responsible for claims costing
over $50,000, they would be motivated to create programs that
contain costs and manage individuals' health needs well.
MR. CAULCHI said he has a good deal of background on New York's
program that he could provide to the committee.
11:04:19 AM
REPRESENTATIVE GARDNER asked if New York State pays those claims
from its general fund or whether it has an insurance program to
tap into.
MS. TOBLER replied the Health New York program is funded through
general funds.
11:04:41 AM
REPRESENTATIVE ROSES asked, regarding Massachusetts' requirement
that every resident have health insurance, whether Medicare and
Medicaid are considered as insurance.
MS. TOBLER replied they are.
11:05:05 AM
MS. TOBLER continued:
Okay, I'm going to go to the next slide, "Reducing the
Number of Uninsured by Allowing Young Adults to Remain
on Their Parent or Guardian's Insurance Longer." This
has actually been a policy or a strategy that more and
more states are adopting and, to tell you the truth,
we don't have really good data on how effective this
is but I could tell you what I know.
So, basically, if you're insured, both in Medicaid and
privately, and you become 18 years old, you're dropped
from that insurance. If you're covered by Medicaid,
you're dropped from the insurance. If you're covered
by private insurance and then go on to further
education, you typically would be covered until you
graduated or turned, depending upon your policy, 22,
23, 21 are some. So, around there you would be
dropped but...you would have to go on to school to be
able to get that extended coverage.
So there are several states, Utah was the first that
looked at the idea of allowing those young adults to
remain on their parent or guardian's policy for a
longer period of time. And the reason that this came
up is because that age group, the young adults, is the
fastest growing segment of the uninsured. They also
are a hard to reach group. Young adults, if you know
any, tend to think that they don't need insurance.
They are healthier than the general population and
they have less money and the money that they do have
they may be saving for a down payment on an apartment
or a car or whatever their priorities are - you know,
going to Europe, and they don't want to spend it on
something as dull and boring as health insurance. So
they are a very hard to reach group.
Parents and guardians tend to be more motivated to
know that their young adult children are covered and
so the idea is that by going through the parent or
guardian, the state would be able to more successfully
pull some of these young adults into an insurance
product.
So you see that I have listed all the states that have
passed legislation allowing this to happen. New
Jersey goes up to age 30, when they say young adults
up to age 30 can be covered by their parent or
guardian's policy. Most of the other states are
around 24, 25, 26. The experience has been - I'm
going to use New Jersey as an example. New Jersey is
requiring reporting so when the Department of
Insurance gets reports back, there's a little box
that's checked off from the insurers that includes
information on whether or not they sold the policy
based on this new law of covering young adults. As of
four months ago, they've covered upwards of about
6,000 new young adults. When they were contemplating
the legislation and they did some data collection,
there were about 100,000 young adults that would be
eligible for this type of coverage and they covered
about 6,000. Utah doesn't exactly collect this data
but, anecdotally, when you talk to the Department of
Insurance there, they feel that there is a
considerable amount of utilization of the law that
allows individuals to be covered up to age 26.
So, it's a relatively new policy. It is targeted to a
hard to reach group and a group that's expanding in
number when you look at who the uninsured are. Each
one of these state laws is very different so, if you
want examples or I know you all had a bill that didn't
pass, but if you want examples and if you want to talk
about this in more detail, I'd be happy to do that. I
don't know if you want to do that now but I'd be happy
to do that at any point in time.
CHAIR WILSON said she would appreciate receiving that
information at a later date.
11:10:09 AM
REPRESENTATIVE ROSES asked, regarding the folks covered under
Medicare/Medicaid, what is being done to address the fact that
some physicians won't treat those patients. He noted some
physicians in Alaska are also refusing to take Tri-care.
MS. TOBLER agreed that is a good point. Providing a health
insurance card doesn't necessarily mean individuals gain access
to services. She said that is a challenge and is another reason
that good data is so important, as well as including providers
in any discussions. She noted some states have put programs
into place that enable people with Medicaid cards or subsidized
insurance to get access to providers but that is not an easy
task.
REPRESENTATIVE ROSES questioned whether the cost of services in
Massachusetts has increased now that everyone is insured.
MR. CAULCHI noted the Massachusetts program is too new to have
much of an effect but all of the providers and insurers were at
the table from the start and costs were discussed. A separate
movement in other states, named transparency/disclosure, has
taken root, the idea being that providers must specify costs
upfront to allow comparison shopping and to allow policymakers
to take a broader look. Some states have provided those costs
on a website. That movement is in its infancy as well so it is
difficult to pull out one model to follow.
11:14:15 AM
MS. TOBLER continued her presentation:
Okay, moving on. The next slide is a chart called
"The Distribution of Health Insurance Coverage by
Age." It just is a graphic to show what we just
talked about, that young adults are the largest group
for the uninsured and the largest growing group for
the uninsured.
The next slide is called "Reducing the Number of
Uninsured by Expanding or Leveraging Medicaid or
SCHIP." When you look at the broad based reforms that
are being proposed and implemented across the country,
each one of them has a component of expanding their
public coverage. In Massachusetts and Vermont, it was
the Foundation for the Universal Coverage proposal.
In Maine, it was part of the Dirigo expansion. In
Pennsylvania they expanded to children. Pennsylvania
also has a program that covers adults as well. In
California there was an expansion. So, using Medicaid
as the foundation for covering all of the uninsured
typically, by expanding eligibility to adults up to
100 percent and expanding eligibility to kids to a
higher level, is the way that the states have done it.
I've just listed the states and whether or not they're
looking at adults or children.
11:15:58 AM
REPRESENTATIVE GARDNER told Ms. Tobler that Alaska passed
legislation this past year expanding Medicaid to children so it
can be added to the list.
11:16:14 AM
MS. TOBLER continued:
The next slide addresses a problem that exists in
every state and that is enrolling those individuals
that are eligible for programs but aren't in the
programs. You know we were in New Mexico a couple of
weeks ago, talking to them down there. They have a
large percentage of uninsured, comparatively speaking,
when you compare them with other states in the
country. The majority of the kids, at least, are
eligible for an existing program and many of the
adults, up to 100 percent of poverty, are also
eligible for an existing program but just aren't
enrolled. Many, many states are grappling with this.
Minnesota made that a priority as well. They have
expanded public programs to include many people that
wouldn't be eligible if they didn't live there but yet
they still have a number of uninsured that are
eligible but just not enrolled.
So enrolling those that are eligible - the governor of
New York made this one of his priorities for kids
because the majority of kids that were uninsured in
that state were eligible for an existing program.
Nationally almost three-fourths of uninsured children
are eligible for, but not enrolled, in public
programs. It's for many different reasons. The
family doesn't want to enroll them. The family has no
idea that they're eligible for the program or the
family feels that the eligibility process is beyond
their capabilities. So those are the three reasons.
Creating programs and working with your agencies in
your state to maximize enrollment in existing programs
probably would be the easy first step in reducing the
number of uninsured.
I'm going to ask Dick to talk about the next slide,
which is "Reducing the Number of Uninsured by
Increasing Choice with Consumer Directed Health Care."
This is really his purview here at NCSL so I'm just
going to ask him to say a few words about the momentum
on consumer driven initiatives across the country.
11:18:12 AM
MR. CAULCHI told members the following:
First of all, a word about the jargon of the words
used. Health savings accounts (HSAs) are the things
that often make the headlines and that have the policy
initiative and there's a lot of legislation filed to
facilitate health savings accounts. From a broader
point of view, health savings accounts are a federal
law created structure that, in fact, require a high
deductible health insurance plan along with them.
It's actually the high deductible health insurance
that provides the insurance coverage so, if someone
were to just have an account with money in it, that is
not technically insurance.
But, in fact these two are paired and one can have a
high deductible plan without actually having an
[indisc.]. I don't want to make this complicated
structurally because the real point is that there's a
growing endeavor, and really movement, across the
country because of the federal law to establish and
encourage health savings accounts and the HSAs
themselves are very flexible and relatively attractive
in a financial sense. They are completely tax free.
Any money put into them is tax free or tax deductible.
Any contribution the employers make also is tax free
and then any withdrawals from the account remain that
way and then the money in them can be rolled over from
year to year. So those are kind of the selling
points. They have been particularly of interest, I
think, to many employers who feel that the traditional
comprehensive is just not affordable. They either
never offered it or they've dropped it or considered
dropping it because of the unaffordability. So the
HSA - or the broader term, consumer directed health
care - that kind of package provides a way that
employers can be in the game, so to speak, but provide
a more limited amount of contribution.
So, you know, a few statistics here that the actual
HSAs formally set up under federal law - there's about
1.3 million at the beginning of this year. But there
are 8.5 million people that have some kind of high
deductible health insurance plan. High deductible
under federal law is defined as you have to have at
least the first $1,100 for an individual or $2,200 for
a family paid out of pocket by the person before the
actual insurance comes in. So, it is what might be
called catastrophic insurance primarily. Again, the
modern versions of these, or the new versions of them,
have some sort of practical incentives. They often
cover wellness features so that it's not just those
times when you're in the hospital with an emergency
but it does cover other things.
A majority of states have passed laws encouraging or
facilitating these and the interesting latest
development or most recent development is that a
number of the comprehensive reforms, including
Massachusetts, have integrated use of health savings
accounts. So some might have said a few years ago
that these were kind of an ideological or a
conservative approach but, like many things we're
seeing, just as cost containment and expansion are
happening simultaneously, so, too, consumer directed
or health savings accounts are being integrated into
other kinds of expansions and public programs.
... I will leave it there unless there are specific
questions and, again, we have a good deal of material
specific to these or the comprehensive programs that
include them.
11:22:36 AM
MS. TOBLER continued her presentation:
So, the next slide is changing the topic to quality.
When you look at the broad based reforms and you look
at the activity that's happening nationally, there is
an upsurge in interest in creating more statewide
quality programs for health care. So most of the new
bills and proposals address quality improvements. I
have some examples up there. In the Dirigo reform,
Maine spent a lot of time collaborating with the
various stakeholders around the state on quality and
they created the Maine Quality Forum, which is a group
that advocates for quality care and helps people make
decisions based on their health care needs and
choices. This Quality Forum actually reports back to
the legislature and it reports to consumers in public
forums and on a public website.
Minnesota is probably the state that I would hold out
as a model for quality reforms. They have been
actively working on quality improvements for many,
many years and just recently the governor has created
an initiative to improve quality of health care in
their state and I just included one of the
initiatives. They created something called the
Minnesota Smart Buy Alliance, which is a joint effort
between state government, labor unions, and private
businesses to improve quality and lower costs. That
group gets together on a regular basis and discusses
health care costs and discusses issues related to
quality and it includes all of the players in the
state. So it's actually a pretty powerful group.
There are plenty of other initiatives that Minnesota
is working on. I just [indisc.] them all.
In the most recent Pennsylvania health reform
proposal, there was a big movement to reduce hospital
acquired infections and so Pennsylvania went about it
in a more specific way as opposed to broad based
quality programs. They are actually looking at really
specific issues in trying to improve outcomes and
quality by addressing those specific issues. The
Pennsylvania health reform has now turned into many
different bills. They took their big broad health
reform proposal and turned it into about a dozen
different bills and actually some of the quality
initiatives were implemented without going through the
legislative process. Hospital acquired infections is
one of them.
Finally, at least four states have recently announced
or passed measures to reduce disparities in health or
health care, New Jersey being one of them. They just
came back with a - they did a statewide report on
disparities in health care. Disparity is very much
related to quality so New Jersey is focusing on
quality but also, at the same time, focusing on
disparities in health care based on ethnic or
geographic areas. They now have a statewide program
to reduce disparities, which they are hoping, at the
end of the day, will improve outcomes and improve
quality of care. Any questions on that?
11:25:59 AM
MS. TOBLER, after determining there were no questions, relayed
that the next slide speaks to chronic disease. She continued:
... I won't talk about this too much because I know
that Ken Thorpe's there and I know he likes to talk
about chronic disease but I will say that more and
more attention, from my experience working with
legislatures over the years, this is probably the most
attention that I've seen being focused on managing
people with chronic disease and it probably is about
time because this is where we spend all of our health
care dollars. So five percent of the population has
the greatest impact on the cost of health care.
So basically, people with chronic diseases are where
we spend our money and if we can do a better job of
managing individuals with chronic disease and
improving their outcomes and making them healthier
that logically we will reduce the cost of health care
and have healthier people have more money to spend on
prevention, etcetera, etcetera.
Vermont, when they passed their legislation last year,
didn't only look at covering the uninsured, but they
actually looked at a more comprehensive system of
health care and they created the Vermont blueprint on
health, which I'm sure Ken will talk to you about so
I'm not going to go into any details. Vermont isn't
the only state looking at that. New Mexico is very,
very interested in rolling in a chronic disease
statewide program in their reform. California is
focusing on chronic disease and what can be done, not
only through private insurance, but through ... local
community and statewide programs to improve outcomes
for people with chronic disease.
11:27:53 AM
Pennsylvania established a governor's chronic care
management reimbursement cost reduction commission in
May so they're also looking at broad based chronic
disease management on a statewide level.
So I would say that it is definitely becoming more of
a priority for legislators and governors talking about
broad based reforms. And, even in some states not
talking about broad based reforms, looking at what
they can do with their existing resources and focusing
on chronic disease as a way to spend those resources.
The reason is, because as a country, we're spending -
if you'll go to the next slide - "Health Care Costs
Concentrated in Sick Few." This is just a graphic to
show where we're spending our dollars and I'm not
going to get into the nitty gritty of this slide but
you'll have it as a reference.
If you'll go to the next slide, which shows the
percentage of U.S. adults who receive recommended care
for their conditions. This is just a graphic that
shows you that although we have some of the best
health care services that are available in the world
here in the United States, if you have a chronic
disease, let's say asthma, about 54 percent of the
time you're not getting recommended care for your
condition.
Now why you're not getting that care could be a myriad
of different reasons but with a chronic disease
management program, the intervention that you would
make with that patient would help reduce that myriad
of reasons that you're not getting your recommended
care. Any questions on that?
11:29:35 AM
MS. TOBLER, upon determining there were no questions, continued:
Okay, let's go to the next slide, which is "Focusing
on Prevention to Decrease the Incidence of Disease."
There has been a real jump in legislative activity
around prevention and disease reduction. Many of the
reform proposals, actually almost all of the reform
proposals and bills include prevention strategies and
policies.
We're also seeing many stand-alone bills focusing on
individual issues like reduction of obesity, reduction
of trans fats in foods, reduction of smoking in cars.
These are just examples, so a lot more legislative
activity around the idea of prevention of disease.
Let's get back to obesity. There's more emphasis on
reducing obesity and increasing exercise in the
legislature. I'm not even talking about in the broad
population as a whole. The reason is because health
related spending on obese people accounted for 27
percent of overall health spending increases between
1987 and 2001; 38 percent of diabetic spending and 41
percent of heart disease spending so you see that
there is a real cost reason why we should try to do a
better job of creating programs and creating
treatments for people who are obese and have chronic
disease especially.
If you'll go to the next slide, it's a pie chart that
shows the causes of disease. So you see that tobacco,
poor diet, and physical inactivity, alcohol
consumption and other preventable about half of the
time - and intervention and effective and valuable
intervention could help prevent disease from
occurring. So that's the reason that there is an
increased interest in legislating around prevention.
The next slide, I don't know - one of your other
speakers probably will show you this because I know
that they have this slide in their repertoire, but
this just is a graphic that shows the incidence and
occurrence of obesity and the trends among U.S.
adults. ... These are slides that are generated by the
CDC and I think it's astounding to look at the colors
on that map. It's 1990, 1995 and 2005 and, for those
that might not be able to see the code on the bottom
of the slide, the light blue is less than 10 percent
of the population is obese, a little bit darker blue
is 10 to 14 percent, the dark blue is 15 to 19 percent
of the population is obese, the sort of yellowish
color is 20 to 24 percent, and the orange is 25 to 29
percent and then the orange-brown with the little
grate over it is over 30 percent of the population is
obese.
And so if you look, from 1990 to 2005, you can see
that there's been a very, very remarkable change in
the population and we're growing into an obese
population. Obesity comes with many health concerns.
So there has been plenty of activity legislatively to
try to reduce obesity. We have databases of laws. If
you're interested in taking a peak at those, let me
know and I'll send them to Rebecca. Any questions on
that?
11:33:20 AM
SENATOR DYSON asked if any state or local governments have made
efforts to limit the amount of public dollars going to those
patients whose behavior causes their health conditions, such as
IV drug users or diabetics who do not monitor their blood sugar.
MS. TOBLER said some states have instituted incentive programs
for Medicaid patients. Patients who manage their diabetes or
reduce their body mass index when obese get an incentive. Other
states provide less of a benefit package if patients cannot
accomplish those things. She said a trend is occurring.
MR. CAULCHI noted that several states have added higher employer
contributions for employees who smoke as an incentive to quit.
SENATOR DYSON said he would appreciate receiving more
information to explore that idea.
MS. TOBLER agreed to send more.
CHAIR WILSON asked Ms. Tobler to skip the Medicaid highlights
today, due to lack of time.
11:36:49 AM
MS. TOBLER continued her presentation:
... Let's go on to the next slide, "Focus on
Wellness/Personal Responsibility in Private and Public
Insurance." That is so much of the point just
discussed. There has been some legislation to promote
wellness, like allowing premium discounts and rebates,
employer tax credits, focusing on state employees like
Dick just mentioned and creating statewide wellness
programs. There was a study that was done at St.
Louis University that came out with numbers that said
that workplace-based health programs can save an
average of $3.50 for every dollar spent. I think
there's still some discussion out there as to the
return on your investment and I think that some of the
hesitation that states have in going into wellness is
that they feel that there isn't significant data but I
think that that data is coming in now. Hopefully your
next two presenters will be able to talk about that.
Rhode Island passed legislation this year creating
Well Care, which is an affordable health insurance
product that is focused on wellness. It's focused on
prevention, primary care, and actively managing
chronic illness and there's some requirement that
there needs to be the use of evidence-based medicine.
I included a link there because it's very interesting
if you have some time to look into it I would check
out that link.
And then, last but not least, was something that we
talked about a little bit earlier, and that is access
to health care isn't just about getting an insurance
card. That includes all parameters. It includes not
just having access to insurance to pay, but also
having access to appropriate physicians in appropriate
geographic areas.
Community Health Centers have been a way for
individuals who either have Medicaid or don't have
coverage at all to get services and health centers
provide care for about 15 million people at about
5,000 different locations. In a few states this year,
there's discussion about expanding community health
centers to not just provide access to those who don't
have insurance, but to provide medical homes for
people that do have insurance. Community health
centers are usually in underserved areas, which in
your state is a large part of the state. They are not
just in rural areas. They are also in urban
underserved areas.
The community health centers are, if you don't know
anything about them, they're a partnership with - the
federal government provides some financing - less than
30 percent of the financing and then in some states
general fund dollars are provided for community health
centers but not all states. ... The next slide [shows]
the number of federally qualified health centers in
your state and then, if you're interested, I also have
a comparison chart that shows the number of ...
general fund dollars or other dollars that come from
public sources that go to help finance community
health centers.
CHAIR WILSON requested a copy of that information.
11:41:24 AM
MS. TOBLER continued:
If we'll go to the next slide, which is "Access to
Heath Care: Incentives for Doctors to Practice in
Underserved Areas," you know, most of the states are
in the business of recruitment and retention and so 45
states have loan repayment programs for doctors who
practice in underserved and rural areas. But some of
those programs are really funded by federal dollars so
there are other states who have really taken on this
issue, New Mexico being one, California, Arizona that
have taken on the financing of those loan repayment
programs and have added bonuses and incentives to try
to encourage physicians to stay in hard to serve
areas. It is definitely an issue that if you're
looking at access as a whole and not just as providing
access to insurance, it is definitely something that
you need to look at and study carefully and I know
that you all have done very good work in this area in
Alaska.
Let's go to the next slide: scope of practice because
this is something that has been a current discussion
in health care reform proposals across the country.
I'm going to use Pennsylvania as an example. You know
you, as legislators, license your providers and you
create their scope of practice so you create the
ability of them to practice and use their skills at
the highest level. In Pennsylvania, with their health
reform, one of the components of their health reform
was to expand scope of practice for nurse
practitioners and physician assistants and pharmacists
so that they can practice at the full extent of their
knowledge. That is directly related to trying to
reduce the cost of services by allowing lower paid
providers to provide services that in some other
states can only be provided by higher paid providers,
like doctors.
And then the other thing that has been coming up in
discussions is retail clinics. I did not ask before
I prepared this presentation whether or not retail
clinics are popping up in your state but they're
popping up all over the place. Those are the clinics
that you see in chain pharmacies and in Wal-Mart.
There has been a little group of legislation that's
come up, either trying to overly regulate retail
clinics and to reduce the number of RNs and PAs that a
physician can oversee or to encourage retail clinics
by increasing. So Texas actually is trying to
encourage retail clinics by reducing the restrictions
on physician oversight of RNs.
So that's kind of what's happening out there in scope
of practice but it certainly is a piece of the puzzle
when you're looking at access.
That's the last piece on health reform across the
country. I tried to give you the highlights. I hope
you'll share the Medicaid slides with the rest of the
committee. Please feel free to contact me about the
content of that. If you'd like me to go into detail
about what's happening in Medicaid reform across the
country at a later time, I'd be happy to do that.
11:45:04 AM
REPRESENTATIVE ROSES referred to an NCSL presentation on
healthcare in Chicago in April at which Dr. James talked about
Utah's attempt to change its scope of practice by establishing a
stringent protocol for tests to reduce costs associated with
unnecessary testing. He asked if his memory is correct.
MS. TOBLER said that is correct. She said the subjects of
evidence-based medicine, scope-based practice, and creating
statewide standards for treatment are all part of the
discussion. The more information available on successful
programs across the country, the better prepared Alaska will be
for its discussion. She offered to send information that Dr.
James provided about Utah's program, which is well documented.
CHAIR WILSON said she would like that information.
11:46:51 AM
REPRESENTATIVE CISSNA said she has heard that up to 70 percent
of a person's health care outcomes are based on individual
behavioral choices and habits. She noted mental and behavioral
health need to be part of this discussion because the outcomes
can be very expensive. She asked what work has been done to
address that.
CHAIR WILSON said that question will be addressed this afternoon
in another presentation.
MR. CAULCHI said Representative Cissna is correct that a high
percentage of the outcome factor relates to individual behavior.
Mental health is a large area and somewhat distinct because it
covers a whole range of conditions, from institutionalization at
an early age to people who cannot work full-time. One practical
fact is whether that kind of treatment is fully covered. A
movement to increase the amount of coverage and recognition of
mental health conditions is underway but is controversial
because of the cost.
MS. TOBLER added that integration of mental health and substance
abuse treatment with traditional health care services is
occurring in the states.
11:50:32 AM
REPRESENTATIVE FAIRCLOUGH asked if any research supports the
premise that if insurance is provided to the uninsured, they
will actually access the insurance.
MS. TOBLER said the answer is no. She pointed out that New
Mexico created a three-share program (employees, employers, and
public dollars) that provided subsidies for low income
individuals to purchase employer-sponsored insurance or to buy a
product commissioned by the state. The employer could also buy
in for their employees. There was very little participation due
to inadequate marketing and because it would cost some employers
more than they were already paying. She said that Massachusetts
now requires the uninsured to purchase insurance and Vermont
created a voluntary, subsidized program for low income
individuals. In New Jersey, a questionnaire regarding why
people didn't take advantage of extended benefits to young
adults revealed that many people had no idea the employer was
paying. She said the dilemma is creating a program that creates
a robust private market while recognizing that the lowest income
people probably still cannot afford it and providing for those
people.
REPRESENTATIVE FAIRCLOUGH responded:
Laura, I think you provided the information that I
thought was true. I guess I'm challenging the
hypothesis of 50 states chasing the uninsured if, on
your slide that's labeled "Enroll Those that are
Eligible. Nationally, 3/4s of the Population of
Uninsured Children are Already Eligible." I believe as
states discuss the challenge both in the private
sector and at a state level of wanting people to do
preventative care and wanting all people to be able to
access that care, that there may be a reality that
whether we provide it or not, people won't access it.
Whether that's education and understanding the
importance of a good diet, of less Trans fats or
whatever it is, that we're chasing a hypothesis that
says, and it's a very expensive hypothesis, that if we
offer the insurance they will come. We already have
figures that say they don't come. And so are we
putting all of our eggs in one basket the right way?
I understand, back to Senator Dyson's comments about
personal responsibility, you know I've talked with our
local providers and understand that those uninsured
that are coming at critical times to emergency rooms
to access their health care are driving up the cost
for all the rest of us because that is not the way to
access health care. We want them in early. We want
those children in for their annual check so that we
can start doing some preventative maintenance on their
health care systems. I don't know that we change that
behavior by offering it in the system. I guess it's
not a negative ....
MR. CAULCHI said Representative Fairclough presented a practical
caution. A dilemma during the last decade is that policymakers
sometimes put the emphasis on the detailed structure of a
program rather than on the marketing. He said, as an example,
Massachusetts has recognized that general marketing is central
to the success of its connector program so it is blanketing the
population with ads that tout the program as easy to use and
mainstream. He noted the success of that program is yet to be
seen but emphasized the need to include marketing costs in any
health care program.
MS. TOBLER said the dilemma Representative Fairclough referred
to is one reason Massachusetts decided to mandate that
individuals get health insurance. She noted the financial
penalty for non-compliance is small but will increase in the
future. She said that is why individual mandates are being
discussed in other states.
REPRESENTATIVE FAIRCLOUGH opined that individuals won't come
even if it is mandated. She said the choice is at a deeper
level - whether parents have time or that preventative medicine
is a part of their culture. She remarked that a parent will not
bring her infant in to be immunized because she is being
penalized financially. She felt the marketing needs to be
directed at healthy development and the value of preventative
services. She wants people to actually receive services. She
pointed out she was recently in Dutch Harbor where it costs
$1,000 for a parent to take a child to get services elsewhere.
12:02:53 PM
CHAIR WILSON recalled that when she had three small children and
good insurance coverage, family members did not go to the doctor
because they couldn't afford the deductible. The insurance was
used for emergencies only. She believes many people are in that
position.
12:04:04 PM
REPRESENTATIVE ROSES said when Alaska had the Denali Kid Care
Program, physicians and community health care centers expressed
concern about the number of appointments made but not attended.
Those appointments were not cancelled or rescheduled, which adds
to the cost. He felt people should be accountable for those
costs.
MS. TOBLER said recognizing those challenges and working with
state experts to address those problems is important. She asked
members to call her because she can provide some examples of
local successes in addressing those kinds of problems.
CHAIR WILSON asked Ms. Tobler to send committee members any
information she has on that subject.
12:06:16 PM
REPRESENTATIVE CISSNA commented that Alaska has not made health
a high priority on political surveys. The state spends large
amounts of money on health care but not large amounts of time.
She felt that legislation alone is not enough; leadership by
example is important.
12:08:48 PM
CHAIR WILSON thanked Ms. Tobler and Mr. Caulchi for their
presentations. She said they set the stage for legislators to
work from. She then announced the committee would hear from two
speakers this afternoon and would probably meet until 4:00 p.m.
She announced a lunch recess until 1:25 p.m.
^Presentation: Rethinking Insurance
1:28:22 PM
CHAIR WILSON called the House Health and Social Services
Committee back to order and introduced Dr. Ken Thorpe, the
Robert Wood Woodruff professor and Chair of the Department of
Health, Policy and Management in the Rollin School of Public
Health of Emory University in Atlanta, Georgia. He also co-
directs the Emory Center on Health Outcomes and Quality. His
presentation is about rethinking insurance. Dr. Thorpe has
authored and co-authored over 85 articles, book chapters and
books and is a frequent commentator on health care issues in the
media. He has appeared on national news broadcasts. He
received his PhD from Rand Graduate School, an MAA from Duke
University, and a BA from the University of Michigan. Chair
Wilson noted paper copies of Dr. Thorpe's PowerPoint
presentation were distributed to members.
1:31:02 PM
DR. KENNETH E. THORPE, PhD, informed the committee that he has
spent the last 2.5 years working with two states on enacting
comprehensive health care reform efforts, Vermont and Illinois,
which are restructuring how they pay for and deliver health care
services. He will discuss some of the possibilities Alaska can
look at to make broad sweeping comprehensive reforms. Health
care reform was a nonpartisan issue in both Vermont and
Illinois. The policy initiatives of interest are ones of common
sense prevention and more effective management of patients. He
said it is necessary to define the problem correctly, have the
right vision and a political strategy to succeed. In both
states, getting people on the same page and moving in the same
direction was necessary. He began his PowerPoint presentation,
as follows:
You've heard a little bit about the components of
health care reform. The four that I focus on [are]
one, that a key issue for people when they think
about health care reform is how are you going to make
my health care insurance less expensive, more
affordable. What are we going to do to make sure that
my employer continues to offer it at an affordable
price at lower co-pays and deductibles?
I start out with this one because I don't know the
specific numbers in Alaska but we've done some
national polling in the last election looking at
voters. Obviously, when you look at the voting
public, nationally about 85 percent of Americans have
health insurance - it's closer to 83 percent here.
But about 96 percent of people who voted had health
insurance. When people are voting and when you talk
about health care reform they're focusing on this
stuff costs a lot and we'd like to find some
initiatives to make it less expensive, better quality,
more quality time with my physician, and less
complicated because it is very complicated for
physicians and families and others trying to deal with
the forms and the paperwork involved in health care.
So I think collectively these are areas that I know
that you're touching on in different ways: the
affordability issue, reducing administrative costs.
There are a lot of very simple things that we can do
to move paper out of health care that produces no
quality but produces higher costs. I'll give you some
examples of that.
There are some quality initiatives that we embedded in
both the Vermont and Illinois reforms that I think
might be of interest here as well. Obviously the
debate about what do we do about the uninsured - you
know, Vermont is not dissimilar from this state in the
sense that it has a lot of seasonal workers. It's a
recreational economy, ski resorts, a rural state,
although not nearly as rural or big as Alaska, but it
certainly has some elements that are similar - the
same population size, something in the 600 to 650,000
range.
Policy intervention on the affordability side - I can
just tell you my experience working with the
legislatures in both of these states. I just started
out the first couple of weeks just making sure that we
understood the problem, understood the data, and
understood the analysis about where we're spending our
health care dollar and what's driving health care
spending up. I found that once we got everybody sort
of bought into the data, the numbers, the analysis,
the conversations we had about interventions were a
little bit easier.
So I think that the common sense issue is that
crafting effective solutions that are going to make
health care more affordable, a better value
proposition, means that you have to have a clear
understanding of where you're currently spending
health care dollars and what's driving the growth and
spending up. Real simple stuff but I find when I go
into a lot of different places and talk to policy
makers, and I'll give you some survey data as well,
most people really misidentify or have notions of
where we spend the money and why it's going up that
turn out to empirically not be the fact. So that's an
important shortcoming. If you're trying to solve the
wrong problem, you're not likely to have much of an
effect on really making health care less expensive.
I start out with these six framing issues and this is
largely dealing with the affordability issue. I call
them the six unhealthy truths, which tell the story of
the rise in chronic disease, the impact on health, and
health care in the United States. I believe at the
end of the presentation the citations are there. If
not, I'd be happy to give you the citations of the
studies and so on that each of these comes from. I'll
walk you through them as I go and tell you where they
come from.
1:37:34 PM
DR. THORPE continued:
The first one we know - this is CDC data - that
chronic diseases are the number one cause of death and
disability in the United States. They account for 70
percent of deaths in the U.S. They kill more than 1.7
million Americans a year. So there's a leading cause
of death and I don't think that's tremendously
surprising and certainly I think everybody sitting
here either may themselves have a chronic illness or
certainly know of somebody or somebody in their family
that has diabetes, high blood pressure, depression,
heart disease, cancer. All of these constitute,
selectively, different forms of chronic disease.
Second truth - again these are data that I've
tabulated. They're also data from the CDC. Three-
quarters of spending on health care nationally, and we
can sort of do an estimate for Alaska as well based on
the characteristics of the population and the
demographics to see how much are on the margin. This
number may vary. Chronic illness accounts for three-
quarters of what we spend on health care. Now I think
that that's an important statement because remember
somebody with a chronic disease by definition has an
established medical condition that is expected to last
at least 18 months, two years or even longer. So
these are people that are already ill and, at that
point in time, the issues about insurance [are]
important only in the sense of paying for services to
make sure that services are delivered. What really is
more important is how can we best and most effectively
clinically manage that patient, both in terms of
[indisc.] to do a better job of self managing his or
her condition and also providing the opportunity for
physicians and nurses to work with patients to make
sure that they do all of the basic blocking and
tackling, which is just the primary preventive work of
monitoring and managing the course of these diseases.
Medicaid, depending on the state, accounts for about
83 percent of the spending. Medicare owns the
chronically ill population. Over 95 percent of
spending in Medicare is linked to patients that have
heart disease, cancer, and these chronic health care
conditions.
The third truth, this is looking at the growth in
spending. We've done this now through 2004 and the
numbers are pretty much the same. If you look at what
we spent in 1987 compared to what we spent in 2000,
health care spending increased by over $300 billion.
It went from $313 to $628 billion. This was among
privately insured patients. Of that growth in
spending, about two-thirds of it is linked to the fact
that we are treating more and more people with chronic
illness. So two-thirds of the growth in spending is
due to the fact that we've had a dramatic increase in
the prevalence of treated disease.
Now there's a variety of reasons why the prevalence of
treated disease could go up. We could actually have a
true increase in the number of people that have
diabetes and have high blood pressure and have cancer,
heart disease and so on. That's one reason. It could
be that we're doing a better job of detecting disease.
That's probably a good thing that we're getting at
patients earlier in the course of their chronic
illnesses. It could be the technology is better to
treat more patients today than we were treating 15, 20
years ago. That's certainly the case in terms of drug
interventions for treating depression. That's
certainly the case with Statins treating hypertension
and elevated cholesterol. So what we've been trying
to do... all of these pieces are based on work we've
been doing at Emory trying to decompose what's going
on with spending increases so we can have a clear
picture up front for policy makers to sort of really
understand what's driving the growth in spending so
that they can find the levers of opportunity from a
policy perspective and attack them.
We tried to sort of understand here on how much of the
increases in spending were for issues that we could
potentially intervene, that we had an opportunity to
either modify behavior or have an effect on the
prevalence of treating disease. What we found is that
if you take the issue of obesity - there's a big piece
today in the Anchorage paper about obesity rates in
Alaska. Just as an aside, I can just tell you that
most of the data is based on self reported information
so people are sort of filling out surveys - how tall
are you, how much do you weigh?
It turns out nationally that if we do it that way, the
prevalence of obesity is about one in four, about 25
percent roughly. It has gone up. If you actually do
it clinically, actually have a nurse come in and weigh
somebody and take their height measurements, the
prevalence of obesity is about 35 percent. There's
about a 10 percentage point gap between the self
reported data and the actual clinical data. That's
not probably because people are saying they're too
short. They are fudging a little bit on the margin
with the weight side. But that's something - the
numbers are even worse than what the self reported
data shows. We're reaching up to 35 percent
nationally in terms of obesity rates, much higher than
what the self reported data indicates.
What we wanted to do was on this was to say how much
of the increase in spending over time is due to the
fact that we've had an established doubling of obesity
among adults. So, this first part we're just doing
among adults and we're looking at it among kids too.
1:43:30 PM
REPRESENTATIVE FAIRCLOUGH inquired as to whether slide 6 uses
the CIP so that the comparison of health care spending is
"apples to apples."
DR. THORPE replied yes. The comparison has been done in nominal
dollars, inflation-adjusted dollars, and in each year by
standardizing age and sex, which weeded out demographic changes,
changes in inflation, for age and gender, etc. He further
explained:
We took the top 20 medical conditions in the country.
Those top 20 medical conditions, heart disease,
cancer, hypoglycemia, diabetes, account for just under
80 percent of spending. What we did is we looked at
how much we spent on heart disease let's say in 1987,
how much did we spend in 2004, [indisc.]. And we had
a statistical approach for decomposing how much the
increase in spending was due to more people with heart
disease versus more spending for heart disease
patients. That's what this is reflecting. So if you
go across the 20 medical conditions and look at
[indisc.] on, about two-thirds of the growth is due to
the fact that we're treating more people with these
conditions and about one-third of it is due to the
fact that it cost more on the spending side to treat
them.
If you think about some of these conditions that are
big drivers, you know diabetes prevalence rates are up
55 percent over this time period. The amount of cost
of treating a diabetic is not much different today in
real terms than it was 20 years ago. We've had an
explosion though of people under medical management
for diabetes in this country. So, depending on the
condition that you go through, in some cases virtually
all the increase is due to prevalence increase.
That's true certainly for depression, that's true for
diabetes, hyperlepedemia (ph), elevated cholesterol.
It is not true for cancer and heart disease because
those rates have been relatively stable in terms of
incidence and prevalence and, in some cases, have gone
down. The technology has improved and changed
dramatically for those types of things. But, on
balance, those increases are really due to the fact
we're treating more and more patients with these
chronic health care conditions.
CHAIR WILSON said those are behavioral patterns that could be
changed.
1:46:29 PM
DR. THORPE said that is correct. He continued with his
presentation, as follows:
On this next slide we did another effort study in
decomposition and said how much of the increase in
spending is due solely to the doubling of obesity?
Obviously not all of that two-thirds increase is due
to potentially modifiable risk factors. As I
mentioned, some of it is due to more aggressive
screening and detection. That's certainly the case
with certain forms of cancer. That's certainly the
case with depression. We're recognizing and catching
depressed patients earlier compared to 30 years ago.
So some of it is more screening, some of it is
technology but a lot of it is just truly a clinical
increase in the incidents of disease linked to
potentially modifiable risk factors.
The truth number 4 here, our calculations were that
about 30 percent of the growth in spending over this
time period is due to a doubling of obesity
nationally. Again, we've done these calculations on
different states, looking at how they play out. In
general the range is from 25 to 40 percent, depending
on the state. To give an example of how that plays
out, if you go back to, again, diabetes and I focus on
that because I think everybody's clinically familiar
with it and it is a very classic example of what is
going on here.
I mentioned the huge increase in the prevalence of
diabetes being treated in the U.S. over the last 25
years. If you go back 30 years ago and do it - you
know, standardized the likelihood that somebody has
diabetes for demographics, gender, race, ethnicity,
education and do all of the appropriate
standardizations and then just look at it by weight
class, what you find is that 30 years ago, four
percent of normal weight adults were diagnosed with
diabetes. 14 percent of people who are obese were
diagnosed with diabetes. We're only catching about
two-thirds of total diabetes so if you look at the
total clinical prevalence of diabetes, a third of it
we don't treat and don't diagnose; two-thirds of it we
do treat and diagnose and that hasn't changed in 30
years.
The prevalence rates go to 2004. In 2004, four
percent of normal weight adults are diabetic. The
prevalence of obesity in adults is 14 percent. None
of those things have changed so we're not detecting
more diabetics. The prevalence rates in those body
mass increments has not changed. What has changed is
the distribution of people in each of those groups.
So, virtually all of the increase in diabetes in this
country is due to a shift in the weight distribution.
Another...way of thinking about it is that suppose
that we could have done something magical and just
frozen the rates of obesity today at the levels they
were in 1987 so that they didn't double and nothing
else changed. There's no change in technology. That
stays the same. It stays the same in terms of how we
pay for services. Nothing else changes. The only
thing we do is just hold those obesity levels after
1987 levels. We calculated that we'd spend about 10
percent less in the United States. That is, the base
of spending would be 10 percent lower than it is
today, which is over $200 billion. So it's a huge
impact on overall spending trends in this country.
If you look at the fifth truth, and it relates to this
fourth fact, most of these chronic illnesses could be
prevented or certainly better managed. Again, that's
from the CDC. It shows that about 80 percent of heart
disease and stroke and Type 2 diabetes are preventable
because they do link to potentially modifiable, though
difficult to modify, risk behaviors. About 25 to 40
percent of cancer is potentially preventable. That's
particularly true with certain forms of colorectal
cancer, probably less true with other forms of cancer.
The bottom slide - statistics you've already seen.
Sort of the irony here is despite the fact that most
of what we spend in our health care system is linked
to chronically ill patients. We don't do a very
effective job of providing clinically preventive
health care services to those patients. If you look
at what the American Diabetes Association says is the
standard of care for treating diabetes in this country
in terms of how often you should get your hemoglobin
A1C checked, the annual eye exams, extremity exams,
blood pressure exams, just the basic ongoing medical
management of those patients, they're only getting
about 56 percent of the clinically recommended care.
That's not because the doctors don't know that it is
clinically appropriate to do or the nurses don't know
that it is clinically appropriate to do, it's because
we have a payment system and a delivery model in the
United States that was great in the 1960s, but is not
really built for patients that are being treated in
the health care system today.
If you go back and think about the Medicare program in
1965 when it was first put together, that benefit
design and the way that we pay for services was based
on the clinical characteristics of patients who were
being treated in the 1960s, episodically ill patients
that came in, had a medical event, they were treated
and they went home. Well that's not the clinical
profile of patients driving and spending the system
today. These are not patients that are episodically
ill. They are persistently and chronically ill [and]
need ongoing medical management of their care.
REPRESENTATIVE GARDNER asked Dr. Thorpe to describe a system
that would address today's scenario.
1:52:40 PM
DR. THORPE said he would lay that out and then discuss the
specifics of how Vermont's program was redesigned. He
continued:
The sixth truth is that if you think about what I've
told you today, three-quarters of what we spend our
health care dollars on is on chronically ill patients.
Two-thirds of the growth is due to the fact that we
have more chronically ill patients that are being
treated. About 30 percent alone is due to a doubling
of obesity.
If you take a step back and say what are the
opportunities from a policy perspective to intervene
and do something, the starting point, it seems to me,
in terms of really dealing with the big picture stuff,
is you're not going to solve these issues by dialing
up co-pays and deductibles and having a debate solely
on insurance. Insurance reforms play a piece in this.
There's no question about it but that's not the
primary piece. This is a piece that's more
complicated than simply dialing up deductibles and co-
pays because it deals with the structure of the
delivery model, the payment system, and really
building into our culture preventive interventions
that can potentially modify risk behavior. We've done
this in smoking to a certain extent over the last 30
years. Smoking rates are still way too high but
they've dropped from 50 percent to the low 20s. So
we've done this with smoking and we need to have a
discussion about what are the opportunities and the
types of interventions you could do on the diet,
exercise, nutrition side. Neither one of them are
easy to do.
If you ask the public about this issue, and indeed
this is based on a national survey that our group at
Emory did and another group I work with, which is
called the Partnership to Fight Chronic Disease. It's
a group of 70 organizations nationally, ranging from
the National Association of Manufacturers [NAM],
Chamber of Commerce, Service Employees International
Union, [Indisc.] Hospital Association, there's a broad
cut of groups that have worked on health care reform
for years and years and years, most of them not on the
[indisc.] because most of them started and engaged in
the debate about health reform on the insurance, the
financing and the coverage pieces. They just did not
build a coalition and get much traction and much
movement.
We sort of flipped this around this time and said
let's start with the affordability issue. That's what
most Americans think about when you think about health
care reform. Let's see what we can do to make health
care more affordable, lay out the facts, and see if
you can't build a non-partisan approach to dealing
with this, this time around, at the state level and at
the national level. That's what this group, the
Partnership to Fight Chronic Disease, is really
focused on.
I've been surprised at the engagement that NAM, the
Chamber and Service Employees have had to date in a)
laying this presentation out with us, but also
starting to craft policy solutions that they all can
agree on, which is, to me, a marvel given the
diversity of interests in those groups traditionally.
... If you ask people what percent of deaths do you
think chronic disease accounts for, I mentioned it was
70 percent. Well you can see very few people get it
right on the left hand side. Only 15 percent of the
population is in the sort of the ballpark. If you
asked what percent of spending the chronic health care
account for, again, only about 14 percent of Americans
were in the ballpark on that one.
So part of this, in terms of framing the issue and
getting, I think, policy makers and the public focused
on this, is just an educational part of it, just
laying out the facts about where the spending is,
what's driving it and providing opportunities for
discussion about here's the real problem that we need
to focus on. And then to start to think about some
new innovations and new approaches that might be in
place that could really attack these problems more
effectively than we have in the past.
1:56:55 PM
CHAIR WILSON surmised then that 70 percent of the deaths in the
United States are caused by chronic diseases but more than 70
percent of health care costs are spent on those patients.
Therefore, if that is where most of the health care dollars are
spent, that is the area to focus on.
DR. THORPE said if the desire is to manage funds in the system,
better management of patients with chronic diseases will be
necessary. Primary care physicians say the typical clinical
profile is patients with hypertension, diabetes, elevated
cholesterol, overweight with back problems, pulmonary issues or
asthma, and depression. The current health care system was
never designed to track this and it was not designed for
physicians to manage it clinically. The information technology
and payment systems or population based public health delivery
model are not in place to help primary care physicians to
effectively manage those patients. The payment and delivery
model is still based on the 1960s.
The challenge is to define the problem correctly. The six issues
he has discussed provide a compelling, simple story that
coherently lays out the facts so that interested parties can
focus on policy directions.
1:59:20 PM
DR. THORPE told members the key to controlling the level and
dollar spending is to do a better job at creating a clinical
profile. Patients are not getting the clinically recommended
preventive services. They are not engaged in self managing
their conditions. No one is tracking patients across the
domains of care they get. Prescribing and medical errors occur.
Patients use several physicians over the years so a
comprehensive patient profile is often elusive. An emergency
room physician is often shooting in the dark regarding
allergies, drug interactions, and current treatments of
patients. The key is to develop a new delivery model for
patients treated today. He questioned what a new system should
look like and what are the key components of good, best practice
integrated models. The persistent rise of obesity and chronic
disease must be prevented. The data about each age group shows
dramatic increases in chronic disease prevalence and big
increases in treatment costs. Adolescents aged 15 to 22 spend
the equivalent of what 35 to 44 year olds spent 15 years ago in
terms of disease prevalence and spending patterns. He stated:
This is not quite a tsunami in terms of an increase in
the prevalence in disease, but it's starting early and
it's starting increasingly early in schools, junior
high schools, particularly among girls in school,
related to a lot of things we can talk to related to
physical activity time and so on.
In each of those cohorts, we were seeing these trends
that - as I listen to the policy debate about
affordability, which is largely focused on dialing up
co-pays, deductibles, insurance based reforms, that's
not going to get the job done in dealing with these
more difficult to address behavioral issues and
prevention issues.
2:02:49 PM
SENATOR DYSON asked if really significant co-pays might act as
an incentive for people to take better care of themselves.
DR. THORPE replied yes and said there are two approaches that
could be used. Pitney Bowles and Safeway did experiments in
which they offered employees high deductible plans to encourage
behavioral changes. They found their spending did not decrease,
and in certain elements increased. The data showed that
hospital stays, clinical and emergency room visits increased.
They traced the increase in cost to the fact that patients with
certain ailments, diabetes, hypertension, heart disease, and
certain forms of cancer, were not persistently taking
medications and self managing. They would end up going to the
hospital for treatment and to get prescriptions filled.
2:05:04 PM
SENATOR DYSON asked if those employees had been taking better
care of themselves prior to the switch to a large deductible
policy.
DR. THORPE said the prescription fill rates for medications
taken on a regular basis, such as Statins or insulin, decreased
substantially because of the high deductible.
SENATOR DYSON said if he was a large employer, he would provide
a gym in his facility, record employees' BMI, blood pressure,
cholesterol, etcetera, and offer lower rates to employees who
improved their health.
DR. THORPE said Safeway kept its high deductible plan but said
it would deposit more money into the accounts of employees who
took a health risk appraisal. Asymptomatic employees would
follow a specific care plan. Employees with high blood
pressure, for example, would be given a plan of services to
follow and no cost sharing. The challenge is to make sure
employees follow those plans so that by removing the co-pay and
deductible costs, employee compliance rates increased. So,
financial incentives were used more as a carrot than a stick.
Safeway found most of its health care spending is on the
employees with conditions so the challenge is to engage those
employees in more effective self management. Financial
incentives are very effective, as well as making services
readily available. Some large companies have nurses on site
once a week and have 24-hour nurse call lines. He agreed the
benefit design is important but the challenge is how to
structure insurance deductibles and co-pays in the context of
employees with six, for example, chronic health care conditions.
REPRESENTATIVE GARDNER asked if the Pitney Bowes/Safeway studies
are available or whether the studies are ongoing.
DR. THORPE said he could send copies of their presentations. He
noted another study on this topic was published in the New
England Journal of Medicine. In that study, the drug benefit
deductible was increased. The result was a decrease in the cost
of prescription drugs but increased costs in hospital stays,
emergency room and clinic visits so no money was saved and
mortality rates were slightly higher. He said the challenge is
to understand where the money is spent and how to structure a
preventive delivery model given the fact that patient
characteristics are different. He asserted the issue is much
more complicated than simply dialing up co-pays and deductibles.
2:10:29 PM
DR. THORPE continued his presentation:
I can tell you that if you look at most, what I call,
care managements as opposed to - I don't like to call
it disease management because when I hear disease
management, to me that means you're trying to manage
one medical condition. The more problematic issue is
that the patients in the system are - they have all
these conditions. They come in bundles. You don't
just have diabetes. You have at least two or three
other chronic conditions associated with it.
So, if you think about it, if you look at most private
insurance plans, if you look at most Medicaid
programs, certainly the Medicare program, the care
management that exists in those programs today are
largely ineffective. They're largely ineffective
because if you take a step back and say what would one
of these best practice programs look like? What would
it have to include? It would have to include primary
care physicians sort of as the traffic cop or
concierge managing this. It would have to include
nursing time and nurses working with patients and most
of the care would be provided by nurses that work with
patients. You'd include and engage patients that are
motivated to self manage their conditions. It would
have to include the physician having the information
so here she could understand and track whether or not
you've had your annual eye exams.
And, just looking at all of the clinically preventive
indicators for diabetes and all of these other
conditions, you know, have they occurred on a timely
basis? Did the patient fill their prescription? Did
they refill their prescription? Just the real basics
about managing those patients we don't have in the
system today. And that physician is not paid to deal
with those issues. Take a step back and think about
that patient again, the hypertensive diabetic with all
the co-morbid conditions, that patient is going in to
see a primary care physician today. It's an
established patient so that primary care physician is
getting paid for a 15-minute established office visit
of which he or she probably spends seven or eight
minutes with the patient. That patient has 10
different things that they want to tell you about
their diabetes, their blood pressure levels, their
depression, their back hurts, they're having trouble
breathing. The physician is basically, at that point,
struggling to figure out triage-wise what is the
problem that is the most serious and important that I
can deal with in this point in time, take care of
that, and then hope the other problems resolve
themselves.
So, if you think about it, that primary care doc not
only doesn't have the information on those other
conditions, he or she is not really paid to monitor
those conditions outside the physician's office.
2:13:05 PM
CHAIR WILSON asked how a legislature can get insurance companies
to change their system of designated numerical categories for
diagnoses.
2:13:33 PM
DR. THORPE told members the two policy challenges that both the
Governor's Offices and the Legislatures faced in Illinois and
Vermont were prevention and to clinically manage the funds spent
on the chronically ill. They studied best practices of
effective programs. They surveyed insurers, state medical
groups, and others, and created working groups to determine what
best practice includes. The survey found that some elements of
identifying patient data through claims data were effective but
that system did not work because it was not integrated with the
primary care physician, it does not have a sustainable payment
system, nor does it have an information technology component
that allows tracking. Their approach was to build a health care
home model in which patients choose a primary care physician who
puts together a preventive age-appropriate package of physicals
and risk appraisals and develops a care program that the
patient, physician and nurse would work on. It would contain a
diet and exercise routine, periodicity of monitoring, etcetera,
and the patient's reward for following that program for self
management is to get clinically recommended services at no cost
sharing and a lower premium. He continued:
I am going to - me being the primary care physician,
if I do this, I'm going to have the information
technology ... to really manage it and I'm going to
get paid appropriately so I'm not just going to get a
fee for service payment to come in and manage this
patient. There's got to be a different way of paying
for primary care physicians.
2:17:03 PM
REPRESENTATIVE GARDNER noted certain physicians in Washington
work on a private contract. Patients pay an annual fee for
health care and pay for medication and testing outside of that.
The idea is that patients pay one fee for an entire year and
have an opportunity to address all health needs, which she
believes creates a more satisfying professional role for
physicians. She noted the problem is that insurance companies
do not participate. She asked if Dr. Thorpe has seen that
happening elsewhere.
DR. THORPE replied the distinction between a "concierge"
approach where patients pre-pay to get access to a physician and
the approach he was speaking about is about more bundling of
services and payments. Upfront the physician will be paid a
monthly management fee, recognizing the physician and nurse's
time to manage a patient. Upfront funding will also be provided
for clinically recommended services. Routine office visits will
be monitored so that if a patient receives all of the clinically
recommended services, the physician is rewarded; if not they get
paid 90 percent of the fee. He noted some experimentation is
taking place with case management fees, bundling of services and
around fees for service payments with the expectation that if
this is structured and done right, over an 18 to 24 month
period, clinic visits, hospital stays, emergency room visits
will decrease because the patient is being managed on an
ongoing, proactive basis.
He said the delivery models are being built community-by-
community and, within three to five years, every primary care
physician will have electronic health technology on their desk.
That model provides payment reform, delivery reform, and
information reform.
He pointed out, in regard to Chair Wilson's question about how
can a state take a model and leverage it, these two states began
by determining the best practice delivery models they wanted to
provide with the agreement of all participating parties. They
began with Medicaid patients. He explained:
A Medicaid agency will send out an RFP saying we want
you vendors to manage our diabetics and hypertensive
patients and here are some metrics that we want you to
meet. They sort of turned it on its head and said we
don't want that model. What we want is we want you to
deliver this model. It's more of a government
procurement specification saying this is the delivery
model that we want you to deliver so you come and bid
on delivering that model in Medicaid. They did it in
the state health plan as well. In statute they said
the state employees' plan will use this best practice
model that we've all agreed upon. So that's - Signa
is doing that. And then their uninsured program,
called Catamount Health, the state required that all
private plans offer the Catamount Health policy and
again, in statute, they said that Catamount Health
vendors had to use this best practice care management
model.
If you think about it from the physician's standpoint,
after the first - it took three to five months to kind
of get people used to the change, but as they thought
more and more about it in their practice, you know,
they're treating hypertensive diabetics that were
uninsured, Medicaid, Blue Cross, Signa, and BP Health
and so on, and there were like 20 different reporting
requirements. Each of those vendors had different
care management protocols about how you reported
information, how you received information. It was
driving them nuts. They just didn't understand why,
for the same type of patients, I have 20 different
reporting algorithms and 17 different expectations
about how I'm going to treat the patient. If that
same patient loses their insurance, becomes uninsured,
then flows back to Medicaid, gets Blue Cross, that
patient within a year could get four different
treatment protocols.
So the thought was let's ... come up with our best
thinking about this and it's going to differ in
different states. The delivery models are different
in different states. Let's put together our best
thinking about this. ...If we could build it from
scratch what would it look like both in terms of the
care management model and the prevention model? I'll
talk about the prevention model in a minute.
So let's start with that. We can use Medicaid. We
can use state employees in some demos, if you want to
do it that way. Then, if you do an uninsured product
that you have private health plans offering it, you
can have that provided through the uninsured product
as well.
So, both Vermont and Illinois are using that approach.
Illinois is a much bigger state so it's going to take
longer to do but my sense is that those two states,
within three to five years, five for the Illinois
program, all of their primary care docs are likely to
have electronic health records. General Electric is
building the prototype model for Vermont right now and
it's incredibly inexpensive because they want in to
this marketplace. There's a lot of competition at the
vendor level: GE, Siemens, some of these big data
providers that would love to come into different
states and take all of the paper and build
standardized electronic health records that serve as
sort of the health information exchange portal that
physicians and others can access.
2:23:26 PM
CHAIR WILSON noted Dr. Thorpe said the primary care providers
will be equipped to have this data but in rural Alaska many
midlevel providers provide those services.
DR. THORPE replied that Vermont is a very rural state. A lot of
services are delivered through community health centers.
Depending on the scope of practice issues in different states,
patients can allow primary care givers access to the
information. The patient controls access to that information.
CHAIR WILSON questioned why midlevel practitioners are not
getting their own data.
DR. THORPE said they get that data as well. In Vermont many
midlevel practitioners are located in community health centers
with information technology portals. He pointed out it would
not be wise to roll out a program like this statewide. Vermont
has implemented pilot programs in six diverse communities.
Primary care physicians are not used to working as team members.
They are not used to the information technology. Based on what
is learned from those six pilot programs, the implementation
will be expanded so that in three years all primary care doctors
will have information technology on their desks, run through the
Regional Health Information Organization (RHIO). RHIO's role is
to build an electronic health record that will integrate all
physicians' systems. He asserted that three years ago, the
health care debate in these two states focused solely on
financing insurance coverage for the uninsured. However, the
discussion turned to structural issues and system redesign to
make health care more affordable in a one-year period. The
financing debate was incredibly contentious; the new legislation
passed with only six dissenting votes. He pointed out the state
was the policy innovator; Washington D.C. was not involved at
all.
2:29:10 PM
DR. THORPE continued with his presentation:
On the prevention side, we did a lot of studying on is
there any evidence out there on prevention programs
that are really effective. Perhaps the most notable
one that we know through randomized clinical trials
that really works is called the Diabetes Prevention
Program. That's an aggressive lifestyle intervention
that deals with education, the goal of getting a seven
percent reduction in body weight over a two-year
period. It's done through diet modification. It's
done through working with the enrollees on a weekly
basis about calories, fats, trans fats, all the usual
nutrition interventions, but it's a fairly intensive
program.
They enrolled at-risk adults, meaning that these are
people who are overweight. They were pre-diabetic,
pre-hypertensive, exactly the group you want to focus
on lifestyle intervention to make sure they don't
shift into being a diabetic and hypertensive patient
and incur a big hike in spending. What they find is
that - and again, this is an [National Institute of
Health] NIH randomized trial - they compared the
lifestyle intervention to Metformin, the older line
drug that regulates the blood sugar levels, which we
know is effective clinically to do to manage blood
sugar levels, to just basically what I call "lifestyle
light," which is just don't smoke, don't do this, sort
of the usual, non-aggressive, non-sustained types of
lifestyle approaches.
What that they found is that after two years, the
incidence of diabetes in the aggressive lifestyle
intervention program was down by 58 percent. It was a
dramatic reduction. Among people 60 and above, it
went to 71 percent. Similar reductions in blood
pressure levels.
The challenge that we found there is that when they
put this program together - take a step back - the
good news is that there are interventions out there
that through randomized trials have shown we can
modify behavior on average - yes. What percentage of
the population uses these programs? Probably .0001.
Nobody uses it, in part because nobody knows about it.
Second is that it was designed expensive because it
was done individual by individual by individual. So
one of the things that we did in terms of thinking
through, you know, trying to take sort of the best
parts of this, is to say what is it about the program
that works and we replicate it. Can we do it in a
group setting to get the economies of scale associated
with paying for the program so that we're not doing it
person-by-person and in a very expensive way
delivering the model?
That's sort of this year's initiative in Vermont, is
to figure out how we can provide incentives and work
with employers and schools and in the communities to
say we know from the randomized trials that this
prevention program that has these six elements really
works. Our challenge is to figure out how we can pool
people together so we can deliver this model in a cost
effective way. So that's the upcoming agenda this
particular year is to again, just like we did with the
care management protocol, find the best practice, find
ways to replicate it, and then find ways to find
incentives for employers, schools and communities to
adopt it. Again, that's another statewide initiative
... there's tremendous enthusiasm from the business
community to work on this. AARP has been a big help
in the state in helping us push this thing through,
labor, so the state employee union wants to be a test
site for this as a start of the state health plan and
so on.
But that's one example; we do know there are programs
out there that are effective. Does everybody enrolled
in a program get a 58 percent reduction? No. But I
can tell you that the incident rates for diabetes
among the unmanaged group over that two-year period
was 11 percent compared to 4, 4.5 percent, just a
dramatic difference in terms of what this meant in
terms of health and what it meant in terms of
spending. There are programs like that that work.
Safeway and some of these other big employers are
taking components of that and trying to figure out how
they can integrate that into the work site, provide
the financial incentives to people to avail themselves
of it. Again, make it easy for patients to do the
self management. Wal-Mart's going to be looking at a
program that's moving in that direction as well.
What's interesting to me, again, about all of these
approaches is that if they're recognizing that for far
too long in terms of thinking through this issue, we
focused solely just on benefits and insurance design.
These things are moving much more towards population-
based public health primary care models of prevention
and ongoing medical management. I think there's
growing recognition that that's where the money is and
that's what's really driving the increase up. Yes,
you need the benefit design piece in there, you know,
to drive incentives in the appropriate way and
obviously you need the benefit design in there too to
make sure you continue to discourage discretionary
health care services among non-chronically ill
patients. I'm not saying that that's not important.
It is. It's just that I see this transition into much
more of a population-based, primary care, public
health model that is likely to be a much more
effective way of managing and preventing disease.
And, I think you're seeing some of these states move
rapidly because as the legislators on both sides of
the aisle get involved in this, they say this just
makes sense. This is just common sense. If we can
find something that is effective and works and can
begin to infuse it rapidly throughout the state, if we
can do a better job of clinically managing patients,
if we can do something to make health care less of a
hassle for our primary care physicians, if we can do a
better job of engaging nurses into the care giving
team - those are all things that just make good
clinical sense and those are things that we should
just - it's part of health care reform.
2:35:55 PM
REPRESENTATIVE ROSES asked how the Vermont case connects to the
earlier discussion on coverage of the uninsured.
DR. THORPE said that is an interesting political story. The
first half of session the legislation was built on the blueprint
of building coalitions. The group said it could not start with
the financing debate. No one was interested in buying into the
reform debate because people felt the reforms were about them.
They started with payment reforms, delivery restructuring, the
HIT, and prevention. When the model was laid out, people loved
it because it made clinical sense and created excitement about
st
building a 21 Century delivery model. We then laid out the
proposition that the model be based on a public health model of
prevention, risk assessments, early detection, appropriate
screening, etc. for everyone. The discussion initially began
with creating a universal, preventive benefit program available
to everyone - immunizations, [Health Reimbursement Agreement]
HRAs, screening, etc. The discussion then moved to access to
the delivery model. Over the next two months, the discussion
became a debate about how to pay for such a model. The result
was the creation of an innovative model that had co-pays and
deductibles except for patients with chronic diseases, who had
neither. Vermont ended up with Catamount Health, a private
insurance company at a cost of $60 a month if a person earns
twice the poverty level, and it is subsidized up to 300 percent
of the poverty level, and the cost at that point is about $380
per month. The end result only came about because of the
evolution of the discussion; defining the problem and working in
a non-partisan manner. He noted that the same strategy may not
work in another state.
2:42:00 PM
REPRESENTATIVE ROSES asked if the premium is $60 a month for a
person earning 200 percent of the poverty level and as high as
$383 per month for a person earning up to 300 percent of the
poverty level.
DR. THORPE explained that any uninsured person above 300 percent
could buy in at that premium. He said in Vermont, the uninsured
contribute 10-15 percent of treatment cost of care, with the
remainder loaded into private insurance. He continued:
So what we did is say, look, in order to make health
insurance less expensive for the uninsured, we are
going to make sure that when they enroll in this
private insurance plan, that the hospitals and the
physicians recover their full costs and then some so
we pay hospitals at 110 percent of costs for this
private package, not 145 percent of costs.
If you think about it, the uninsured person who was
paying 13 cents on a dollar - they go into a hospital
and they're paying 110 cents on a dollar. That was a
way of getting the premiums down by about 25 percent.
So, compared to the premium that's out there in the
commercial market with the same benefits structure,
same co-pay structure, it's about 25 percent less
expensive. So even if you're not - at that $380, $390
a month pricing point, there's about 25 percent less
than what that person would buy right now in the small
group market.
REPRESENTATIVE ROSES asked if the number of Vermont physicians
willing to treat Medicare patients has changed.
DR. THORPE said in Vermont, he knows of practices that have put
a hold on new Medicare enrollees. He told members:
We are trying to help them out by saying at least, if
you have a practice that's just Medicare, Medicaid and
uninsured, and a lot of the practices in the rural
areas - that's basically what they've got, that has
not had a very profitable practice profile and so our
argument to them was to say look, at least we can take
the uninsured population and have them come in at 10
percent above cost so that is a much better paying
customer than what you're getting today. It doesn't
help the Medicare side obviously, but it certainly, in
terms of getting the primary care docs bought in,
particularly in rural areas, it was a big benefit.
2:45:55 PM
DR. THORPE told members, in response to a question from
Representative Keller, that Safeway went through a debilitating
strike with the International Food and Commercial Workers. It
lasted a long time and crushed the union. Safeway took a
financial beating. The CEO of Safeway decided to learn more
about health care. He found that the problem of increased costs
was partially due to benefit design and incentives but had more
to do with the issues aforementioned. He did not want to deal
with ongoing strikes and persistent negotiations about co-pays
and deductibles.
2:47:44 PM
DR. THORPE continued with his presentation:
We've talked about most of these things. The slides
are just here in terms of the "Prevention Works!" and
so on. I can give you the sites for the Diabetes
Prevention Program if you want. Just for the sake of
time, because it's been a long day for everybody, I'll
just leave you with a couple of observations here.
My three lessons in working with these two states in
sort of real time politics are that three things are
really important. One is getting the problem defined
right, making sure everyone is working on the same
issue and that there's real data and facts around it
that everybody agrees to.
What I find is that in a lot of different places is
that you have 10, 15 people sitting around the table.
They all want to solve a different problem and they
all have a different opinion about what the problem
is. So, if you can't start from the beginning on
working on the same problem with a common
understanding of what you're trying to solve, your
work is much more difficult, if not impossible. So
that's sort of lesson number one.
Lesson number two is that on the uninsured side,
absolutely that has dominated the attention of health
policy for the last X number of years, finding more
affordable options and bringing the uninsured into the
fold is clearly something policy-wise that makes sense
over the long term, mid-term. It's more difficult in
states like Alaska and Vermont, just given the
seasonality of some of the workers and some of the
fluctuations. There are some things you can do to get
the numbers down.
Don't forget that when most people out there hear you
in the Legislature talking about health care reform,
they're not thinking about that. They are really
thinking about this is a very expensive product that I
am just scared to death that my employer is going to
drop. So, lesson number two is that most people have
health insurance. Their understanding and definition
of health reform is to make it more affordable and, in
bringing the physicians into this, to work with them
to say that we have something that we're going to do
to make it less administratively complicated, less of
a hassle and, again, recognize the fact that we have a
payment and delivery model here that's really,
particularly for primary care physicians, is not
working very effectively.
Number three is don't rely on existing models. Most
of the existing models don't work. There's a reason
why we have high costs and fragmented care and poorly
delivered care is that we don't have good models. And
again, as I mentioned, these models are based on a
delivery system, on patients forty years ago. That's
a very different clinical profile than we have today.
So, don't be overwhelmed by it. You have a lot of
leverage and power here. You can come back and take
these six points as framing issues. They lead to two
very clear types of policy directions. Find out, if
you were building it from scratch in the State of
Alaska given the demographics and given the patient
populations you have, what would those models look
like? If we had our dream list of a prevention
program and new primary care based delivery models,
what would they comprise? How would you build them
and, once you've decided that, how best can you
accelerate the diffusion of those statewide, using the
power of Medicaid, using the power of your state
employees' plan, and perhaps if you do programs that
expand coverage for the uninsured and rely on the
private sector to provide it, use that as a lever as
well.
So you have a lot of opportunity as a state to do
major structural important things in your health care
system that have nothing to do with Washington at all.
They really have to do with things that you can
control if you can get those first two issues in play
- framing the problem right, solving the same issue,
having a common understanding of what those key
drivers are. That sounds simple but it's not and I
can tell you that was 80 percent of the battle in
Vermont and Illinois - just getting agreements and
having everybody understand these six points. That
was 80 percent of it. You frame it, you've got
everybody on the same page, the policy directions are
pretty clear, then it's a discussion about what's the
best way to proceed. At least you're on the same
issue, solving the same problems. I think you'd find
[you're] working in a completely non-partisan way.
That doesn't mean that there are not issues of
contention and differences of opinion. Of course
there is. But these issues as they're laid out here
aren't necessarily inherently Republican or Democratic
issues.
2:52:46 PM
REPRESENTATIVE GARDNER thanked Dr. Thorpe for his excellent
presentation.
2:53:07 PM
REPRESENTATIVE SEATON asked Dr. Thorpe to review the best way to
approach the prevention portion.
2:53:56 PM
DR. THORPE said the collaborators first dissected the Diabetes
Prevention Program to determine its components. Then they
looked at ways to move that model into worksites, the community
and schools. Different pieces of it fit differently in each of
those arenas. They worked with the business community to
determine how to collectively use the model and integrate in
various settings, as well as schools and community health care
providers. This upcoming year we'll look at ways to diffuse the
model into the three domains.
2:56:05 PM
REPRESENTATIVE SEATON said he recently read that viral incidents
account for about 40 percent of obesity. He asked if that's
being addressed.
2:56:43 PM
DR. THORPE replied most of the large increases in obesity are
among Baby Boomers and children. That's why the focus is on the
workplace and schools by taking a proven model. The mean weight
reduction was seven percent of body mass in the Diabetes
Prevention Program so the goal was to deploy that model in
different settings.
2:57:25 PM
REPRESENTATIVE SEATON asked, regarding the electronic medical
records, whether states will probably adopt one of maybe five
providers in order to avoid insurance companies being faced with
a plethora of reporting models.
DR. THORPE said General Electric is working in the New England
region to define inter-operability standards. Vermont is doing
that through its statewide RIO program and finding the vendors
whose programs are consistent.
CHAIR WILSON thanked Dr. Thorpe for his presentation and
announced the committee would hear from Dr. Frogue after a 10-
minute break.
The committee took an at-ease from 3:00:05 PM to 3:10:47 PM.
^Presentation: Changing the Health Care System
CHAIR WILSON called the committee back to order and introduced
Jim Frogue. She told members that prior to Mr. Frogue's current
position, he was the director of the Health and Human Services
Task Force at the American Legislative Exchange. His Op. Eds
have appeared in the Atlanta Journal Constitution, the Chicago
Sun Times and the Washington Times. He has appeared on Good
Morning America, Bulls-eye, Power Lunch, All Things Considered,
and many other broadcasts. He holds a Masters of Philosophy
from Cambridge University and a Bachelors of Arts from the
University of Southern California. He provided members with
written materials to accompany his presentation.
3:12:17 PM
JIM FROGUE,, Chief Liaison to State Policy Projects, The Center
For Health Transformation, provided the following testimony:
When we talk about health transformation, we want to
talk very broadly. What people normally talk about
when they talk about health care reform are things
like rates and deductibles, raising co-payments,
adding another formula, restricting access to
prescription drugs. That's it. That's not the kind
of transformation that's needed. That's silly.
That's not futuristic. So, what I'm going to do in
the course of the next few minutes is define what I
st
mean by saying a 21 Century intelligent health
system. That's describing the circle so we'll spend
our time defining that and then how we can get there
and show a couple of examples of groups and
organizations that are already there and having
tremendous success delivering better care at lower
cost, which are not mutually exclusive. You can do
better at lower cost and that's what everybody wants
and it can be done.
Health before health care - this is the most important
thing. I think some previous speakers have alluded to
this but if people aren't sick, they are not
expensive. At the policy council yesterday, one of
the facts that was voted on at a previous meeting was
90 percent of heart disease is due to preventable
behaviors. 90 percent of heart disease is due to
preventable behaviors or bad diet, bad exercise and a
range of things like that. If we could just promote
better activities earlier on, people aren't going to
get sick. Most importantly, they are going to have a
much better quality of life and they're not going to
be in emergency rooms and they're not going to be
costing more. So we have a health care system and
health care debate that tends to focus on treating the
symptoms and very little on the root causes.
This slide I like and it contrasts a little bit with
the one right after it but there's one thing about
this slide and the next one that are absolutely in
sync and that's what I want to highlight. This is
from the Journal of the American Medical Association a
couple of years back. It says this is what determines
your health status. My health status, each
individual's health status is determined by these
things, behaviors, so use of tobacco, use of alcohol;
movement deficit disorder - a fancy way of saying too
much television .... They say genetics is 30 percent,
environment, public health, that's things like clean
water, clean air, that kind of stuff, and 10 percent
is health care delivery, so hospitals, clinics, what
doctor you go to is only 10 percent of your health
status. Now that seems to be where all of our
arguments are, right? Most of our arguments, I should
say, are about the 10 percent and too little about the
other 90. You can't do much about the genetics
although that will probably change in the next few
years, but for now we'll say we can't.
Now this is another - mediators of health, put
together by Al Tarlov, who is a long time professor at
Harvard University. Now he runs a department down at
Rice in Texas. He says that society and relationships
are 55 percent of health status. That sounds a little
out there, a little strange, maybe a little touchy
feely but I think there's a lot of legitimacy to that.
What kind of family environment you're in. Do you
have a lot of stress with your family, a lot of stress
with your work? Do you react to stress worse than
other people? These things really matter. You know,
if you have an annoying colleague that sits in the
cube next to you, I don't want any of you to respond
to that. You'd probably get yourselves in trouble.
Probably you have a lot of annoying colleagues in the
cubes next to you. That can be very stressful and add
to your day and, in the long term, can really impact
your health.
They say health behaviors, those are things like
tobacco use and alcohol and diets, are about 20
percent. The other one said it was higher - it's
about 40. Genetics and biology - this guy says it's
only 10 percent, which is much lower than even 30.
But look at what's the same or almost the same. 15
percent is medical care. The other one said 10.
Both of these great researchers and these people that
follow this for a living say that what doc you go to,
what hospital you go to, what kind of care you get is
10 to 15 percent of what determines your health
status. That's pretty important to understand because
we spend all of our time, a lot of partisan bickering
and yelling and screaming over the pieces that
actually have the least impact on our health status.
It's interesting to note that there are islands in the
South Pacific where people have longevity rates as
long as we do in the United States and they don't have
an MRI machine for a 2,000 mile radius. It's not
because - I mean America has by far the best medical
technology in the world. There's no doubt about
that...but we don't have the longest longevity rates.
I would argue longevity rates are not the best
indicator of health systems, but that's kind of beside
the point because what is a health system is another
conversation and almost everyone in the room would
disagree on that definition. But, longevity and
quality of life are very critical. I think when you
look at medical care having such a small impact on an
individual's health status, it's important to focus
more on the broader things and important to focus on
the roots, as opposed to just treating the symptoms.
So I'm going to give you a series of ideas. At the
Center for Health Transformation, we do everything we
can to talk about solutions. We're not going to ever
give a long presentation about the current system or
the problems. That's all you get all the time.
People could come in and tell you all about the
current system, the problems. We try and give you
specific solutions and ideally ones that are either
cheap or free and that have a huge impact on health
status.
So the number one most important thing you can do over
the long term to promote health is promote exercise
and good diets in kids. That's the number one most
important thing you can do and you can do it in a
couple of ways. One, you can challenge your school
districts to mandate physical education and a junk-
free food campus. There shouldn't be a public school
anywhere in the state that sells Coca Cola on campus,
whether out of vending machines. They should not do
that. Now if people want to do that on their own,
that's certainly their own business but the taxpayer
shouldn't have to subsidize or even be a party to
that. Kids that consume food like that and processed
sugars - that has a terrible impact over the course of
their health status over the long run.
As I'm sure you're all well aware, there was a report
this morning on the front page of the newspaper that
we're a nation that's getting increasingly obese. I
guess Alaska's not quite as bad as some others but
every state is bad and it's getting worse. You just
can't have a health care system when 12 year olds are
getting adult onset diabetes. No health care
financing system, no health care technology is going
to be able to handle a system where obese 12 year olds
that aren't moving ... you can impact by creating
better behaviors at early ages.
One particularly creative solution that I've seen
around the country is in West Virginia and it would be
even more applicable here in Alaska because I
understand there are days where there is a lot of snow
up here and it's really cold. I've never been here in
the winter. It's always been in the summer and I've
never seen it below 60 degrees so I'll assume that it
gets really cold here and snowy in the winter time.
In West Virginia, they use Playstation's Dance Dance
Revolution, which, if you've never heard of it, it's a
video game and you get the equivalent of a Twister mat
and on the screen little arrows come down and then
they play songs. You're supposed to move your feet to
the music. It's very difficult. My 10-year old niece
dances circles around me at the easiest level when I
tried this for the first time at Christmas but it gets
kids moving and it's a video game. You basically
trick them into exercising. My understanding is, I
don't play video games, but the next generation of
video games, a lot of them are movement based. Their
boxing are actually boxing, their dancing are actually
dancing, their guitar playing - you actually have to
move your fingers but that's a great way, especially
when people aren't able to go outside and exercise, to
get people to exercise inside and it's fun to do. If
you were creative and ambitious, you could probably
get away for - you know, somebody could donate it or
give it to you for low cost or say we want to make
this part of our physical education system in the
state. They'd probably be interested in doing that.
The other thing is bad food and a poor neighborhood is
a serious impediment to health. If a low-income
person only has $3 to spend on a meal, they're going
to spend it somewhere for 1200 calories and not on
something that's maybe a lot healthier but it's only
300 calories. That's a discussion we could get into
later but if people live in neighborhoods where the
only access to food is very bad food, then it's going
to be very hard to impact their health status over the
long run.
3:21:13 PM
MR. FROGUE continued his presentation with slide 7, entitled
"Nine Surprising Diabetes Risks.", as follows:
These are just nine surprising diabetes risks:
watching two or more hours of television a day;
drinking one soda a day increases it almost 100
percent; skipping breakfast; a major bout of
depression; a large waist, even if you're at normal
weight; waking up in the middle of the night and
eating fast food more than twice a week; high stress;
consuming a lot of processed meat. These are just a
couple of things that are worth throwing out there
that most people don't associate with diabetes.
Adult onset diabetes type 2 is increasingly common and
Governor Huckabee, who is now running for president as
a lot of people know, had early indications of adult
onset diabetes and then decided he was really going to
change his lifestyle. He started running. He lost
100 pounds. Now he runs marathons and has even
written a book about his experiences. That's an
example of one person who changed their behaviors and,
as a result, is considerably healthier.
Silver Sneakers is another program - there are a lot
like this. I'm just picking this one because some
people have heard of it. It encourages people,
particularly older people, to exercise because of free
fitness membership for seniors. A lot of insurance
companies contract with it. Participating fitness
centers throughout the U.S. while traveling - there's
customized classes, health education seminars, but 30
percent lower cost for Silver Sneakers members on
average but much lower for those who attended four
times a week.
So exercise is particularly healthy and it's
particularly good for older women who are alone.
Women tend to outlive us guys but the biggest risk
they have is when they're alone, they get depressed
and they get to take drugs and there can be a downward
spiral that has a very negative impact on their
health. So the idea of getting people together to
exercise, maybe to walk around the mall three times a
week, if it's a cold day out. Most malls would be
happy to let you do that at 6 or 7 in the morning
before their stores open. Not only is it exercise,
but it gets to the other slide I showed earlier about
society and relationships. People who are isolated
get depressed, partly because they don't move, but
partly because they're not out meeting people and
chatting with people and making friends. Again, this
sounds a little "foofy" and a little simplistic but
it's very, very true and there's lots of studies, and
I can give you more than just this, of people who get
out and exercise, especially older single women, who
show marked improvement in health status.
I have a great, great aunt who just turned 100 in
April. She lives in Long Beach, California. I don't
see her too often. I live on the East Coast now. I
didn't even realize this but there was an article
th
about her in June for her 100 birthday in her local
little paper. I never knew she did this but
apparently she leads a walking group in her
neighborhood for ... all kinds of people. It's mostly
older people but it can be anyone. Apparently no one
can keep up with her. ... She walks all of the time
and she's in great shape, and she's really energetic
and I think you could attribute a lot of that to the
fact that she moves and the fact that she has a lot of
friends.
So what is consumerism in health care? [Slide 9] We
are going to jump ahead a little bit more here.
Consumerism in health care - this is how we make
purchases in other areas that are non-health.
Consumerism is how you bought your car, your personal
computer, your last vacation, chose your child's
college. You gathered as much reliable information as
possible and then made a decision based on price,
convenience, and what you value. This isn't some
crazy, radical notion and this is how we buy pretty
much everything else in our life. Everyday that goes
by, there's more information available to us for free
on the Internet so we don't just have to ask friends
or neighbors ... but there are opportunities to find
more information on line.
So what is health care consumerism specifically? It's
when employers, insurers, hospitals, physicians, drug
and device manufacturers and individual patients know
and share accurate price and outcome data for all
players. I'll come back to that in just a minute.
Is bottom up where providers respond to empowered,
informed patients? Individuals, employers and
insurers all have strong incentives to promote
wellness prevention and early testing. We'll come
back to that too and I'll give a couple of examples of
that. It's better for all people, particularly those
with multiple chronic conditions. I think one of the
biggest myths you hear is that we move toward
consumerism, it's good for the young and healthy.
That's true for particular vehicles if they're
designed really poorly. Consumerism actually works
best for the people who are sickest and their ability
to buy care and choose what's best for them.
Since I'm talking to several politicians here, this is
a good stat for you. Do you have the right to know
cost and quality information about your health care
provider? That's a 93 percent yes. By contrast,
should we leave God in the Pledge of Allegiance only
comes in at 91. So, there's probably not too many
people out there campaigning around, you know, we
should really take God out of the Pledge of Allegiance
but campaigning against people's right to know cost
and quality information would be even worse than that.
But we do a lot of polling. Actually we've got
another poll that's coming out in a couple of weeks on
Medicaid. I'll come back to that in a minute too.
This is a great issue - right to know. Do people have
a right to know cost and quality information about
hospitals, about physicians and about others that are
in the system?
These are two examples of what they do in Florida, and
I would encourage all of you who are interested in
this to go on these websites: Floridacomparecare.gov;
and MyFloridaRX.com. Floridacomparecare.gov has price
and outcome data for all procedures in all hospitals
in the whole state for free. It costs the state about
$200,000 to run these websites a year. So this isn't
like some big giant millions and millions of dollars
in investment. All they do is post data that they
already collect, put it on line. When it went live -
it's been about two years now since they've had it up.
There was no marketing campaign. They didn't run
commercials. The governor wasn't out talking about it
but they got 70,000 hits on the first and people
became aware of it extremely quickly. When you post
results from hospitals, half of them are going to be
below average - half of anything is below average. So
the hospitals that are below average aren't happy
about it too much and the ones that were happy didn't
offset the ones that were really angry about their
results being posted.
3:28:04 PM
CHAIR WILSON said she asked a representative of the Alaska
Hospital Association if Alaska hospitals would support a similar
website. She was told association members have talked about
creating a website but would like to have input on how it is
implemented.
MR. FROGUE said it has to be done in the right way and must
adjust for the populations served by different hospitals, such
as a large number of elderly in an area. Several years ago he
did a presentation for some New Jersey hospital CEOs. At that
time, his insurance company had data ranking hospitals available
to customers. He showed the results of some of the New Jersey
hospitals to the CEOs. They were livid about the data. His
point was that was the only information available at the time to
patients so if hospitals can provide more accurate information
to patients, they should. Florida's websites have been
available for two years; they were not originally supported by
the hospitals. Hospitals with particularly bad ratings in a
specific area put efforts into those weak areas to improve them,
which is what patients need. He stated a patient's right to
know which hospital is more likely to kill you is greater than
the hospital's right to keep that information secret. He
continued with his presentation:
The results of health care consumerism, if done right,
this is what you'll have - more choices of higher
quality at lower cost with greater convenience, think
cell phones, personal computers, flat screen
televisions. Every year that goes by, those items, I
just picked those three because everyone is familiar
with those, you get more choices of high quality at
lower cost. Think of the most cutting edge cell phone
in the year 2001. Maybe it cost $500 to $600 at the
time. You couldn't give it to any 14-year old today
because they'd be embarrassed to show it at high
school. It wouldn't have colors on it. It wouldn't
have games on it. It wouldn't have downloadable ring
tones. Think of the rapidity of cell phones...but
health care doesn't function like that. Beware of
this absurd myth. I don't hear too many people use
this anymore but occasionally you hear this. You
can't shop for health care when you're lying
unconscious. People actually do say this.
Emergency rooms will tell you half, roughly give or
take, of people that show up in emergency rooms aren't
even emergencies. It's something like 99 percent of
interfaces we have with the health care system are not
emergencies. And even when they are, there's an
opportunity usually for people around to make
decisions as well. Of course if you're lying in a
snow drift and had a heart attack and there's no one
around you can't shop for a hospital. But that's a
tiny, tiny minority of interfaces with the health
system. Most people have the opportunity to shop
around most of the time. We had an example of last
summer some friends and I were playing football and
one of our friends fell and hurt his knee pretty badly
and he was in a good deal of pain and really was in no
position to make a decision on whether he needed to go
to the emergency room. ... The 20 of us that were not
in pain were able to decide over the course of two
minutes where to take him.
... I won't go through all of these. I'll just
highlight a couple but when I talked earlier about
what the circle is, this is one outline of what the
st
21 Century Intelligent Health System is: individual
centered, values driven, 100 percent coverage.
Certainly we want a system where everybody is covered.
I'll mention on that one too in Switzerland they have
a very interesting system. This is one thing I didn't
mention yesterday. In Switzerland they have 100
percent coverage. Everyone has a plan. What they do
there is it's not based on what employer you have.
There's a mandate you have to buy coverage. Well what
people do there, there's about - I think there's
something like 75 insurance companies so people have
... different choices. They sign contracts with
insurance companies so you might go to Alaska Blue
Cross and sign up for five years or ten years or Bern
Blue Cross, if they have such a thing in Switzerland.
At the end of those five, ten years of the contracting
period, if you're actually healthier you get money
back. So it's an incentive of the health plans and
your incentive to actually be healthier, but what the
plan knows is you are going to be with them for five
or ten years so they actually care more about your
health status.
The way it works now, the average 32 year old has had
nine different jobs. That was true for me when I was
32. In fact, it was exactly true. ... But every time
you change jobs, you probably have a new health
insurer, you probably have a new network, you may get
a job where there is no coverage offered. You may
have a period of unemployment. In the Swiss system
none of that matters because it's not connected to
your employment at all. For people who are low-
income, they get a subsidy to buy the plan of their
choice. They have 100 percent coverage. It's a very
unique system and the incentives are on the insurers
and the individual to be healthier. Switzerland is
actually one of the healthiest countries in the world.
Transparent price and quality information. I want to
back up one second. On this one, the MyFloridaRX.com
- I skipped over that. They list the prices of the
100 most common prescribed drugs at all pharmacies so
I'd just encourage you to go on the website yourself
and poke around. You can get any price. When this
came out two years ago, there were huge discrepancies
in prices. People didn't know this. No one knew - I
mean no one knows how much drug prices - they cost
$10. That's your co-payment, or $20 if you get
something branded.
There was a newspaper - you know, some smart reporters
started clicking around on it and said you know,
that's interesting. They went to one place in Miami
and they found that the exact same drug was something
like four or five times more expensive at one pharmacy
than it was within the same zip code. So they called
up the expensive guy and said why is it for the exact
same pill, the exact same dosage, is it four or five
times more expensive? The guy said oh, that's not our
real price. Okay fine, so this goes in the paper.
Well, the next day, this is read in Tallahassee, the
Florida capital, by the state health secretary who
said that's interesting, because that's the usual and
customary price that you've been reporting to Medicaid
for the last couple of years. So are you lying to the
reporter or are you engaged in fraud? Just tell us.
That guy wasn't in business for too much longer. But
you're going to have shake-out when you do this and
certainly that's an example of it.
Electronically based, as opposed to paper based -
doctor's offices are about the last place on the
planet - you can go in the background and see manila
folders wall to wall. I mean how many businesses do
you actually see that anymore? There are very, very
few.
3:37:52 PM
MR. FROGUE, in response to Representative Gardner's earlier
question regarding Washington State's cash pay system, told
members that several doctors in Washington and Oregon belong to
a group called "Simple Care." They operate on a cash-only
basis. They don't take Medicaid, Medicare or insurance. The
overwhelming majority of their patients are low income and
uninsured. They charge per minute versus insurance codes, which
is a binary mediated market because the third party is removed.
He mentioned that many "big box" stores, such as Costco, have
put clinics in their stores with a nurse to do very basic,
preventive care, such as strep tests. The cost is lower and it
provides another option for services. He pointed out that
Illinois has a horrific health justice system. Trial lawyers
are chasing doctors out. In 2003, Texas adopted radical tort
reform; up to that point it was one of the worst places to
practice medicine because of malpractice suits and skyrocketing
premiums. Texas now has thousands of doctors returning to the
state and they are going to underserved areas. He told members,
"In fact, Texas is poaching them from their rival Oklahoma,
which has to add a whole new layer of satisfaction." He said
the fourth generation of health care consumerism has not been
reached yet, but in 5 or 10 years, people will be able to buy a
home DNA diagnostic kit at the supermarket and people will know
what kinds of food help prevent cancer. He noted the diagnostic
ability could save people from a lot of cost and suffering over
the long run. For example, bran helps to prevent cancer in 97
percent of the population but causes it in 3 percent.
3:42:15 PM
REPRESENTATIVE GARDNER asked who the 3 percent are.
MR. FROGUE said no one knows, but the tests will help people
determine where they stand.
3:43:01 PM
MR. FROGUE told members the health care industry will make a
huge movement to wireless support and holistic care. He said a
new Internet program allows a person to enter symptoms and,
through a series of questions, diagnose a problem. A great book
entitled, "The End of Medicine" talks about how the population
will have so much information about its own health care in the
near future.
3:44:42 PM
MR. FROGUE continued his presentation [slide 16]:
"What ISN'T Healthcare Consumerism?" Well, everything
we have now pretty much is not health care
consumerism, public and private, for true costs and
quality outcomes are obscured or hidden. A high
deductible plan by itself, absent usable, accessible
and understandable information, health savings
accounts that are not done right, isn't really a very
good health care. I happen to have an HSA myself.
I'm still alive. It works. I've had it for two years
but there's ways to set it up where it can [have] a
lot more impact in improving health.
In a system where prices go, for the same service, up
every year, prices as we know in cell phones, TVs and
personal computers go down for the same amount of
computing power. Think of the Apple 2E computer in
1985 and the thing cost $2500 in 1985 dollars. I mean
you can buy hundreds or thousands times more power for
an inflation adjusted 10 percent of the cost 20 years
later.
This is an example of an employer that's done a
particularly good job with moving towards a consumer
based model and improving health status and lowering
costs. You have a larger, you have about a 10 page -
it goes into a lot more detail, I just have two slides
on it, but it's this document here. You can read all
about it.
... They're an 8500 employee system based in Omaha,
Nebraska. They have a few facilities in Iowa. Their
CEO was at a Chamber of Commerce dinner in 2005 and a
CEO of a railroad company next to him said you're in
health care. What are you doing? You know, we can't
handle these 10 percent cost increases. What are you
doing over at the hospital? And Wayne Sensor said
nothing. It was kind of a moment of clarity. We're a
hospital - right? We should know about - I have no
answer for you. So he went out and made this a
priority for his own employees.
By the way, the same guy, he's been there about four
years now as CEO. One of the first things he did when
he came onboard is he found out his cardiology
department was performing below average so he took an
ad out in the local paper and said we're below average
in cardiology. Can you imagine doing that? That's
just crazy and, of course, the cardiology department
was just apoplectic. They thought that was the
dumbest thing they'd ever heard. Why would you do
something like that? Well, four years later they're
well above average. They took the steps required.
The sunlight was good. They hated it at the time but
in the long run, not only did it make the place - did
it improve their results tremendously, he saved a lot
of lives. ... What's very, very important about this
is he led it.
One of the biggest mistakes you'll see is, this is a
vast oversimplification and stereotype but I'll do it
anyway. A CEO will read in the Wall Street Journal -
turn to his HR director and say what are health
savings accounts? That sounds interesting. They're
saving some money. Let's do that. Let's do that next
year and then forget about it and then delegate it to
the HR director. And the HR director may be getting
close to retirement, you know, why do I have to do
this? It's so much more complicated. I've got all of
this work to do. So they throw in an HSA option for
the next plan year and, you know, out of 1,000 people
in the company, 12 take it. The next year the CEO
says I thought we were going to do HSAs. Oh well, we
tried it and no one wanted it. It didn't work.
That's typical. You get that a lot. So you can find
a lot of examples of HSAs not working.
One of the first states to go to HSAs in their state
employee plan, which is something I'd highly recommend
you do with this, they offered an HSA plan early in
mid-2004, which is shortly after HSAs became legal.
But the way they structured it was for a single person
with a $3,000 deductible. Now you only paid $9 a
month for that deductible, which, if you took the
difference of what you paid for the old PPO and now
that you paid $9, if you put that money into the HSA,
you'd have about $900 and they are assuming you even
did that so there'd still be a $2,000 gap between that
and the deductible. It was something like 35 people
out of 50,000 took it. I mean the Governor took it
because it was his idea and his family, so he and his
family of six - that's probably a fifth of the people
right there. But that's just not - I wouldn't take
that. That's just not...well structured.
If you structure it correctly, and it's led by the CEO
and the CEO is very much involved and engaged and
there's an aggressive education campaign and it's a
priority of the company or a priority of the state,
then you can get results like this. They made it a
choice, first of all. You know, if people wanted to
stay in the standard PPO they could do that. For some
people they were just more comfortable in the old
system. But the employer made such a large
contribution - they actually do an HSA-HRA hybrid.
It's detailed more in here. I'll just focus on the
results. If you want to see how they did it, that's
what the 10 pages is for. But this year in 2007 it's
up to almost 90 percent of people chose the consumer
based option. So these are the results. These are
just a couple of the highlights of results for 2006.
This is the first full calendar year they had their
consumer based model in place.
They had three times the national average in
preventive care ... which is 100 percent covered by
the way. We want people to get preventive care so
this is a good thing. Please go, we'll pay for it.
So these are things like mammograms, check-ups,
childhood immunizations, these kinds of things, all
100 percent covered, three times more than the
national average. They had smoking cessation and
weight loss programs; 400 people quit smoking and
that's pretty good. That's seven or eight percent of
the whole population and, assuming most of them don't
smoke, that's pretty high. 670 people enrolled in
weight loss programs and lost a combined 6,500 pounds.
Each employee was actually paid $100 to take an
optional on-line health survey so I'm not going to
force you to do anything, but if you'd like to, we
could pay you $100 to do it. You don't even have to
tell the truth. You just fill it out and it takes 15
minutes and you get your $100. If it turns out you're
diabetic or have some other ailment and you enroll
with a health coach, you get paid for that. If you
meet certain health metrics, for example if you're
diabetic and get your A1C down to a more acceptable
number, you get paid for that.
It turns out the financial incentives for an employer
and for the company of insurers they work with, it's
very much in their interest to make you healthy so
it's worth paying you a couple hundred dollars to do
healthy things than pay thousands of dollars down the
road for you to show up for an ER visit that could
have easily been avoided. So, at the end of the year
in 2006, nearly $2 million in employee money was
carried over into 2007 in their HRA-HSA balances.
So what was the overall cost trend for 2006 with all
this new money spent on preventive care, all these
payments going out to people to take health risk
assessments, with all these payments going out for
people to quit smoking and lose weight and enroll with
health coaches? Their overall health cost trend for
2006 was 1 percent, not 10, not 12, not 15, not 20 -
one. So they got much better health outcomes at much,
much lower costs.
3:52:01 PM
CHAIR WILSON asked what happened the following year when more
employees participated.
MR. FROGUE said he believes 75 to 80 percent chose the plan in
the first year. In the second year, the percentage was close to
90. More people enrolled in the plan the second year because
they liked what they were seeing. He hypothesized that a
company with 10,000 employees agreed to put 50 percent of the
savings from an agreed upon health trend into wages. The
employees agreed to a 10 percent trend over the next five years.
If the average employee earned $15 per hour, and the average
health plan cost $6,000 per year and, with a consumer based
plan, the trend was a 1 percent cost increase, the average plan
in 2012 would equal $9600 at an annual rate of 10 percent and
instead was only $6300 at 1 percent. He said he could provide
many examples of the cost savings between a 10 percent trend
over 5 years and a savings of 1 percent over 5 years. He said
if an employer agreed to put 50 percent of that back into wages,
the raise would cumulatively equal $2.35 an hour, just through
health savings. That incentive could be offered to employees.
He noted similar successes in the private market include:
United/Definity - 50,000 employees joined its consumer directed
plans and costs decreased 3 to 5 percent in '04 and '05; Aetna
had 134,000 employees join a full replacement plan with a 1
percent cost trend since 2003; Wellpoint Lumenos had 40,000
employees show an 8 percent decrease in 2005. He emphasized
HSAs are not theoretical models; thousands of people are
participating in them. He then mentioned a new plan, which has
a high deductible of perhaps $2500. For each metric a
participant meets, those being [body mass index] BMI, blood
pressure, [low-density lipoprotein] LDL bad cholesterol and
nicotine use, the deductible decreases by $500. So, the
benchmarks are easier to achieve than those posted on the NIH's
website. The program is voluntary but participants can lower
the deductible by 80 percent by meeting or exceeding the
benchmarks. He said it is better to reward people for good
behavior rather than punish them for bad behavior. That changes
the dynamic and the way people react.
3:57:01 PM
CHAIR WILSON asked who is using the new plan.
MR. FROGUE answered the new program is being used in a few
states right now. It is unique. There is an almost universal
consensus that discrimination against genetics is inappropriate
but discrimination based on behaviors is appropriate. That is
what these plans do. He then referred to Slide 21, entitled
"Florida Medicaid Enhanced Benefit Accounts," which pays people
for positive behavior, such as getting children to appointments
on time. Medicaid recipients are paid $25 for taking certain
measures that make them healthier. The deposit can be used to
purchase medical items that otherwise would be paid out of
pocket. It has had an off-the-chart satisfaction rate with the
beneficiaries.
3:59:40 PM
CHAIR WILSON asked about the cost changes in Florida.
MR. FROGUE said the program just started at the end of 2006 but
in three weeks former Governor Jeb Bush and Alan Levine, former
Secretary of Health, will be presenting and reporting their
findings at a Medicaid event. He encouraged the committee to
watch it on a web cast.
4:01:17 PM
MR. FROGUE then turned the committee's attention to Slide 22,
"New Mexico Care Coordination Model," in which 17 governmental
agencies that interface with low-income clients coordinate to
create a care model by creating a comprehensive picture of each
individual. He noted an unnamed state found it had three
departments that dealt with low-income programs with 15
different computer systems that did not interface.
4:03:44 PM
MR. FROGUE moved on to slide 23, "Gallup Survey on Medicaid
Consumerism," and told members:
Another thing we've done is we worked with the Gallup
polling organization. Those of you who are in
politics know that the Gallup poll is one of the most
reliable polls. They do a lot of great political
work. Their political work now is about 2 percent of
their income. The overwhelming majority of what they
do you never hear about. They actually do surveys all
over the world. They do surveys for companies. They
know more about hospitals than anyone. In fact, one
comment they made that I thought was particularly
interesting is you can gauge the quality of a hospital
by finding out how happy the nurses are. That's the
number one indicator of hospital quality, how happy
the nurses are. That's pretty easy. You don't need
some long study and a bunch of PhDs spending years,
poking around results. Just survey the nurses. If
they're happy it's a good hospital. If they're angry
and bitter, it's not going to be a very good hospital.
So anyway, that's one of the things I've learned in
working with them.
But we actually did a survey with them last year. We
have a much - actually I have a phone call with them
tomorrow to talk about some of the early results. We
actually ask people on Medicaid what they think of
consumerism. Is it some kind of radical notion?
...Let's ask them what they think of some of these
crazy schemes. Is it in your interest? Would you
respond differently if you have some of these rewards
and incentives? The first survey we did came out
September of last year and...they did it very quickly.
They had 172 respondents so a sample on the smaller
side but they found that 67 percent of those were
extremely or very likely to switch to a Medicaid
program with shared savings, so 79 percent were
extremely or very likely to go to a doctor's office
instead of an ER if they were to share in some of the
savings. 73 percent were likely to adopt a healthier
lifestyle and then if you could use the savings and
spend it, where would you want to spend it? They said
health care and housing and food were the top three.
There were several others as well.
But the next survey - actually I just got some data on
it today. They were able to reach 415 people on
Medicaid, the majority disabled, and ask them a whole
range of questions. ...I helped craft the questions
but I haven't seen the responses yet. But this is
th
going to be unveiled at our event on September 18
too. Some high ranking people at Gallup are going to
come out and speak to us about what people on Medicaid
think. It's fine what we may think in this room but
none of us, at least here, are on Medicaid. We should
ask people on Medicaid. Is this something that would
work for you? Are you interested in this? How would
it be different if you were in charge? How would you
help people be healthier? So that's going to be one
of the highlights.
This is just the summary of what we have coming up on
th
September 18. We have the Minnesota Governor and
Chair of the National Governors' Association Tim
Pawlenty is going to speak. Former Florida Governor
Jeb Bush and then my boss, Newt Gingrich, [are] going
to host. We're going to release the Gallup poll. We
have a panel on the Medicaid system that works. ...
The Medicaid director in Arizona is a particularly
creative guy. They have a very vigorous electronic
health record project that they are working on with a
bunch of other states. They are actually finding a
way to make sure that the Medicaid data can be shared
with people that are non-Medicaid, which is actually
one of the problems a lot of states have now, so you
can create a total picture of people's health status
no matter where they go.
It's obviously always extremely, extremely important
to make sure that that is done with the utmost respect
for patient privacy. In fact, whenever I make any
comments about electronic health records, I always
implore legislators to create absolutely vicious
penalties for people who abuse the sanctity of
electronic health records because the benefits are
tremendous. ... One of the classic examples is
Katrina. People who fled New Orleans and went to
Dallas, for example, they could go to Jiffy Lube and
find out when their car last had its oil changed. But
when they went to M.D. Anderson to see about their
cancer or diabetes treatment, their paper records got
washed away in the floor.
So the ability to have electronic health records can
be extremely helpful to coordinating care but it's got
to be done in a way that has utmost respect for
people's privacy because as bad as it would be to lose
your credit score, for example, to a computer hack,
losing your health data would be far more personal and
far more devastating. You could never really get that
genie back in the bottle so ... even things as
simplistic as forwarding an e-mail with someone else's
health data that was obtained illegally should be
extremely - very harsh penalties because we want the
benefits but we don't want the abuse and people are
just not going to want to go toward an electronic
health record if they think their neighbors or anyone
else may see it. I just want to throw that out there.
We also have former Secretary from West Virginia,
Governor Manchin has a particularly interesting
program now where he is requiring people on Medicaid
to sign a contract of responsibility if they choose,
and if they choose, then they'd receive more increased
benefits so, if they didn't break appointments, if
they did certain things around the treatment of their
disease or improving their care, then they would
actually be eligible for other benefits. So, there's
a responsibility on both sides where people who are
low income on Medicaid certainly have rights to health
care but then people that pay the bill have some
rights too. People that pay the bill should be able
to say well, we're happy to give you the care. We're
happy to give access to care. We're happy to pay for
the care. We just want to insure that the care is
being used to the maximum possibility to make you
healthier in the fastest possible way. ...Nancy
Atkins, who was the long time...Commissioner of
Health, is going to be speaking on the panel. She's
excellent. I was on a panel with her a few months
th
back so that's September 18.
Some other Medicaid ideas - Governor Pawlenty has
incorporated Bridges to Excellence, which is a pay for
performance scheme for diabetes and obesity into
Medicaid. Know Your Data - this is another
interesting one that you might want to look into,
especially you as legislators but anyone in the
public. You should be able to have real time access
to billing patterns from your hospitals. That's
something that no state has right now. It usually
takes many months or even years to get billing pattern
data but you pay for it, you should know. One example
from a couple years back in Kentucky there was a
hospital they found where - in nature viral and
bacterial pneumonia are roughly - about 80 percent of
the cases are viral and about 20 percent are
bacterial. Medicaid just reimbursed a lot higher for
bacterial. They had one hospital where it was 80/20
the other way. The hospital was having, apparently,
all of these cases of bacterial pneumonia. Well,
that's one of two things: either it's an outbreak of
disease that you really need to know about, or it's
fraud that you really need to know about. But they
didn't detect it for years because no one had access
to it.
Think Google again. We did a presentation for the
State of Missouri several months back where we did
this for free just to test it. We gave them their
data and you can go into any - you can do it by zip
code, you can do it by counties, whatever search terms
you want, and you can get the billing patterns from
any hospital, any provider. You can get their
prescribing habits. You can get anything. Now this
is not patients specifically because patient privacy
is sacred. We don't want to come near that. But
billing patterns of providers is not. You should be
able to have it. You should be able to know. In
fact, if you wanted to get really radical, you could
post it all on-line and let anyone look at it.
There was a study...there was a mining company in
Canada, in Ontario a couple of years back, called
Goldcorp. The new CEO - it's always a new guy that
comes in...and said we're just not finding any gold.
All you geologists, what's wrong with you? You're not
finding anything. So he decides he's going to post
all of his mine data on-line, which, you know, the
geologists were just appalled by this - oh that's
crazy, we're going to open ourselves to a hostile
takeover. So he said too bad and the CEO posted it
all on-line. It even has a WIKI page and you can just
do Goldcorp Challenge. You'll find all of the
information about it. They put it all on-line
[indisc.]. Anyone who wanted to, from high school
kids in Texas to physicists in Australia, could jump
on and they had a $500,000 prize. So they had entries
from all over the world in a couple of months when
they had the challenge. Two physicists from Australia
won. They'd never been to Canada but they analyzed
all of the data online and, because they opened up
their data to the world and had all these smart people
looking at it, they found infinitely more gold than
they'd ever thought possible and their stock price
increased by 30 times or something but they had the
confidence to say we don't have all of the answers.
You don't have all of the answers. I don't have all
of the answers. But if you, you know, the collective
knowledge of the world, people would be interested to
look at it. No state does this now but it would be an
interesting thing to look at. Academics would do it
for free. You wouldn't even have to offer a prize,
but they'd look at something. Oh that's interesting,
you have patterns here we didn't know about.
4:12:41 PM
One of the things we found in Missouri is there were -
it was in the dozens ... of people with their personal
data blinded that had over 100 ER visits in a year.
... You're talking about thousands of people in a
state of many millions that are 15, 20 percent of the
overall Medicaid budget. I mean imagine if you could
just isolate those. We hear this all the time, 5
percent of the people are 50 percent of the cost or 20
percent of the people are 80 percent of the costs.
Those are roughly accurate for any private health plan
or any Medicaid program or Medicare. But most of
those people that are high cost are actually the same
people year in and year out. It's not one pregnancy
or one cancer. It's the same people with chronic
conditions year in and year out in all kinds of
different situations. If you can isolate those people
and put them in different care plans where they
actually get much better care out of it, and they have
much more coordinated care, the overall costs can come
down considerably.
We actually wrote a book earlier this year. It's free
- we can send you copies if you want it, called Making
Medicaid Work, where we interviewed Secretary Levitt
(ph) and nine state health secretaries across the
country. We talked about what kind of incentives,
what kind of best practices are out there. In fact, I
apologize. I had meant to bring a few copies. It's
about 75 pages. It doesn't take too long to read but
it's interesting. I've had about 4,000 requests for
it from around the country, so hopefully that's a
function of its quality, not a function that it's
free. A lot of people have found value in it.
4:16:41 PM
CHAIR WILSON asked Mr. Frogue to send a copy for each committee
member.
MR. FROGUE agreed to do so. He then advised committee members
to ask future speakers to discuss solutions to health care
problems rather than to discuss the problems themselves. Many
innovative approaches to solving health care program problems
are occurring throughout the country. He noted that better care
at lower cost is not a mutually exclusive concept. He offered
to answer questions.
CHAIR WILSON thanked Mr. Frogue for his informative presentation
and said it will spur the committee to investigate further. She
asked how many governors are pushing health care reform right
now.
MR. FROGUE said governors need to lead this reform to have
maximum impact. Successful states had governors who were very
involved in the reform at every level - from state employee
policy changes to more exercise in schools.
CHAIR WILSON asked whether changes in schools, for example not
allowing junk food, were mandated.
MR. FROGUE said if the Legislature prefers to defer to local
control, it could create an Alaska Nutrition Council to set
standards that define what constitutes healthy food in schools
and good physical activity as well. The Governor's web page
could post a challenge to school districts to meet those
standards and rank them. The cost would be negligible, health
groups throughout the state would probably donate time and the
media loves rankings. He thought that would have a much bigger
impact than anything that could be done on the financial side.
CHAIR WILSON thanked Mr. Frogue again. She then announced the
committee will meet on September 18, 2007, in Anchorage, with
the Senate Health, Education and Social Services Standing
Committee on the certificate of need program. The committee
will also meet on October 16; the location and agenda will be
announced.
REPRESENTATIVE SEATON suggested holding the October meeting
during the special session.
CHAIR WILSON announced she would consider that suggestion.
ADJOURNMENT
There being no further business before the committee, the House
Health, Education and Social Services Standing Committee meeting
was adjourned at 4:22:26 PM.
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