Legislature(1999 - 2000)

02/09/2000 01:35 PM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
      SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE                                                                    
                         February 9, 2000                                                                                       
                            1:35 P.M.                                                                                           
MEMBERS PRESENT                                                                                                                 
Senator Mike Miller, Chairman                                                                                                   
Senator Pete Kelly, Vice-Chairman                                                                                               
Senator Gary Wilken                                                                                                             
Senator Drue Pearce                                                                                                             
MEMBERS ABSENT                                                                                                                  
Senator Kim Elton                                                                                                               
COMMITTEE CALENDAR                                                                                                              
HOUSE CONCURRENT RESOLUTION NO. 15(title am)                                                                                    
Requesting the governor to proclaim March 2000 as Developmental                                                                 
Disability Awareness Month.                                                                                                     
     -MOVED HCR 15 (title am) OUT OF COMMITTEE                                                                                  
SENATE CONCURRENT RESOLUTION NO. 12                                                                                             
Relating to declaring March 2000 as Sobriety Awareness Month.                                                                   
     -MOVED SCR 12 OUT OF COMMITTEE                                                                                             
SENATE BILL NO. 204                                                                                                             
"An Act extending the termination date of the Alaska Commission on                                                              
Aging; and providing for an effective date."                                                                                    
     -MOVED SB 204 OUT OF COMMITTEE                                                                                             
SENATE BILL NO. 198                                                                                                             
"An Act increasing the base student allocation component of the                                                                 
public school funding formula; and providing for an effective                                                                   
     -MOVED SB 198 OUT OF COMMITTEE                                                                                             
CS FOR HOUSE BILL NO. 85(FIN) am                                                                                                
"An Act relating to licensure and professional discipline of                                                                    
members of the teaching profession and providing for related                                                                    
penalties; relating to grounds for dismissal of a teacher; relating                                                             
to the Professional Teaching Practices Commission; relating to                                                                  
limited immunity for procedures under the Educator Ethics Act;                                                                  
making conforming amendments; and providing for an effective date."                                                             
     -MOVED CSHB 85(FIN) am OUT OF COMMITTEE                                                                                    
Presentation by Mr. Jerry Near and Mr. Gary Schwartz of the                                                                     
Statewide Health Care Commission                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
HJR 15 - See Resources minutes dated 4/14/99, 4/19/99 and                                                                       
4/23/99 and Rules Committee minutes dated 5/5/99.                                                                               
SCR 12 - No previous action to consider.                                                                                        
SB 204 -  See HESS minutes dated 2/2/00.                                                                                        
SB 198 - No previous action to consider.                                                                                        
HB 85 - See Health and Social Services minutes dated 2/2/00.                                                                    
WITNESS REGISTER                                                                                                                
Ms. Jennifer Strickland                                                                                                         
Aide to Speaker Brian Porter                                                                                                    
State Capitol Bldg.                                                                                                             
Juneau, AK 99811-1182                                                                                                           
POSITION STATEMENT:  Testified for the sponsor of HCR 15.                                                                       
Ms. Angela Moss                                                                                                                 
Aide to Senator Ward                                                                                                            
State Capitol Bldg.                                                                                                             
Juneau, AK 99811-1182                                                                                                           
POSITION STATEMENT:  Testified for the sponsor of SCR 12.                                                                       
Ms. Rene' Gayhart, Specialist                                                                                                   
Division of Mental Health and Developmental Disabilities                                                                        
Department of Health and Social Services                                                                                        
P.O. Box 110620                                                                                                                 
Juneau, AK 99811-214                                                                                                            
POSITION STATEMENT:  Supports SCR 12.                                                                                           
Ms. Pamela Watts, Executive Director                                                                                            
Advisory Board on Alcoholism and Drug Abuse                                                                                     
P.O. Box 240249                                                                                                                 
Anchorage, AK 99534-0249                                                                                                        
POSITION STATEMENT:  Supports SCR 12.                                                                                           
Mr. Ernie Turner, Director                                                                                                      
Division of Alcohol and Drug Abuse                                                                                              
Department of Health and Social Services                                                                                        
P.O. Box 110607                                                                                                                 
Juneau, AK 99811-0607                                                                                                           
POSITION STATEMENT: Supports SCR 12.                                                                                            
Mr. Eddy Jeans, School Finance Manager                                                                                          
Department of Education                                                                                                         
801 W 10th, Suite 200                                                                                                           
Juneau, AK 99801-1894                                                                                                           
POSITION STATEMENT:  Supports SB 198.                                                                                           
Mr. Carl Rose, Executive Director                                                                                               
Association of Alaska School Boards                                                                                             
316 W 11th Street                                                                                                               
Juneau, AK 99801                                                                                                                
POSITION STATEMENT: Supports SB 198.                                                                                            
Mr. John Cyr, President                                                                                                         
National Education Association Alaska (NEA)                                                                                     
114 Second Street                                                                                                               
Juneau, AK 99801                                                                                                                
POSITION STATEMENT: Supports SB 198.                                                                                            
Ms. Sanna Green, Executive Director                                                                                             
Professional Teaching Practices Association (PTPA)                                                                              
344 3rd Street, Ste 127                                                                                                         
Anchorage, AK 99508                                                                                                             
POSITION STATEMENT:  Supports HB 85.                                                                                            
ACTION NARRATIVE                                                                                                                
TAPE 00-04, SIDE A                                                                                                              
Number 001                                                                                                                      
        HCR 15-DEVELOPMENTAL DISABILITY AWARENESS MONTH                                                                         
CHAIRMAN MILLER called the Senate Health, Education and Social                                                                  
Services (HESS) Committee to order at 1:35 p.m. and announced HCR
15 to be up for consideration.                                                                                                  
MS. JENNIFER STRICKLAND, aide to Representative Brian Porter, said                                                              
the resolution simply establishes this coming March as                                                                          
developmental disability awareness month.  Representative Porter                                                                
decided to introduce this legislation as a resolution instead of a                                                              
citation to bring broader recognition to the issue.  Passage of                                                                 
HCR 15 will give strength to the efforts of many groups, especially                                                             
the Key Campaign, and promote a greater understanding of the                                                                    
capabilities  of Alaskans with developmental disabilities and the                                                               
challenges they face.  This has been a tradition in Alaska for a                                                                
number of years and coincides with a similar designation on the                                                                 
national level, as proclaimed by President Reagan in 1983.                                                                      
SENATOR WILKEN moved to report HCR 15 from committee with                                                                       
individual recommendations and its zero fiscal note.  There were no                                                             
objections and it was so ordered.                                                                                               
              SENATE CONCURRENT RESOLUTION NO. 12                                                                               
 Relating to declaring March 2000 as Sobriety Awareness Month.                                                                  
CHAIRMAN MILLER announced SCR 12 to be up for consideration.                                                                    
MS. ANGELA MOSS, aide to Senator Ward, sponsor of SCR 12, declares                                                              
March 2000 as sobriety awareness month.  Alcohol and drug abuse has                                                             
been identified as the single most destructive health problem in                                                                
Alaska.  Its devastating effects have been felt within every                                                                    
racial, ethnic, and economic background.  SCR 12 reinforces                                                                     
Alaskans' commitment to a clean and healthy lifestyle.                                                                          
CHAIRMAN MILLER announced an at-ease.  He called the meeting back                                                               
to order and said that a person signed up to testify on the                                                                     
previous bill.  He said the committee would take testimony now.                                                                 
MS. RENE' GAYHART, Developmental Disabilities (DD) Program,                                                                     
Division of Mental Health and Developmental Disabilities, stated                                                                
support for HCR 15.  HCR 15 is important because it recognizes                                                                  
nearly 12,000 Alaskans with DD and their need for life-long                                                                     
supports to be fully included in the community where they live.                                                                 
The Division welcomes the advocacy consumers, the Key Campaign, and                                                             
the Key coalition branch of the DD Program.  They also support the                                                              
efforts of service provider agencies, families, and the Governor's                                                              
Council on Disabilities and Special Education to ensure that more                                                               
Alaskans with DD are able to participate in and contribute to                                                                   
community life.  The programs in her division accomplish the                                                                    
important goals of integration and inclusion in one's community.                                                                
Recognition of March as developmental disabilities awareness month                                                              
will demonstrate the power of community that is exemplified by                                                                  
people with disabilities.                                                                                                       
CHAIRMAN MILLER apologized for missing her testimony when the bill                                                              
was before them.  He then returned to SCR 12.                                                                                   
Number 465                                                                                                                      
MS. PAMELA WATTS, Executive Director, Advisory Board on Alcoholism                                                              
and Drug Abuse, stated support for SCR 12.  She said March has been                                                             
proclaimed DD awareness month since 1995 in recognition and                                                                     
appreciation of the example set by citizens who believe in and                                                                  
support a life of sobriety.  Alcoholism and drug abuse has had a                                                                
negative impact on our society, but most unfortunately on our                                                                   
families and communities.  Our high national ranking in child abuse                                                             
and neglect is significantly impacted by alcohol and drug abuse.                                                                
The cost to Alaska in terms of human and financial resources is                                                                 
staggering.  This resolution reflects the mission, strategies, and                                                              
goals of the Advisory Board's state plan for alcohol and drug abuse                                                             
services.  The Board strongly supports individual, organizational,                                                              
community, and statewide efforts toward prevention and intervention                                                             
of alcohol and drug abuse problems.  The Board recognizes the                                                                   
efforts of those who lead the way.  They appreciate the leadership                                                              
of the Legislature in paving the way for continued reenforcement of                                                             
the improved quality of life for all Alaskans.                                                                                  
Number 585                                                                                                                      
MR. ERNIE TURNER, Director, Division on Alcohol and Drug Abuse,                                                                 
stated support for SCR 12.  He fully endorsed the previous                                                                      
SENATOR WILKEN moved to pass SCR 12 out of committee with                                                                       
individual recommendations.  There were no objections and it was so                                                             
            SB 204-EXTEND ALASKA COMMISSION ON AGING                                                                            
CHAIRMAN MILLER announced SB 204 to be up for consideration and                                                                 
announced that the committee had already held a public hearing on                                                               
this legislation.                                                                                                               
SENATOR KELLY asked for a fiscal note.                                                                                          
CHAIRMAN MILLER noted that it has a zero fiscal note.                                                                           
There being no one else wishing to testify, SENATOR WILKEN moved to                                                             
pass SB 204 from committee with individual recommendations and its                                                              
attached fiscal note.  There were no objections and it was so                                                                   
         SB 198-INCREASE BASE ALLOCATION FOR EDUCATION                                                                          
CHAIRMAN MILLER announced SB 198 to be up for consideration.                                                                    
SENATOR WILKEN, sponsor of SB 198, said the State of Alaska's                                                                   
education funding formula is based on a specific dollar amount per                                                              
student.  Currently, the base student allocation is $3,940.  SB 198                                                             
increases this allocation by $50, making the base allocation                                                                    
$3,990.  In FY01, the foundation program, which funds K-12 Alaska                                                               
public schools, will require approximately $19 million less in                                                                  
state aid than the amount authorized in FY00.  Several key factors                                                              
contribute to this drop in state aide while continuing to fund the                                                              
foundation formula.  One is a decline in projected student                                                                      
enrollment which is projected to be about .8 percent; another is a                                                              
required increase in the local effort per the formula (an increase,                                                             
depending on where you live, of around 2-5 percent); another is an                                                              
increase in assessed values across the state; and last, an increase                                                             
in the deductible impact aid, known as PL 874 money (an increase of                                                             
$11 million or 15 percent over last year).                                                                                      
SB 198 keeps a portion of these savings within K-12 education and                                                               
provides a modest increase in school funding equally across the                                                                 
state.  He encouraged their support.                                                                                            
MR. EDDY JEANS, School Finance Manager, Department of Education                                                                 
(DOE), said the Governor has introduced SB 244 which would direct                                                               
an increase in funding through the quality schools grant component                                                              
of the foundation program.  Specifically, it targets the money to                                                               
improve student performance.  The Department of Education prepared                                                              
a fiscal note for SB 198 and the $50 increase in the base student                                                               
allocation equals $10,489,300.  He emphasized that he feels                                                                     
strongly that new dollars in the foundation program need to be                                                                  
targeted to improve student performance.  He offered to answer any                                                              
questions at this time.                                                                                                         
Number 908                                                                                                                      
MR. JOHN CYR, President, National Education Association - Alaska,                                                               
stated support for SB 198.  NEAA believes the need for more money                                                               
for schools is critical.  It believes the foundation formula needs                                                              
to be increased.                                                                                                                
NEAA is also concerned about teacher salaries.  More and more young                                                             
professionals are leaving the state because they can't make a                                                                   
living here.  For instance, his son-in-law is moving away with his                                                              
two grandchildren.  He has been teaching in Homer for the last                                                                  
three years but cannot make an adequate living.  The same thing is                                                              
happening to other folks, too; and it's a shame to see it happen.                                                               
The State needs to provide the basic infrastructure that schools                                                                
require.  Alaska schools need help all over, not just in the                                                                    
quality schools initiative.  He urged committee members to pass the                                                             
Number 1021                                                                                                                     
MR. CARL ROSE, Executive Director, Association of Alaska School                                                                 
Boards, stated support for SB 198 and made the following comments.                                                              
The quality of life in Alaska and across the U.S. will be directly                                                              
proportionate to the quality of the education we provide the young                                                              
people today.  The issue is one of quality and he agrees with the                                                               
Department of Education that we need to pay strict attention to                                                                 
There is a system in place right now and quality initiatives have                                                               
been introduced that will require additional money.  We don't have                                                              
the option of stopping what we do right now and focus strictly on                                                               
the quality of improvements.  We have to continue providing the                                                                 
services they do right now and, in many cases, schools are doing a                                                              
good job.                                                                                                                       
Their needs are tremendous and the way the foundation is set up ...                                                             
we have a strong economy in Alaska and it's reflected in our                                                                    
property values.  It calls for more local contributions as a result                                                             
of declining enrollment and the additional impact aid money.  The                                                               
actual money to public education will be less than what was                                                                     
appropriated last year and the question is not that we have fewer                                                               
needs today; we have more needs.                                                                                                
They support the quality initiatives.  He understands the                                                                       
Governor's position, but he is perplexed by the comment that                                                                    
dollars won't be siphoned off or redirected to salaries,                                                                        
maintenance and administration.  Students have to be housed                                                                     
somewhere, which is maintenance.  Our students have to be taught                                                                
and that is largely salaries for our teachers.  These schools have                                                              
to be administered; that's not the responsibility of professionals                                                              
in the class room. They are under tremendous mandates; schools have                                                             
to be administered to provide the public with some level of                                                                     
He concluded by saying that schools have great needs and this                                                                   
should get us part of the way there.  There is some merit to the                                                                
Governor's proposal.  We are $19 million short and he wanted to do                                                              
everything he could to get those dollars into our schools, because                                                              
they need the money.                                                                                                            
SENATOR WILKEN moved to report SB 198 out of committee with                                                                     
individual recommendations with the attached fiscal note.  There                                                                
were no objections and it was so ordered.                                                                                       
         HB  85-TEACHERS'LICENSES, DISCIPLINE & ETHICS                                                                          
MS. SANNA GREEN, Deputy Director, Professional Teaching Practices                                                               
Commission (PTPC), said the purpose of the bill is essentially to                                                               
consolidate statutes in a single place and add some new provisions.                                                             
In order to make things consistent, the word "certification" has                                                                
been changed to "license."                                                                                                      
The rest of the bill gives the PTPC the authority to do some of the                                                             
things it has been doing in practice.  She said one of the new                                                                  
sections is a compilation of the grounds for denial of                                                                          
The PTPC would like reciprocal discipline in Alaska for an educator                                                             
who has been disciplined in another jurisdiction.  To do that now,                                                              
the PTPC has to go through the whole hearing process.  Notification                                                             
is available through the national clearinghouse, but the PTPC has                                                               
to go through a hearing process.  This change would speed things                                                                
The PTPC would like to expand the waiting period from one to five                                                               
years for reinstatement, because one year is not sufficient.  It                                                                
wants to add that misrepresentation of a material fact on an                                                                    
employment application is grounds for discipline.  Right now the                                                                
PTPC can discipline if a fact is misrepresented on an application                                                               
for certification, but they want to include misrepresentation on an                                                             
application to a school district.                                                                                               
The PTPC would like the authority to put conditions on teaching                                                                 
The PTPC wants the authority to impose a civil fine against a                                                                   
person who is regulated by state law but does not hold a license.                                                               
The main people covered by that provision would be teachers in                                                                  
higher education who are under their jurisdiction by statute but                                                                
have no license. There are hardly any disciplinary sanctions the                                                                
PTPC can impose on that group.  The PTPC would like the ability to                                                              
impose a civil fine of up to $5,000 (although that amount is                                                                    
limited in the proposed legislation).                                                                                           
The bill also contains a provision that a person's license is                                                                   
suspended or revoked from employment as a member of the teaching                                                                
profession even if the position does not require a license.  There                                                              
is a case where it revoked the certificate of a superintendent and                                                              
then the school district wished to rehire him back in the same                                                                  
position as a noncertificated employee.                                                                                         
It would also like to strengthen the provisions of confidentiality                                                              
of minors.                                                                                                                      
The PTPC would like a provision to provide immunity from liability                                                              
for persons who participate in good faith in their proceedings.                                                                 
They have this now, but it is a little restrictive.                                                                             
They would like to mandate that a person who accepts a job that                                                                 
requires a certificate and doesn't have one could be charged with                                                               
a class B misdemeanor if they don't petition to get one.  This has                                                              
happened, because the person can just say they have applied for the                                                             
certificate when they are hired for 90 days (while presumably the                                                               
Department is going through the process of getting them licensed).                                                              
Number 1605                                                                                                                     
SENATOR WILKEN asked if the PTPC supports the legislation                                                                       
MS. GREEN replied that it does.                                                                                                 
SENATOR WILKEN added that the Department of Education is in full                                                                
support also.                                                                                                                   
CHAIRMAN MILLER said he thought this was a worthy piece of                                                                      
legislation, but it bothers him when state agencies do something                                                                
and then ask for the authority to do it later; this is the reverse                                                              
of the way things should be done.                                                                                               
SENATOR KELLY moved to pass HB 85 from committee with individual                                                                
recommendations and the attached zero fiscal note.  There were no                                                               
objections and it was so ordered.                                                                                               
Number 1693                                                                                                                     
CHAIRMAN MILLER announced that was all the legislation the                                                                      
committee would take up today, but they would now receive a                                                                     
presentation from Mr. Jerry Near and Gary Schwartz with the Health                                                              
Care Commission.                                                                                                                
MR. GARY SCHWARTZ, member of the Community Care Foundation Board of                                                             
Directors, said their purpose is to conduct intensive study and                                                                 
public hearings regarding the establishment of a self-funded state                                                              
health care delivery organization.  It's not a government                                                                       
organization; it could be public, private, coop, or 501(C)(3) type                                                              
of organization.  It could offer and administer a basic health                                                                  
benefit plan available to all Alaskans.  He said the bill they                                                                  
prepared is modeled after the Long-term Care Task Force that they                                                               
have all supported.                                                                                                             
The Statewide Health Care Commission, after about a year's work,                                                                
had recommendations for the legislature on appropriate and                                                                      
affordable health services for Alaskans to be covered in a                                                                      
statewide plan.  The projected health insurance premium costs could                                                             
be approximately 30% lower than what we are now seeing.                                                                         
He asked the legislature to encourage the creation of a health care                                                             
market more directly driven by consumers and health care providers                                                              
responsive to the needs of Alaskans.  Under the statewide health                                                                
care delivery system envisioned, Alaskans would be able to have a                                                               
choice of their physicians from a panel of providers who meet                                                                   
participation criteria and want to provide health care to Alaskans.                                                             
The physicians' panels would provide a full continuum of medically                                                              
necessary services for the enrolled population.  The Alaska Health                                                              
Care Delivery System does not need to be overhauled; we need to                                                                 
fine tune the existing system.  We have excellent physicians and                                                                
hospitals in Alaska who, they believe, are committed to providing                                                               
high quality, accessible, and cost effect services.                                                                             
They need support and encouragement from Alaskans to improve                                                                    
efficiencies in delivering health and medical care - a basic                                                                    
standard program that provides medically necessary services                                                                     
throughout Alaska covering physician services, institutional or in-                                                             
patient care, emergency care, out patient procedures, preventive                                                                
services, and prescription to create the proper marketing climate                                                               
for improvements in provider productivity and efficiency.                                                                       
In addition to addressing a statewide health plan, they envision                                                                
the Commission recommending health care efficiencies and the                                                                    
elimination of unnecessary services.  The ultimate goal is to                                                                   
ensure that every Alaskan has access to affordable and appropriate                                                              
health care services.  The Alaska Health Plan should become the                                                                 
obvious choice for health care financing by virtue of its                                                                       
affordability, quality of services, superior health outcomes and                                                                
demonstrated commitment to excellence.                                                                                          
MR. SCHWARTZ said that there are limited numbers of health                                                                      
insurance companies competing in the Alaska market which seriously                                                              
impacts the cost availability of coverage and patient access to                                                                 
quality medical care.                                                                                                           
There are between 80,000 to 100,000 uninsured Alaskans who cannot                                                               
afford health insurance premiums.  He understands that they run a                                                               
good 35 - 40% more than they do in the lower 48.  If we had our own                                                             
program, we could probably reduce those costs by at least 30%.                                                                  
He said they are concerned that about 40% of our health and                                                                     
hospital services are provided out-of-state in spite of the fact                                                                
that we have excellent physicians and hospitals in the state.  We                                                               
bypass our own resources.  They thought that an Alaska plan for                                                                 
Alaskans and by Alaskans would address that issue.  They would also                                                             
like to see the administration of private and public health                                                                     
insurance claims done here in Alaska.  There is no reason why you                                                               
can't process claims, determine eligibility, and provide an                                                                     
administrative service right here in Alaska.                                                                                    
The Commission would like to see the state form a partnership with                                                              
the health insurance company, but they have to meet a certain                                                                   
criteria.  They have to use Alaskans, provide jobs and keep those                                                               
resources and people here.                                                                                                      
There really is no means for Alaskans to compare existing health                                                                
insurance plans and the relative costs of operation, medical, and                                                               
hospital services, as well as administrative efficiency.  They                                                                  
believe the Commission in its public hearings could address these                                                               
issues as well.                                                                                                                 
SENATOR WILKEN asked what was different about their proposal                                                                    
compared to what the situation is today.                                                                                        
Number 2116                                                                                                                     
MR. JERRY NEAR answered that it would be an Alaskan citizen-owned                                                               
SENATOR WILKEN asked if it would compete with  Aetna and the rest.                                                              
MR. SCHWARTZ answered that it certainly could compete with the                                                                  
other insurance companies, or they could become a partner.  The                                                                 
point is they are really trying to lower the cost of medical care                                                               
and would like to get a basic benefit program available to all                                                                  
Alaskans at their option.  It's intolerable when you have 80,000 to                                                             
100,000 uninsureds.  A fourth of those are children and nobody is                                                               
really addressing that.                                                                                                         
SENATOR WILKEN asked who pays for the 75,000 people who are                                                                     
presently uninsured.                                                                                                            
MR. NEAR answered that a part of it could be having a health                                                                    
insurance plan that is not as expensive as they are now.  When they                                                             
testified yesterday in the House HESS Committee there was an                                                                    
avalanche of people responding to their ideas, like the Denali Kid                                                              
Program, a participatory program with federal funds.  This program                                                              
is going to grow and next year there will be the need for more                                                                  
support than there is this year.                                                                                                
When health insurance is getting to be $600-$700 per month, a lot                                                               
of employees are not covering their families.  Unless they can do                                                               
something about the cause, they will have a fix-it program that                                                                 
will continue to grow.                                                                                                          
MR. NEAR pointed out that the World Health Organization has                                                                     
identified key elements to achieve better health: peace, shelter,                                                               
education, decent income, and stable economy, sustainable                                                                       
resources, social justice, and equity.  They don't even mention the                                                             
intervention of our health care system that we currently pay a lot                                                              
of money for.  Further, they say that a society that spends so much                                                             
in health care may be reducing health because they end up                                                                       
neglecting other key elements.  Alaska needs to become more self                                                                
The Organization also winnowed through all the elements to figure                                                               
out what other elements relate to the health of a nation and it got                                                             
down to economics.  Unless you have a decent job at a decent wage                                                               
that is sustainable, it's going to be more of what we've got.                                                                   
MR. NEAR said you don't really have to work with a partner, but                                                                 
ramping up our citizen owned system is fairly expensive and demands                                                             
quite a bit of talent, hardware, and expertise.  He noted that the                                                              
Anchorage school system, which is close to being the second largest                                                             
employer in the state, is having discussions about their current                                                                
program.  Overall, the state spends close to $3 billion and if we                                                               
could manufacture a 10% savings on those amounts, that's                                                                        
significant.  They request that the legislature look seriously at                                                               
their proposal.                                                                                                                 
TAPE 00-04, SIDE B                                                                                                              
Number 2361                                                                                                                     
SENATOR KELLY said it seems like the goals of increasing health                                                                 
care and driving down the cost are mutually exclusive.  He asked if                                                             
they have any idea of how that would work.                                                                                      
MR. SCHWARTZ said yes; that last year Representative Gary Davis                                                                 
provided a business plan on how that would happen.  They received                                                               
letters from both the House and the Senate encouraging them to go                                                               
forward.  They laid out one model based on what the large and small                                                             
business coalitions are doing by forming group purchasing                                                                       
capability, working directly with providers whether they are                                                                    
physicians or hospitals.                                                                                                        
His experience in the Twin Cities with a large business coalition                                                               
was that they were able to reduce the cost of health care by about                                                              
14% and providing care to about 485,000 people.  It was getting                                                                 
doctors, patients, and purchasers together and reaching some common                                                             
understanding of what the basics were going to be, how they would                                                               
be communicated, and how they were going to demonstrate quality and                                                             
outcomes. They worked with the providers and negotiated an                                                                      
equitable reimbursement system which was competitive.  He did not                                                               
mean that just Minneapolis and St. Paul were the model; this has                                                                
been done in a number of areas in the private sector.                                                                           
They feel that by reducing premium costs, more demand would be                                                                  
generated, but you're improving, and with preventive services,                                                                  
you're actually improving health care.  As a result, they can save                                                              
20-30 percent.  People will be able to buy coverage again.  Some of                                                             
the small margin, the profit, can help subsidize the uninsured.                                                                 
Number 2361                                                                                                                     
MR. NEAR said there is a lot of activity in forming associations                                                                
for grouping so that you get a greater mass of participation.  The                                                              
whole theory of insurance is to share the risk; the more                                                                        
participants, the per individual risk goes down. The optimal size                                                               
for a group seems to be 500,000-1,000,000 enrollees.  Alaska fits                                                               
in that scenario.  If you get more than that, it doesn't improve                                                                
much. He reiterated that the state had done a lot of studies on                                                                 
moose, caribou, and fish; the amount of money involved in those                                                                 
entities nowhere compares to what we're spending on health care.                                                                
He thought it merited a good close look by the legislature.                                                                     
SENATOR KELLY asked if their model would have price controls                                                                    
attached to it.                                                                                                                 
MR. SCHWARTZ answered that he didn't want to have mandates; he                                                                  
wanted insurance companies to stay and compete.  He thought the                                                                 
Commission could develop a very affordable plan that would lower                                                                
the insurance premiums of other companies that want to stay in this                                                             
market.  He would be shocked if they had to impose price controls.                                                              
Also, they are not out to "gore" the provider with this either. A                                                               
number of physicians in Fairbanks are looking for ways to improve                                                               
administrative efficiencies and provide better care.                                                                            
Everyone thanked each other for their efforts.                                                                                  
CHAIRMAN MILLER adjourned the meeting at 2:40 p.m.                                                                              

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