Legislature(1993 - 1994)
02/14/1994 01:40 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE
February 14, 1994
1:40 p.m.
MEMBERS PRESENT
Senator Steve Rieger, Chairman
Senator Loren Leman
Senator Mike Miller
Senator Jim Duncan
Senator Johnny Ellis
Senator Judy Salo
MEMBERS ABSENT
Senator Bert Sharp, Vice-Chairman
COMMITTEE CALENDAR
SENATE BILL NO. 284
"An Act establishing the Alaska Health Insurance Corporation and
requiring licensed health care providers to comply with certain
statutes and regulations relating to the corporation; relating to
disability insurance claims processing and to approval of rates for
disability insurance, including health insurance; and providing for
an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 284 - No previous action to record.
WITNESS REGISTER
Dr. Tom Nighswander
Physician at the Alaska Native Medical Center
Resident Engineers Office
Anchorage, Alaska
POSITION STATEMENT: Reviewed SB 284.
ACTION NARRATIVE
TAPE 94-8, SIDE A
Number 004
CHAIRMAN RIEGER called the Senate Health, Education and Social
Services (HESS) Committee to order at 1:40 p.m. He introduced
SB 284 (COMPREHENSIVE HEALTH INSURANCE ACT) as the only order of
business before the committee. He welcomed the listen only
teleconference sites of Anchorage, Fairbanks, Barrow, Cordova,
Homer, Seward, and Sitka.
DR. TOM NIGHSWANDER, physician at the Alaska Native Medical Center,
stated that he was choosen to help bring together SB 114 and SB
205. He said that health care reform should involve promoting
healthy Alaskans, but if they become ill access to care should be
provided. This care should have an appropriate provider, the
correct amount of high quality care, and a reasonable cost.
Number 090
Dr. Tom Nighswander commented that the question facing the
committee regarding health care reform should be what would be
appropriate for Alaskans. He informed the committee of a series of
health care problems facing Alaska that federal legislation will
probably not help. He pointed out that some of the issues in rural
health care are not addressed in federal legislation.
Dr. Tom Nighswander detailed the cross-section of interests
represented at the meetings leading to SB 284. He identified the
principle of universal coverage, the need to address the cost of
care, and the need for public involvement with all aspects of the
plan as the main tenets that developed from these meetings. He
commented that SB 284 ended up better than a combination of SB 114
and SB 205. He pointed out that the issues of public health,
preventive medicine, wellness, and many others were present in SB
284 due to public input.
Number 217
Dr. Tom Nighswander acknowledged that SB 284 does not define a
benefit package, therefore, the total cost is unknown. SB 284 also
does not define a financing plan. Although those issues are not
addressed, there is a process set up to deal with those issues. He
noted that SB 284 is a phased approach to health care reform which
develops an infrastructure allowing the ability to address anything
proposed at the state or federal level. He stated that
conceptually SB 248:
(1) would provide universal coverage of a yet to be defined
standard benefit package to all Alaskan residents with the
services provided by all licensed practitioners in the state;
(2) would focus on public health, preventive medicine, and
wellness;
(3) would protect the individual choice of a provider;
(4) would initially establish a voluntary mechanism for cost
control which states that if it is not effective after three
years, some mandatory procedures would be invoked;
(5) would establish a peer group which monitors quality,
utilization, and cost.
He recognized that SB 284 does not prohibit a resident from
purchasing services beyond what was provided in the benefit
package, but that would be paid for by the individual.
Dr. Tom Nighswander explained that SB 284 creates a health
insurance corporation in the state. The corporation would create
and implement a public process to tackle the issues of the benefit
package and various financing options. The corporation would also
collect data regarding the costs of services and the type of
services being provided around the state. He emphasized that half
the residents of Alaska have services provided by the federal
government. This lead to the request of waivers so that the
corporation would be able to obtain cost and utilization data from
various federal programs in existence. He emphasized the mandates
of the corporation regarding public health, wellness, and a long
term care plan. He explained that the incentives for primary care
providers to work in rural areas is important to Alaska.
Number 323
Dr. Tom Nighswander discussed the market based single payer system
of the cost control section. A single payer system implies a
health insurance fund which would be channeled through a single
payer mechanism. This single payer mechanism could be the
corporation or an insurance company which would administer the plan
and pay the premiums. He explained that the market based aspect
was submitted by the physicians and hospitals to introduce free
market competition. The market base would require all providers,
both physicians and hospitals, to publish and make available to the
customer the prices for their services.
Dr. Tom Nighswander continued his discussion of the cost control
section. He stated that there would be a base year of the cost of
providing health care based on the data received from the first
years of the corporation. This base year would become an
expenditure target with escalators, but the target could be
modified in the future based on the factors listed in SB 284. He
noted that there would also be subtargets, a target to be met each
year, within the budget.
Dr. Tom Nighswander noted that regarding cost control, SB 284
expects that providers of care would voluntarily comply with
expenditures. This mechanism for voluntary compliance is not
detailed in SB 284. He pointed out that the health care community
in Alaska is a very connected network. He also mentioned
controlling quality and utilization with this voluntary compliance
idea. He believed that the best way to address the issue of
quality would be through peer groups. Dr. Nighswander explained
that if the voluntary compliance does not work substantially after
three years, mandatory expenditure targets would be imposed by SB
284.
Number 401
SENATOR DUNCAN expressed appreciation for Dr. Nighswander's work
with SB 284. He pointed out that although SB 284 would not
immediately accomplish the three issues Dr. Nighswander noted
earlier, they are recognized and given deadlines by SB 284. He
noted that SB 284 defines a cost control system and places a
deadline. SB 284 also recognizes universal coverage as the guiding
principle or purpose leading to the market based single payer
system. SB 284 speaks to designing of the system. He emphasized
the providers and public involvement utilized in SB 284. SB 284
specifies the public involvement process. He noted that the
following licensed providers: marital and family therapists,
direct entry midwives, physician assistants, clinical social
workers, emergency medical practitioners, and intensive care
paramedics were not included in SB 284. Those exclusions were an
oversight and would be corrected.
SENATOR LEMAN suggested that there are less than 76,000 Alaskans
without health care coverage. He stated that regardless of the
number of Alaskans without health care coverage, among those are
people who choose not to have coverage. He recognized that all
Alaskans would pay for health care coverage in this pool SB 284
creates. He expressed interest in the issue of personal
responsibility and hoped that SB 284 did address this issue. He
noted that Clinton's national plan does not seem to recognize the
difference in lifestyle choices. He said that recognition of
lifestyle choices with varied rates according to your choice would
be a more attractive package. In response to Senator Leman's
concern, DR. TOM NIGHSWANDER stated that co-payments are included
in SB 284.
SENATOR LEMAN asked if SB 284 addressed those people seeking health
care outside the state of Alaska. DR. TOM NIGHSWANDER said that
issue was not specifically addressed in SB 284. Dr. Nighswander
explained that the intent of SB 284 was to address health care
provided in the state of Alaska.
SENATOR DUNCAN explained that SB 284 specifies all the provider
groups so that their services could be considered under the benefit
package. The benefit plan would encourage the use of in-state
facilities and providers. He stated that a physician who does not
provide a service or believes the patient would be better served
outside the state can refer the patient outside the state. DR. TOM
NIGHSWANDER said that would have to be allowed in the benefit plan.
He clarified that generally those cases would be highly specialized
services that are not provided in the state of Alaska.
Number 513
SENATOR LEMAN suggested that paying for transportation costs should
be limited to those cases Dr. Nighswander mentioned regarding
referrals. DR. TOM NIGHSWANDER agreed with Senator Leman. SENATOR
DUNCAN emphasized that the focus on transportation was intended for
the costs of transport from a rural area to a provider's location.
Senator Duncan stated that Clinton's federal plan does not address
Alaska's transportation realities, which is one reason Alaska
should consider its own plan.
SENATOR LEMAN asked what happens to those satisfied with their
current coverage, could there be mandatory enrollment. DR. TOM
NIGHSWANDER anticipated that a standard benefit package would cover
all Alaskans. SENATOR DUNCAN clarified that under the market based
single payer system every resident of the state would have the same
comprehensive benefit package available to them or provided for
them. Senator Duncan asserted that a resident could purchase
supplemental insurance, but that resident would continue to finance
the single payer system.
SENATOR LEMAN questioned who will pay and how will they pay. DR.
TOM NIGHSWANDER agreed that the debate will focus on that issue.
SENATOR MILLER asked what would be the incentive or disincentive
for price shopping with the market based single payer system. DR.
TOM NIGHSWANDER noted that although the amount of co-insurance has
not been decided, it could be substantial which would promote price
shopping.
SENATOR SALO expressed shock that half of all Alaskans were
federally insured in some way. She pointed out that in some cases,
like Southeast Alaska, travelling to Seattle is a closer and a more
economical option. She suggested an exchange system. She
requested more explanation of preventive care and public health.
TAPE 94-8, SIDE B
Number 580
DR. TOM NIGHSWANDER explained the different categories of
preventive health measures. SB 284 recognizes the need for
preventive medicine, wellness, and public health; however, SB 284
does not define them. He commented that when individuals and
communities take control of their personal health, the public
health issues will advance.
SENATOR SALO stated that she believed health care should be
reformed due to reading that over 20 percent of the medical dollars
spent in America are spent in relation to collecting the bill. She
further noted that only 2 percent is spent on preventive medicine.
She asked if those figures were correct.
DR. TOM NIGHSWANDER said that was well documented. He discussed a
self-insurance example. He stated that the single payer system
tries not to create a bureaucracy. He acknowledged that there are
savings to be had.
SENATOR DUNCAN agreed with Senator Salo on the need for public
health. He pointed out that pages 16 and 17 of SB 284 state that
the corporation would develop a public health improvement plan with
a number of responsibilities. DR. TOM NIGHSWANDER commented that
private discussions posed having dual responsibilities of the
commissions in the future.
SENATOR DUNCAN addressed the sticker shock issue. He stated that
sticker shock will occur if nothing is done. Health care costs in
the future will increase if the system is not reformed. He noted
that most studies propose a rerouting of money. The outset may
have higher premiums, but they will be less than a non-reformed
commission.
CHAIRMAN RIEGER asked Dr. Nighswander to compare today to twenty
years into the future. DR. TOM NIGHSWANDER noted the many
technological advances regarding the changes in health care.
Number 490
CHAIRMAN RIEGER requested an estimate of the increase in cost due
to increased consumption. DR. TOM NIGHSWANDER discussed the Hawaii
plan where a common benefit package was implemented for most all of
the residents. The results were excellent in comparison to other
countries.
CHAIRMAN RIEGER asked for an estimate of what the cost is likely to
become; is consumption going to grow per capita due to better
technologies. DR. TOM NIGHSWANDER pointed out that often a
technology is adopted before its proven efficacious. He explained
some technologies that illustrated his point. He did not have a
specific figure. He stated that other industrialized countries
spend less of their GNP with the same outcome as the U.S. and in
some measures better results. He emphasized that more public
satisfaction occur in those other countries as compared to the U.S.
SENATOR SALO suggested reviewing the economic aspect of preventive
care. DR. TOM NIGHSWANDER posed mammograms as an example of
preventive care and its economic benefits.
CHAIRMAN RIEGER inquired of Dr. Nighswander's opinion on the market
base with published prices. He asked if the difference in costs of
providers would be fractionally covered by the proposed policy or
would the full incremental cost be covered. DR. TOM NIGHSWANDER
stated that the full incremental cost would be covered if it falls
within the price range structure, the individual may have to pay a
little extra.
SENATOR DUNCAN reiterated that if a service is covered in the
benefit package then the reimbursement would be at the level stated
in the package. He expressed his belief that publishing fees would
bring the fees closer together.
Number 370
CHAIRMAN RIEGER asked if Dr. Nighswander had a position on the rate
schedule of the plan. DR. TOM NIGHSWANDER noted that there are
some provisions for some different rates. CHAIRMAN RIEGER referred
to page 5 lines 23 and 24 where the varying rate depends on family
status. Chairman Rieger asked how far would family status be
subdivided.
SENATOR DUNCAN labelled this section as a transitional section. He
explained that when a single payer system is achieved the rates
would not vary. There would not be dependent coverage either.
CHAIRMAN RIEGER asked, "how is the child going to pay that child's
premium?" SENATOR DUNCAN said, "That would be part of the
financing mechanisms that would be determined. What I'm saying is,
I for example, my policy wouldn't cover my dependent's. Every
resident of the state would have an insurance policy under a single
payer system. Everybody would be covered." SENATOR RIEGER said,
"Someone is going to pay for that." SENATOR DUNCAN said, "Of
course they're going to pay for it, but that would be part of the
financing of how you provide a package for 590,000 Alaskans whether
it's a payroll tax or a sales tax, or an income tax. But it's not
necessarily separate premiums, except if the individual had to pay
a 10 percent co-payment. Then of course, I as a parent would
probably pay for my three year old's co-payment. I don't think I
would expect them to do that. This was the move towards community
rating that we talked about in insurance reform that would be in
the transitional phase. Although I might add that because we are
going to have supplemental insurance allowed, that would have
continued to apply even after the single payer system because
supplemental insurance would be available to people over and above
what the comprehensive package was."
CHAIRMAN RIEGER inquired if the individual would get the same
coverage independent of personal habits. DR. TOM NIGHSWANDER said
that was not addressed directly; SB 284 has a standard benefit
package for everyone. SENATOR DUNCAN explained that part of the
corporation's responsibilities would be to design incentives to
encourage healthy lifestyles through wellness programs and the
like. He envisioned that the individual's deductible could be
different if enrolled in a wellness program. DR. TOM NIGHSWANDER
agreed that the language of SB 284 allows flexibility to do such.
CHAIRMAN RIEGER asked what would happen with the money that the
federal government uses in covering over half of all Alaskans. DR.
TOM NIGHSWANDER said that this is a phased approach. Dr.
Nighswander explained that initially only federal waivers would be
used to obtain cost and utilization information. Dr. Nighswander
noted a system where federal money would go to a central resource
in the state, like the health corporation. Then the state would
become the grantor of grants in the system now in place.
Number 285
CHAIRMAN RIEGER asked if this bill speaks to practice parameters.
DR. TOM NIGHSWANDER said that it only speaks to practice parameters
in peer control of utilization and quality.
CHAIRMAN RIEGER asked if the definition of health care providers
and services are the same definition the federal government uses
when they say that health care is 14 percent of GDP. DR. TOM
NIGHSWANDER said that the definitions would be the same if long-
term care was included. SENATOR DUNCAN pointed out that it was
included on line 4 page 19. DR. TOM NIGHSWANDER noted that the
federal definition also includes mental health services, but the
big issue would be the long-term care.
SENATOR SALO asked if Dr. Nighswander felt that encouraging
individuals to use existing technologies was a public health issue.
DR. TOM NIGHSWANDER said that he agreed and that it could also be
viewed as a community issue.
SENATOR SALO questioned what technology existing now or in the
future would be affordable and useful in terms of prevention. She
asked Dr. Nighswander's opinion regarding whether there will be
more or less incentives to move forward under this reform. DR. TOM
NIGHSWANDER stated that there should be built-in incentives to
encourage healthy lifestyles.
SENATOR SALO discussed differing views on the healthy lifestyles
aspect of health care.
CHAIRMAN RIEGER asked if there should be a mandatory co-payment on
consumption of all but the most fundamental health service. DR.
TOM NIGHSWANDER said yes. Dr. Nighswander explained that over
utilization is an issue and there has to be some sort of
disincentive which supports allowing co-insurance. Dr. Nighswander
noted that some types of preventive issues should be easily availed
without co-insurance being an obstacle.
SENATOR SALO asked if there was discussion on co-payments being
financial obstacles in some cases. DR. TOM NIGHSWANDER informed
the committee that this issue was addressed. He explained that a
waiver could be used based on some type of income test in which the
co-payment could be augmented by other funds or even waived.
Number 180
CHAIRMAN RIEGER noted that on Friday public testimony will be heard
on both health care bills. He suggested that anyone with lengthy
testimony could prepare written comments so that everyone could be
heard in a timely manner.
There being no further business before the committee, the meeting
was adjourned at 3:00 p.m.
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