Legislature(2023 - 2024)BUTROVICH 205
02/21/2023 03:30 PM Senate HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| SB8 | |
| SB53 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 53 | TELECONFERENCED | |
| += | SB 8 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 45 | TELECONFERENCED | |
SB 8-REPEAL CERTIFICATE OF NEED PROGRAM
3:33:49 PM
CHAIR WILSON announced the consideration of SENATE BILL NO. 8
"An Act repealing the certificate of need program for health
care facilities; making conforming amendments; and providing for
an effective date."
3:34:38 PM
GARY ZEPP, Staff, Senator David Wilson, Alaska State
Legislature, Juneau, Alaska, provided the sectional analysis for
SB 8 as follows:
[Original punctuation provided.]
Sections 1-3: AS 12.25.030(e) & AS 12.55.155(c)(36)
PAGE 1, LINE 4 - PAGE 2, LINE 4:
Makes conforming amendments to AS 18.20.400 and AS
18.20.499 to eliminate references to AS 18.07.111,
which is repealed under sections 9 and 10 of the bill.
Section 4: AS 18.20.400(c)
PAGE 2, LINE 8 PAGE 4, LINE 10: Makes a conforming
amendment to AS 18.26.220 by removing references to
repealed sections of law.
Section 5: AS 18.20.400
PAGE 4, LINES 11 - 23: Makes a conforming amendment to
AS 18.20.200(c)(7)(A)(i), which defines a "residential
psychiatric treatment center" licensed by the
Department of Family and Community Services.
Section 6: AS 18.20.499(2)
PAGE 4, LINE 24 PAGE 5, LINE 5: Makes conforming
amendments to AS 18.20.499(2) to eliminate references
to AS 18.07.111, which is repealed under sections 9
and 10 of the bill.
Section 7: AS 18.26.220
PAGE 5, LINES 6 16: Repeals a section of uncodified
law, section 4, chapter 275, SLA 1976, which provided
a transition to allow medical facilities in existence
or under construction before July 1, 1976 to obtain a
certificate of need.
Section 8: AS 18.35.399(9)
PAGE 5, LINES 17 - 29: Makes a conforming amendment
that removes the reference to the "certificate of
need" statute AS 18.07.111, and replaces it with the
updated statue reference under AS 18.20.400 (d),
"Definitions".
Section 9: AS 18.07.021 - 18.07.111; AS
21.86.030(c)(1); AS 44.64.030(a)(18); and AS
47.80.140(b)
PAGE 5, LINE 30 PAGE 6, LINE 1: Repeals all of AS
18.07, which describes the certificate of need program
for health care facilities, and AS 21.86.030(c)(1), AS
44.64.030(a)(18), and AS 47.80.140(b), which also
relate to the certificate of need program.
Section 10: Section 4, ch. 275, SLA 1976, is repealed:
PAGE 6, LINE 2: Repeals section 4, chapter 275, SLA
1976.
Section 11: Certificate of Need; Applicability:
PAGE 6, LINE 3 LINE 8: Amends uncodified law and
provides that the Department of Health may not take
action on or after the effective date of sections 1-
11 to revoke, enforce, or modify a certificate of need
issued to a health care facility before the effective
date of sections 1-11 of this Act.
Section 12:
PAGE 6, LINES 9 - LINE 14: Amends uncodified law by
adding a new subsection that directs the Department of
Family and Community Services to create necessary
regulations by July 1, 2025, to implement the changes
made by this Act by, but not before the effective date
of sections 1-11 of the Act.
Section 13:
PAGE 6, LINE 15: States that section 12 of this Act
takes effect immediately under AS 01.10.070(c).
Section 14:
PAGE 6, LINE 16: States that, except as provided in
section 13 of this Act, this Act takes effect July 1,
2026
MR. ZEPP noted that Sections 5, 11, and 12 erroneously refer to
the Department of Family and Community Services (DFCS) instead
of the Department of Health (DOH).
3:40:58 PM
CHAIR WILSON opened public testimony on SB 8.
3:41:21 PM
JEFFREY SINGER, Senior Fellow, Cato Institute, Phoenix, Arizona,
testified in support of SB 8 as follows:
[Original punctuation provided.]
My name is Jeffrey A. Singer. I am a Senior Fellow in
Health Policy Studies at the Cato Institute. I am also
a medical doctor specializing in general surgery and
have been practicing that specialty in Phoenix,
Arizona, for over 40 years. Thank you for allowing me
to testify before the Senate Health and Social
Services Committee regarding SB 8, which seeks to
repeal health care Certificate of Need requirements. I
appreciate this opportunity to provide my perspective
as a health care practitioner and policy analyst to
assist this committee in assessing existing policies.
3:41:34 PM
MR. SINGER continued:
Roughly four decades since the repeal of the 1974
federal law that incentivized states to establish
"Certificate of Need" (CON) requirements before new
health care facilities can developor existing ones
can add beds or equipmentCON requirements still exist
to varying degrees in 35 states. A classic example of
central planning, CON commissions are heavily
influenced by incumbent health care providers.
Attempts to reform or repeal them are often met by
fierce resistance from the incumbents who try to make
the case that they only have the interests of the
general public in mind. CON laws render state health
care systems sclerotic and unable to rapidly adjust
their infrastructure to meet the changing demands of
public health emergencies. Many governors suspended
CON laws during the public health emergency. State
legislators should formally repeal the CON laws in
those states and those where they were not suspended.
3:41:47 PM
MR. SINGER continued:
Lawmakers enacted Certificate of Need Laws based on
the theory that restricting the supply of health care
services would somehow reduce demand for those
services and thus restrain health care spending.
However, policymakers should have noticed that third-
party payers, private or government-run, pay for most
health care services. This insulates most patients
from the actual prices of health care services, while
the third-party payers absorb the costs. Consumer-
patients with little skin in the game have no
incentive to be cost-effective. When price signals are
inoperative, demand continues despite restrictions in
supply. Shortages inevitably develop while prices paid
by third-party payers increase at a greater rate than
would have otherwise occurred. This is basic
economics.
3:42:29 PM
MR. SINGER continued:
The only way to reduce health care expenditures when
health care consumers are largely insulated from price
effects is to decrease availability and access to
health care. In a George Mason University Mercatus
Center working paper, a review of 20 academic studies
found that CON laws largely failed to achieve their
goal of reducing health care costs and concluded that
the overwhelming evidence is that CON laws are
associated with higher per-unit costs and higher
expenditures. The numbers speak for themselves.
National per capita health expenditures increased from
$2354 in 1974 to $12,914 in 2021 (in constant 2021
U.S. dollars).
3:43:04 PM
MR. SINGER continued:
Despite the ineffective nature of these laws, states
still have a variety of CON laws on the books today.
The various states differ in the type and number of
restricted facilities and expenditures. For example,
Ohio restricts only long-term care services, while
Kentucky restricts more than 24 different types of
health care facilities. The state where I reside and
practice medicine, Arizona, repealed all of the CON
laws except for ambulance services in 1990. The
Arizona Hospital Association supported this action. By
1990, California, Colorado, Idaho, Kansas, Minnesota,
New Mexico, South Dakota, Texas, Utah, Wisconsin, and
Wyoming repealed all of the CON laws.
Hospital administrators argue against the repeal of
CON laws claiming these laws allow them to generate
enough revenue to provide 24-hour emergency services
and uncompensated care. Physicians and other health
care practitioners also provide uncompensated care and
other services. Yet state professional organizations
don't argue for creating a certificate of need
requirement before allowing additional doctors,
nurses, psychologists, physical therapists, etc., to
set up practices in a state. And they would be
publicly derided if they did so.
3:43:47 PM
MR. SINGER continued:
New health care practitioners entering the state may
provide competition to incumbents. This has not
stunted the growth of the health care professions.
Instead, it has benefitted health care consumers by
increasing choice and access.
Lawmakers should heed the lessons the public health
crisis provided and act now to repeal CON laws and rid
their health care systems of discredited central
planning reminiscent of a bygone era.
3:44:32 PM
JARED KOSIN, Present and CEO, Alaska Hospital and Healthcare
Association, Anchorage, Alaska, testified in opposition to SB 8.
He stated that to treat the repeal of CON as a binary choice
grossly over-simplifies the issue. Healthcare is complex. The
wholesale removal of CON directly threatens care access for
vulnerable people, transparency, and overall healthcare costs,
which is why most states still have CON laws. He agreed that
healthcare costs are too high. However, healthcare is not a free
market and will not respond as one because the prices for over
50 percent of healthcare services rendered are set and paid for
by the government.
MR. KOSIN stated that eliminating CONs paves the way for a
proliferation of ambulatory services that only serve patients
with private insurance. This happened in Georgia, Pennsylvania,
Ohio, and other states. Repeal of CON jeopardizes patients with
Medicare and Medicaid. It also undermines the ability to offer
core services at community hospitals. The repeal of CON laws
leads to a proliferation of surgery and imaging centers;
emergency care, labor and delivery, inpatient rehabilitation,
and dialysis are impossible without these services in hospitals.
He stated that people would not be better off having more
surgery and imaging centers when hospitals cannot provide
emergency services or deliver babies.
MR. KOSIN opined that balance is needed. The CON program is
flawed; it has not been updated in twenty years. All the
regulations for the CON program are in Alaska's Administrative
Code. Modernizing regulations is the solution. He urged the
legislature to direct the Department of Health to work with
stakeholders on refining the Alaska Administrative Code and vote
no on SB 8.
3:46:58 PM
BILL WARD, representing self, Delta Junction, Alaska, testified
in support of SB 8. He stated that since 2018 a bill to repeal
CON has been before the legislature. He has watched each bill
die due to the legislature's irresponsible method of delaying
bills to the end of a session for a budget battle. The
legislature ignores action on important bills. Delta Junction
needs advanced medical care facilities. CON restrictions
exacerbate the situation. Delta Junction has two clinics that
provide good urgent and routine care. Fairbanks' hospitals have
handled emergency, advanced diagnostics, and extended care. The
need for medical care in Delta Junction is recognized, but CON
laws prevent the expansion of care. Delta Junction patients are
transported to Fairbanks if not stabilized within one day
because the clinics lack the proper diagnostic equipment.
Ambulance transport to Fairbanks is impeded by the weather and
increased road use. Delta Junction's population is rising, and
its citizens are aging. CON laws keep all eastern Alaska from
receiving proper healthcare.
3:50:42 PM
STEVE FRANK, Board Member, Foundation Health Partners,
Fairbanks, Alaska, testified in opposition to SB 8. He stated
that Foundation Health Partners has a hospital, clinic, and
long-term care facility. The foundation is a locally owned
nonprofit organization. Surgery and imaging are two services
that bring in money for the foundation. Repealing CON would
allow others to take these services from the foundation but not
offer the services that would not earn them a profit. Passing
CON will hurt the foundation and cause Medicaid to increase. CON
is a complicated issue. He warned the legislature to be careful
in their decision because repealing CON will not reduce costs;
it will increase the Medicaid budget.
3:52:58 PM
PATRICK SHIER, Representative, Pacific Health Coalition,
Wasilla, Alaska, testified in support of SB 8 and said he favors
measures that enlist the power of the competitive markets in
pursuit of better healthcare access and pricing. The Pacific
Health Coalition is a private nonprofit coalition of 49 self-
funded health plans across Alaska and the Pacific Northwest. The
coalition assists the 240,000 members in finding ways to provide
the best pricing and value in quality healthcare. Member's plans
saved over $721 million in 2021, an increase of over $100
million from the prior year. The coalition did this by
leveraging available competitive principles. Competition is
responsible for historic discounts in many areas, such as
orthopedic surgery in south-central Alaska, where a provider
approached the coalition to negotiate lower fees to reduce
members' engagement in medical tourism. He opined that CON's
intervention in healthcare had once been warranted, but it has
since outlived its usefulness by creating barriers to Alaska's
healthcare industry. Repealing CON would be the first step in
unraveling many distortions in the healthcare industry.
Repealing CON would help providers and consumers think of new
ways to achieve high-quality, effective healthcare delivery in
Alaska.
3:55:08 PM
MARY KASPARI, President, Interior Alaska Hospital Foundation,
Delta Junction, Alaska, testified in support of SB 8 and
provided a brief history of CON. She said Delta Junction is an
underserved healthcare area in Alaska where CON laws do not
help. From Delta Junction to the Canadian Border, there is no
advanced health care available for Alaskans, only day clinics.
The nearest hospital is 100 miles away, and getting there can be
difficult due to weather, military convoys, and trucking
services. A person does not realize the severity of the issue
until it is their loved one in a life-threatening situation
where time is of the essence. Repealing CON will increase Delta
Junction's ability to knit necessary medical services in the
community with the vast surrounding service area.
3:56:55 PM
DAWN FRAZIER, representing self, Delta Junction, Alaska,
testified in support of SB 8. She said outlaying communities
drive through Delta Junction to get to a hospital in Fairbanks.
People in those communities have driven in dangerous road
conditions to reach Fairbanks to save lives. Community
volunteers have worked hard to improve healthcare by
establishing a clinic and pharmacy. The volunteers are now
working to develop a small community hospital like those in
Valdez, Nome, Cordova, and Wrangell. It is a big task for a
worthy cause but receives no support from CON. Healthcare
foundations, corporations, and organizations can weigh in on the
decisions affecting Delta Junction, while its residents pay more
for their care, additional for travel, hotels, and meals. The
CON process is cumbersome, unfair, and influenced by profit and
expenses. She opined that it is time to do away with the CON
program. During COVID hospitals did not have enough beds due to
CON laws.
3:59:58 PM
ERICK CORDERO, Vice President, Alaska Policy Forum, Palmer,
Alaska, testified in support of SB 8. He stated that CON is
detrimental to Alaskans. CON makes opening new healthcare
facilities in Alaska difficult and expensive because patients
pay higher costs for lower-quality care and have fewer options.
CON laws require businesses to prove their services are
necessary before entering the market, which limits accessibility
and innovation. The laws also make it challenging to adapt to
emerging healthcare needs quickly. Allowing existing providers
to give input on their potential competition is not in the best
interest of patients. COVID prompted Alaska and other states to
suspend CON requirements to ensure healthcare facilities could
deliver essential services. The suspension of CON created no
problems but made the healthcare system more responsive to
emerging needs. Alaska needs to follow the example of states
that have removed CON laws.
4:01:45 PM
ANTONIA LEONARD, representing self, Wasilla, Alaska, said she
supports SB 8, the repeal of CON.
4:02:31 PM
CHAIR WILSON stated the committee would hear from previously
invited testimony that could not testify due to time
constraints.
4:02:38 PM
JAIMIE CAVANAUGH, Attorney, Institute for Justice, Arlington,
Virginia, testified by invitation on SB 8 and said that from a
policy perspective, several states with CON laws purposely
exclude rural areas from the program. Alabama, Oregon,
Tennessee, Washington, and Florida excluded rural areas from
their Con programs to encourage hospitals and other healthcare
facilities to expand into new areas. She opined that Utah and
Colorado had not had a hospital closure since 2005, and neither
state has CON laws. Therefore, it cannot be CON laws that
prevent rural hospital closures. In 1987 the federal government
repealed CON laws because findings showed the laws failed to
control healthcare costs and were insensitive to community
needs. Since then, various US government agencies have continued
to be consistent and support CON repeal. In 2019 the Federal
Trade Commission (FTC) and the Antitrust Division of the
Department of Justice submitted testimony supporting Congress's
repeal. They testified that CON proponents concede that CON laws
allow incumbent providers to earn greater profits than they
would in a competitive environment. They argued that these
providers use profits to cross-subsidize charity care. However,
the evidence does not show that CON laws advance that goal.
Empirical evidence contradicts the notion that dominant
providers use market power to cross-subsidize charity care. DOJ
and the FTC reviewed empirical evidence in a peer-reviewed
journal and found that CON does not increase the amount of
cross-subsidized charity care. They found that CON laws lead to
higher costs, lower quality, and decreased access to care. She
urged support for SB 8.
4:05:32 PM
ZACH YOUNG, representing self, Anchorage, Alaska, testified in
support of SB 8. He said CON laws are antiquated and have done
the opposite of their intent. Alaska has severe medical care
needs and a lot of rural communities. CON has caused undue
hardship to Alaska's rural communities that should have
hospitals. He stated his belief that repealing CON will provide
affordable healthcare and competition within the hospital
system, thereby creating more efficiency for the entire state of
Alaska.
4:07:16 PM
CHAIR WILSON closed public testimony on SB 8.
4:07:34 PM
MATTHEW MITCHELL, Senior Research Fellow, Knee Center, West
Virginia University, Morgantown, West Virginia, said he wished
to address the comment that healthcare is not a free market and
Medicaid costs will increase with the repeal of CON. He said 3
out of 10 Americans live in a state without CON, and their
experience, as reported through 100 different studies, is
greater access to higher quality and lower cost care. Alaska
does not have to speculate what will happen with its repeal. A
paper by Nancy Miller, Charlene Harrington, and Elizabeth
Goldstein titled Access Community-Based Long Term Care:
Medicaid's Role was published in 2002 in the Journal of Aging
and Health. They found that CON is associated with higher per
capita Medicaid community-based care expenditures. Two other
studies found that CON's repeal does not affect Medicaid
spending. Zero studies out of 40 found that Con is associated
with reduced spending on Medicaid.
4:09:44 PM
CHAIR WILSON held SB 8 committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 8 Singer-Written Testimony Alaska Sen. Health and Social Services Committee.docx |
SHSS 2/21/2023 3:30:00 PM |
SB 8 |
| SB 8 ADN Op-Ed_What's really crowding Alaska's hospitals_2.2.23.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 8 |
| SB 8 Providence Opposes SB 8 Repeal of CON.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 8 |
| SB 53 v A..PDF |
SHSS 2/21/2023 3:30:00 PM |
|
| SB 53 SHSS Presentation v. B.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 53 |
| SB 53 Sponsor Statement.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 53 |
| SB 53 Sectional Analysis version B.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 53 |
| SB 53 FN Dept Law.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 53 |
| SB 53 FN DFCS API.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 53 |
| SB 53 FN DOA OPA.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 53 |
| SB 53 FN DOA Public Defender.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 53 |
| SB 53 Research - KTUU Article 2.15.2022.pdf |
SFIN 5/3/2023 9:00:00 AM SHSS 2/21/2023 3:30:00 PM SJUD 3/10/2023 1:30:00 PM SJUD 3/29/2023 1:30:00 PM |
SB 53 |
| SB 53 v B.PDF |
SHSS 2/21/2023 3:30:00 PM |
SB 53 |
| SB 45 Amdmt S.1.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 45 |
| SB 45 Amdmt S.2.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 45 |
| SB 45 Amdmt S.3.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 45 |
| SB 45 Amdmt S.4.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 45 |
| SB 45 Amdmt S.6.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 45 |
| SB 8 - FHP opposition letter to S-HSS.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 8 |
| SB 8 - Dr Mitchell's Peer Reviewed CON data.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 8 |
| SB 8 - KMC Opposes SB8 - 2.20.23.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 8 |
| SB 8 Support Hanson 2.21.23_Redacted.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 8 |
| SB 8 - NCSL - Rural Hospital Closures CON and Ambulatory Surgical Centers.pdf |
SHSS 2/21/2023 3:30:00 PM |
SB 8 |