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