Legislature(1993 - 1994)
02/15/1994 03:00 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
February 15, 1994
3:00 p.m.
MEMBERS PRESENT
Rep. Cynthia Toohey, Co-Chair
Rep. Con Bunde, Co-Chair
Rep. Gary Davis, Vice Chair
Rep. Al Vezey
Rep. Harley Olberg
Rep. Irene Nicholia
Rep. Tom Brice
MEMBERS ABSENT
Rep. Pete Kott
Rep. B. Davis
OTHER LEGISLATORS PRESENT
Rep. Joe Sitton
COMMITTEE CALENDAR
*HB 414: "An Act creating the Alaska Health Commission;
relating to the delivery, quality, access, and
financing of health care; relating to review and
approval of rates and charges of health insurers;
relating to certain civil actions against health
care providers and health insurers; repealing
Alaska Rule of Civil Procedure 72.1; and providing
for an effective date."
HEARD AND HELD
(* First public hearing.)
WITNESS REGISTER
NANCY BEAR USERA, Commissioner
Department of Administration
P.O.. Box 110200
Juneau, Alaska 99811-0200
Phone: (907) 465-2200
Position Statement: Testified in support of HB 419
JACK PHELPS, Legislative Aid
Rep. Pete Kott
Alaska State Legislature
State Capitol
Juneau, Alaska 99801
Phone: (907) 4650-3777
Position Statement: Asked questions on HB 414
BILL CRAIG, Interim President
Alaska Native Blind
613 Degroff St.
Sitka, Alaska 99835
Phone: (907) 747-5917
Position Statement: Asked questions on HB 414
MERRIT OLSON, Member
American Association of Retired Persons
1032 W. 11th
Anchorage, Alaska 99503
Phone: (907) 272-9156
Position Statement: Asked questions on HB 414
PREVIOUS ACTION
BILL: HB 414
SHORT TITLE: COMPREHENSIVE HEALTH CARE
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
01/28/94 2182 (H) READ THE FIRST TIME/REFERRAL(S)
01/28/94 2182 (H) HES, JUDICIARY, FINANCE
01/28/94 2182 (H) -2 FISCAL NOTES (GOV, DCED)
1/28/94
01/28/94 2183 (H) GOVERNOR'S TRANSMITTAL LETTER
02/15/94 (H) HES AT 03:00 PM CAPITOL 106
ACTION NARRATIVE
TAPE 94-20, SIDE A
Number 000
CHAIR TOOHEY called the meeting to order at 3:21 p.m., noted
members present and announced the calendar. She brought HB
414 to the table.
HB 414 - COMPREHENSIVE HEALTH CARE
CHAIR TOOHEY informed the committee that Commissioner Usera
would do an overview and indicated there were teleconference
observers in Anchorage and Fairbanks.
Number 058
NANCY USERA, Commissioner, Department of Administration,
testified in support of HB 414. She said that she was there
to present Governor Hickel's health care commission bill.
She stated that Governor Hickel has continued to be
concerned that there be solutions tailored to the needs of
Alaskans. She stated that the department needed to know
what is happening in Alaska regarding the use and services
provided to health care recipients before any ultimate
decisions are made in the area of comprehensive reform. She
felt it was important to say that Governor Hickel's
legislation does not represent comprehensive reform. She
said that until only three days previous, she would have
said that the proposal was a "10% firm step forward," for
putting a mechanism into place that would deal with health
care reform issues. She further stated that as a
comparative analysis to the compromise bill that was
introduced, she felt HB 414 would be a 30% step forward.
COMMISSIONER USERA said HB 414 would accomplish three
things. First, costs would be contained and there would be
easier access to health care systems being provided. She
said insurance pools, universal claim forms, and mandatory
nonbinding arbitration for settlements would be utilized to
contain costs. She explained that the legislation provided
for insurance rate review. She stated that over the last
three years, in her role as commissioner representing
management for one of the largest employers of the state, it
has been very difficult to get verification and rate
information from insurance companies. Secondly, the
comprehensive reform proposals would be evaluated. In order
to accomplish that, there must be available information and
data that is specific to Alaska and also there must be a
defined benefit package. She questioned what President
Clinton's universal health package would look like in
Alaska. She said until it is known what that package is, no
proposals that are before the legislature can be priced.
COMMISSIONER USERA stated that the goal of HB 414 was to
collect and analyze data, define the benefit package, and
then based on that information an implementation plan would
be created. It is a management planning process for
comprehensive reform. She said the major proposals on the
table would be developed into a management planning tool
that would include a cost benefit analysis. She said the
third goal of the proposal was to take the recommendations
derived from the information and data gathered and present
them to the legislature.
COMMISSIONER USERA explained that many of the provisions
within HB 414 were similar to HB 451. She said HB 414
stopped at "phase I," which is the management planning, the
cost benefit data collection, and the "niche" fixes. HB 414
does not go on to presuppose a specific outcome of which a
comprehensive reform proposal will emerge from the state.
She said HB 414 would make recommendations and that the
legislature would make that determination.
Number 327
CHAIR TOOHEY asked how can the process of HB 414 start when
the roles of Indian health, the veteran's administration,
Medicare, and other health concerns and their data have not
been taken into consideration.
Number 344
COMMISSIONER USERA responded by saying the commission was
modeled closely to that of the public utility commission.
She said there were two reasons for that decision. First,
there was a growing recognition that all Alaskans have a
right to affordable and quality health care, which she said
was not dissimilar to the need for electricity. Secondly,
there would be three commissioners working full time and
there would be a stronger global view of the issue of health
care.
Number 443
REP. BUNDE, in reference to Commissioner Usera's analogy of
health care and electricity, commented that people pay for
the electricity they use. He indicated the sizable fiscal
note accompanying the proposal. He asked Commissioner Usera
to perhaps ask Governor Hickel to consider paying for the
commission out of the permanent fund dividend, citing that
although it is a service and a right to everyone, they also
have a responsibility to pay for it. Chair Bunde encouraged
Commissioner Usera to discuss the Oregon Plan with Governor
Hickel. The Oregon plan keeps costs under control by
covering a list of common illnesses and not covering more
"exotic" sicknesses.
Number 489
CHAIR TOOHEY related to Chair Bunde that perhaps he was
speaking of a newspaper article from the previous day that
said the Oregon plan had made parameters on Medicaid and
Medicare billings, not on the state's health care plan.
Number 495
REP. BUNDE said, on the contrary, that it was indeed a list
of the most common diseases.
Number 501
CHAIR TOOHEY stated that the article did make mention of the
Oregon plan in Medicaid and Medicare funds.
Number 503
REP. BUNDE suggested to Commissioner Usera that perhaps the
proposals in HB 414 and HB 451 be rolled into one.
Number 519
COMMISSIONER USERA stated for the record, in regard to the
public utility commission, that the department supported the
right to access affordable health care, not free health
care. She said the payment scheme for the commission would
come from premium tax, which currently is directed into
general fund. She further stated that the benefit plan is
designed after the Oregon plan.
Number 547
CHAIR TOOHEY suggested creating a glossary of terms, noting
that access can mean two different things when a person
lives 800 miles from the nearest clinic. She also stated
that cost is a factor in accessibility.
Number 568
REP. VEZEY said he has not found anyone in the Fairbanks
North Star Borough who has been denied access to medical
care, citing that there are signs in every health care
facility in Fairbanks that says: We do not refuse service
based on the ability to pay.
Number 582
COMMISSIONER USERA said the proposal looks to find more
efficient ways to provide current services. She said
everyone recognizes the cost shifting, the rationing of
health care and the reality that some people go bankrupt
when they need catastrophic care. She felt the rural areas
do not have equal access to the same type of care as urban
areas.
Number 615
REP. VEZEY stated again that he has never known anyone to be
denied medical care. He said that people voluntarily make
the decision to live in a very remote area and less or no
accessibility is by their choice.
Number 624
COMMISSIONER USERA suggested that there have been numerous
people that have testified at public hearings that indicated
strong concerns that quality and affordable health care is
not accessible.
Number 628
REP. VEZEY commented that he wished those people who had
been denied medical access would come forward.
Number 632
REP. B. DAVIS asked if the legislative health care task
force that she was a part of was also the task force that
worked with the Comprehensive Health Care Reform Act
(CHIPRA) that now has a proposal before the legislature.
Number 654
COMMISSIONER USERA replied yes.
Number 655
REP. G. DAVIS stated that Deputy Commissioner Livey was a
part of that task force and asked who else in the DOA was a
part of the task force.
Number 657
COMMISSIONER USERA, after some discussion, stated that the
original task force was comprised of three administration
representatives, DOA, Department of Health and Social
Services, and the Department of Commerce and Economic
Development. She said the group that worked on the
compromise bill, between the CHIPRA proposal and the
original bill sponsored by Senator Jim Duncan, was an ad hoc
group.
Number 673
REP. G. DAVIS asked which member from the Department of
Commerce (DOC) participated.
Number 674
COMMISSIONER USERA replied it was Dave Walsh from the DOC.
Number 677
REP. G. DAVIS suggested that the state had spent a lot of
time, effort, and money to look at health care reform and to
some degree has come up with a proposal. He stated that
President Clinton has a proposal on the federal level and
the Kenai Borough has also spent a lot of time, effort and
money in developing a plan. He further stated that CHIPRA
has spent much time also. He stated that much weight would
be considered from those proposals, but he felt the state
had perhaps spent enough time, effort, and money on
researching the problem.
Number 723
COMMISSIONER USERA responded by saying that the DOA was not
ready to make a substantial investment in comprehensive
reform that would "go from zero to 100 in a single piece of
legislation." She said if DOA was to guess wrong in regards
to the correct manner in which to address health care
reform, the implications would be far reaching. She said
that an alternative would be to make all the decisions that
need to be made in one piece of legislation. She also
stated that everything is incremental in its development,
and that over time, both proposals incrementally have
reached critical mass.
Number 786
REP. BRICE commented that public health is the cornerstone
of a healthy population and that he did not see the issue
addressed in HB 414. He also relayed a scenario where a
person was in a serious automobile accident, taken to the
hospital, and once the staff discovered that the person had
no insurance, was transported to another hospital. He said
that he was tired of 60% of people paying for the 40% of
people who use emergency and catastrophic care through
insurance. He felt there were enough studies to approach
the goal that needed to be obtained. He then asked
Commissioner Usera if she was saying that HB 414 is mutually
exclusive to any other proposals.
Number 955
COMMISSIONER USERA said the proposal was a different
approach to the same problem. She said the difference in
the two proposals is that HB 414 is a "phase I" approach and
HB 451 "goes beyond phase I to phase III." She agreed with
Rep. Brice that public health is the cornerstone of health
care areas. She indicated that on page 4, subsection 2,
line 19, there is a provision to establish advisory
committees to the commission to conduct research or
investigation and report back to the commission on findings.
She said public health would fall under this provision. She
further commented that the DOA would be amenable to have
that specifically outlined and charge given.
Number 897
CHAIR TOOHEY stated that the only legislation that could
really be discussed at the time was HB 414, because no one
had seen the compromise bill, HB 451. She said HB 451 would
be heard next week.
Number 913
REP. SITTON said that the total cost of health care last
year was close to $3 billion for the 500,000 people in
Alaska. He said clearly something is wrong, and it is
imperative that prevention be promoted.
Number 933
REP. VEZEY said that the total numbers for the cost of
health care are all different. He said the gross state
product is approximately $6 billion and he found it
difficult to believe that 50% of the economy is being spent
on health care. He said it would be even more difficult for
him to believe that in ten years the total for health care
will be $6 billion. He wished there were more reliable
statistics.
Number 953
COMMISSIONER USERA agreed and said that many of the
proposals are based on different assumptions. She said as a
result it is difficult to know what the outcomes will be.
She then stressed that more data would strengthen the
assumptions.
Number 964
CHAIR TOOHEY stated that step one would be collecting data.
Number 970
REP. SITTON said the state advised him of the aforementioned
figures. He also said a great amount of the $3 billion is
federal money.
Number 980
CHAIR TOOHEY asked Commissioner Usera for a sectional
analysis of HB 414.
Number 985
COMMISSIONER USERA said the intent of Section 1 is promotion
of access to affordable, quality health care. She stated
that Section 3 sets up a commission and lays out the
relative duties and responsibilities of the three paid
commission members. The section would also require the
director of insurance to establish uniform forms and
procedures for health claims. She further stated that time
frames would be established for the activity of the
commission. She said that Section 4 provided for nonbinding
mandatory arbitration to reduce litigation costs. She then
stated that further on in the legislation is a provision for
resolving disputes between insurance companies and
beneficiaries. She said, to her knowledge, that no other
state includes this provision in their health care plan.
COMMISSIONER USERA clarified for Rep. Vezey that Alaska
would be the first state, to her knowledge, that provided
nonbinding arbitration between the insurance companies and
those they insure.
COMMISSIONER USERA continued with the sectional analysis.
She said Section 5 would convert the current panel of five
malpractice reviewers to one expert adviser. She said this
would aid cost containment and cost efficiency. She said
Section 6 was the provision for mandatory, nonbinding
arbitration. Section 7, she explained, is the provision for
review and approval of rates and rating factors, indicating
that the function of the committee was primarily to verify
rates. She said that the Division of Insurance would do the
actuarial assumptions and revues and would make a
recommendation to the commission, who would then approve the
rates after public hearings.
Number 132
CHAIR TOOHEY asked Commissioner Usera to explain in more
layman terms what she had just said.
Number 136
COMMISSIONER USERA related a scenario to the committee. She
said if AETNA, who provides the state's insurance, came to
the DOA and said they were going to increase health premiums
by $25, she would have no way of knowing if the rating
factors they quoted to justify the increase were accurate.
CHAIR TOOHEY said the cost increase could perhaps include
the cost of the hospital, the doctor, the cleaning woman,
etc.
Number 148
COMMISSIONER USERA said it would also include the cost of
the insurance company's corporate "set up." She felt there
was a need for some way to determine that the rate is based
on accurate information.
Number 164
CHAIR TOOHEY asked if a benefit package would require the
same determination of rate factors in regards to the cost of
medical procedures, the cost of the doctor and nurses, etc.
Number 170
COMMISSIONER USERA said that was not provided for in the
legislation.
TAPE 94-20, SIDE B
Number 000
COMMISSIONER USERA stated that most people would not need to
know the cost of something that they would never use, and
questioned as to how many people pay for a benefit they
never use.
Number 008
REP. BUNDE shared the analogy that if a person knew they
were going to die there, the person would not go there.
Number 025
CHAIR TOOHEY asserted that there were many people who feel
that they are going to end up with a better system than the
one in place now. She felt that those people are unaware of
what is to come, and that they need to be educated, and that
all people are obliged to educate themselves on the issue.
Number 047
COMMISSIONER USERA rhetorically asked if the legislature was
making proposals just to do something different or to do
something better.
Number 050
COMMISSIONER USERA continued with the analysis. She said
Section 7 would also provide for insurance pools. She
indicated that there were no mechanisms to implement past
insurance pools, referring to the "high risk pool" set up by
the legislature, and the small business insurance pool. She
stated that Sections 13 and 14 would allow that the
commission would not be subject to all the rules of the
procurement code, but will establish its own procedures,
allowing expediency for implementation. She stated that the
commission members are 26C level, which is a program
director level.
Number 146
REP. BRICE said that it would be interesting to hear at a
later date more in depth testimony pertaining to the
procurement procedures that would be used.
COMMISSIONER USERA said there are many models that could be
used for the procurement process.
COMMISSIONER USERA proceeded with the sectional analysis.
She said the sunset provision allows for six years. She
continued on by saying that in order to repeal a court rule,
the court can take action or the legislature can take action
pertaining to the arbitration and medical expert provisions.
She said the court rule does require a two-thirds majority
vote in each house to pass.
COMMISSIONER USERA said she would be glad to provide other
expert testimony for a future meeting.
Number 252
REP. BUNDE asked Commissioner Usera to clarify the fiscal
note from the Office of the Governor and the fiscal note
from Commerce and Economic Development.
Number 267
COMMISSIONER USERA she said that the fiscal note from the
Division of Insurance includes the technical expertise that
they would need to do the actuarial work on rate review and
approval.
Number 282
CHAIR TOOHEY said the cost would be covered by the tax on
the insurance.
Number 285
COMMISSIONER USERA said, "what we do is make that program
receipt on the taxes. It's important to note that it still
comes out of the general fund."
Number 293
JACK PHELPS, Legislative Aid to Rep. Pete Kott, commented
and asked questions on HB 414. He asked if the collection
data for the insurance rating factors could be reported to
the Division of Insurance and then the division would simply
report the data, instead of it being channeled through the
commission.
Number 327
COMMISSIONER USERA stated that the work would be done by the
Division of Insurance so as not to increase the staff of the
commission to do the review process or analysis. She felt
that the establishment of rate factors needed to be
addressed in a public forum to educate the public.
Number 374
BILL CRAIG, Interim President, Alaska Native Blind, asked
questions on HB 414. He asked if there would be a public
hearing where people who had been refused medical care could
testify either in person or by teleconference.
CHAIR TOOHEY stated that would be the type of data collected
by the commission. She asked Mr. Craig to clarify further
what the intent of the question was.
Number 399
MR. CRAIG stated that people are in fact turned down for
medical services for lack of insurance.
Number 403
CHAIR TOOHEY said that some people would be covered by
Medicaid, but there are gaps that need to be addressed.
Number 412
MR. CRAIG said that emergency rooms have turned down
uninsured people.
Number 424
CHAIR TOOHEY stated that if it is a private hospital that
does not accept state funding, people can be turned away.
Number 443
MERRIT OLSON, Member, American Association of Retired
Persons, asked questions on HB 414. He asked if the
proposal would fit under the federal guidelines.
Number 460
COMMISSIONER USERA stated that the DOA should not be in
competition with the federal government. She felt that
whatever congress came up with for health care would have a
"state opt-out feature." She said that from all the
information she has heard that has come from Washington,
D.C., indicates that there will be universal coverage,
portability, and provisions for states.
Number 496
MR. OLSON asked if the federal government would give the
state time to design a health care plan before implementing
the federal plan.
Number 501
COMMISSIONER USERA replied that she was unsure of the
answer. She said the state will only do what is right for
Alaska, and that she did not want the federal government
driving state decisions.
Number 521
CHAIR TOOHEY closed public testimony and asked for further
questions from the committee. There were none.
Seeing no further business before the committee, CHAIR
TOOHEY ADJOURNED the meeting at 4:20 p.m.
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