Legislature(2007 - 2008)Anch LIO Conf Rm
07/27/2007 10:00 AM House HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| Presentations on Alaska's Unininsured | |
| HB140 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE
July 27, 2007
10:06 a.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Bob Roses, Vice Chair
Representative Anna Fairclough
Representative Paul Seaton (via teleconference)
Representative Sharon Cissna
Representative Berta Gardner
MEMBERS ABSENT
Representative Mark Neuman
OTHER LEGISLATORS PRESENT
Senator Hollis French
Representative Andrea Doll
COMMITTEE CALENDAR
PRESENTATIONS ON ALASKA'S UNINSURED
-HEARD
HOUSE BILL NO. 140
"An Act expanding medical assistance coverage for eligible
children and pregnant women; relating to cost sharing for
certain recipients of medical assistance; and providing for an
effective date."
-HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 140
SHORT TITLE: MEDICAL ASSISTANCE ELIGIBILITY
SPONSOR(s): REPRESENTATIVE(s) GARA
02/15/07 (H) READ THE FIRST TIME - REFERRALS
02/15/07 (H) HES, FIN
02/28/07 (H) SPONSOR SUBSTITUTE INTRODUCED
02/28/07 (H) READ THE FIRST TIME - REFERRALS
02/28/07 (H) HES, FIN
03/15/07 (H) HES AT 3:00 PM CAPITOL 106
03/15/07 (H) Heard & Held
03/15/07 (H) MINUTE(HES)
WITNESS REGISTER
PAT CARR, Director
Health Planning Systems Development
Department of Health & Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Presented the Department of Health and
Social Services study of the uninsured in Alaska.
ALICE RARIG, Planner
Health Planning Systems Development
Department of Health & Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the presentation
by the Department of Health & Social Services.
KARLEEN JACKSON, Commissioner
Department of Health & Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Answered a question during the presentation
by the Department of Health & Social Services (DHSS).
MARK FOSTER, Business Consultant
Anchorage, Alaska
POSITION STATEMENT: Presented the State Health Care Reform
Initiatives Overview on behalf of the University of Alaska,
Anchorage, Institute for Social and Economic Research (ISER).
REPRESENTATIVE LES GARA
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 140 as the sponsor.
ACTION NARRATIVE
CHAIR PEGGY WILSON called the House Health, Education and Social
Services Standing Committee meeting to order at 10:06:42 AM.
Representatives Roses, Fairclough, Gardner, and Wilson were
present at the call to order. Representative Seaton attended
via teleconference. Representative Cissna arrived as the
meeting was in progress. Also in attendance were Senator French
and Representative Doll.
^Presentations on Alaska's Unininsured
10:07:08 AM
CHAIR WILSON announced that the first order of business is the
first in a series of meetings concerning spending state health
care dollars wisely. This meeting will focus on the uninsured
in Alaska and will begin with a presentation by the Department
of Health & Social Services (DHSS) on its findings, including
options for expanding health care coverage. The second
presentation will be by a consultant representing the University
of Alaska, Anchorage, Institute on Social and Economic Research
(ISER). There will then be discussion on HB 140. Chair Wilson
announced that the next meeting on August 28, 2007, will feature
an overview by the National Conference on State Legislators
(NCSL) on how other states are addressing the problem.
10:10:49 AM
PAT CARR, Director, Health Planning Systems Development,
Department of Health & Social Services (DHSS), informed the
committee that she will present the findings of an Alaska State
Planning Grant project that studied the uninsured in Alaska and
looked at the options for expanding health care coverage. She
stated that the focus of her presentation will be on who the
study indentified as the uninsured in the state. In addition,
the project revealed who in Alaska has what type of health care
coverage; whether the coverage is an employment benefit or not,
what is the structure of the type of coverage; whether the
coverage is self-purchased; whether there are regional
variations; the issues of coverage for families; what other
states are doing for their uninsured; and what is the cost of
coverage for the uninsured. She noted that Alaska was one the
last states to participate in the planning grant process and the
study gathered information from household surveys, employer
surveys, focus groups, key informant interviews, economic
analysis, and six forums across the state.
10:15:24 AM
MS. CARR continued to say that data was also gathered from a
variety of national and state sources. The study determined
that in excess of 17 percent of Alaska's population, or 114,000
people, are uninsured. In answer to a question from the chair,
Ms. Carr clarified that the uninsured group does not include
those who receive tribal benefits. She then said that 52
percent of the state receives insurance coverage through
employers, 4 percent purchase private insurance, 16 percent are
covered by Medicaid, 6 percent are covered by Medicare, and 5
percent are covered by other public programs. Categories of
insurance coverage are: 33 percent covered by government
insurance; 57 percent covered by employers; and 5 percent
covered by self-purchased insurance. Ms. Carr informed the
committee that those most likely to be uninsured are young adult
males.
10:17:50 AM
REPRESENTATIVE GARDNER asked for the specific meaning of
"counted as uninsured."
10:18:20 AM
ALICE RARIG, Planner, Health Planning Systems Development,
Department of Health & Social Services (DHSS), answered that the
current population survey counts as uninsured a resident who has
not had insurance at any time for the past year.
10:19:39 AM
REPRESENTATIVE GARDNER asked whether the percentage would be
higher if those who have had coverage for part of the year were
included.
DR. RARIG said yes. She added that people coming in and out of
care is a significant issue for the state.
10:19:50 AM
REPRESENTATIVE ROSES asked whether seasonal workers are
accounted for. He suggested that their numbers could make the
problem larger or smaller.
10:21:12 AM
MS. CARR responded that the question of coverage for seasonal
workers will be addressed later in the presentation. She then
pointed out that, after young, adult, males, the people who are
most likely to be uninsured are: the self-employed; part-time
workers; seasonal workers; and people who work for small firms.
She stressed that over one-half of the uninsured are employed.
Ms. Carr then informed the committee that 62 percent of the
uninsured are white, 19 percent are Alaska Native, 6 percent are
Asian, 2 percent are African American, and 11 percent are of two
or more races.
10:21:32 AM
REPRESENTATIVE GARDNER asked whether there were groups of Alaska
Natives that do not have access to federal health care coverage
through the Alaska Native Medical Center (ANMC), or through
tribes.
MS. CARR answered that any Alaska Native can go to the ANMC;
however, the mobility of the population brings in the issue of
the portability of care and access to medical services. She
explained that two-thirds of the Native population has some type
of insurance coverage other than tribal coverage.
10:23:43 AM
MS. CARR further noted that, by age group, one-third of
residents aged 18 to 24 years are uninsured and that 38 percent
of this group is male and 25 percent is female. The study also
revealed that, of households with less than $35,000 in annual
income, 58 percent are uninsured. In comparison, of households
with income greater than $35,000, 42 percent are uninsured. She
pointed out that the problem is not limited to low income
families. Looking at the employment status of the uninsured, 52
percent are employed, 9 percent are seeking employment, and 39
percent are children and others not in the labor force. Ms.
Carr stated that 27 percent of Alaskan children do not have
continuous insurance coverage throughout the year; this group
has been identified as an especially needy population.
10:25:45 AM
CHAIR WILSON observed that some states have extended the
designation of children, for coverage purposes, to age 24. She
suggested that the committee study this issue.
10:26:38 AM
DR. RARIG informed the committee that the purpose of the Alaska
household survey was to get information beyond the difficulties
of interpreting national surveys that are not sufficiently
specific regarding insurance coverage. In fact, the behavior
risk survey conducted by DHSS, Division of Public Health, asks
about health coverage at a point in time, as opposed to
continuous coverage throughout one year. She pointed out the
complications of determining household insurance coverage.
About 1,300 households were surveyed and it was reported that 31
percent, or 73,000, of Alaska households had not been covered by
employer or union health insurance in the past year. In
addition, 12 percent of households reported directly purchasing
some type of health insurance in the past year. Dr. Rarig noted
that some residents are dually insured or covered in various
ways. These purchased policies may include short-term specialty
policies, and policies with limited scopes; this would explain
the duplication of percentages. The regional analysis indicated
that Gulf Coast households were more likely to purchase
insurance than rural households.
10:30:04 AM
DR. RARIG continued to compare regions. The statewide average
of households with coverage through employment, or a union, is
69 percent; in rural Alaska it is 55 percent; in the Gulf Coast
it is 59 percent; in Fairbanks and vicinity it is 69 percent; in
Anchorage, Mat-Su, and Southeast it is 73 percent. The
household survey also asked for respondent's primary place of
employment and revealed that 83 percent of males, and 92 percent
of females, indicated that their employment was a permanent, not
seasonal, position. She reminded the committee that respondents
may have part-time employment; therefore, one job may be held by
more that one person and one person may have more than one job.
This situation also makes the task of determining who is
uninsured a difficult task. The survey did determine that 13
percent of those employed had been in their positions for less
than 6 months. The primary place of employment reported by
respondents during 2006 to 2007 was: 50 percent by private for-
profit companies; 11 percent by not-for-profit, exempt, or
tribal employers; 12 percent are self-employed; and 27 percent
by government. The survey also determined the number of
employees per employer.
10:33:43 AM
DR. RARIG informed the committee that one-quarter of firms with
fewer than ten employees offer health insurance. Nearly all
firms with more than 100 employees offer health insurance, but
not necessarily to all employees. The Alaska Employer Survey
2006 indicated that, due to the expense, 53 percent of employers
do not offer insurance. Other reasons given are: seasonal
employees; not enough employees; and employees covered by other
health plans. National surveys have revealed that Alaska has
twice the percentage of seasonal workers than any other state in
the U.S. Furthermore, Alaska is above the national average for
the length of the waiting period before new employees in the
private sector are eligible for health insurance. Dr. Rarig
stated that seasonal employees have difficulties obtaining and
retaining health coverage for a variety of reasons. The Medical
Expenditure Panel Survey conducted by the Department of Labor &
Workforce Development (DLWD) indicates that over 300,000
individuals worked in the state during some part of 2004; thus
one-third of the people who are reflected in the average
annualized jobs are non-residents. She continued to say that
one-half of the respondents have worked during at least a
portion of three of the quarters of the year; and one-half have
worked for portions of all four quarters of the year.
10:38:24 AM
CHAIR WILSON asked whether workers who work for three quarters
of the year draw unemployment for the fourth quarter.
10:39:05 AM
DR. RARIG answered that this data is from DLWD; however, she
will research the answer to that question.
10:40:17 AM
REPRESENTATIVE ROSES questioned whether those who were employed
for three quarters of the year include school teachers.
DR. RARIG expressed her belief that teachers, who work at least
part of each quarter of the year, would not be part of that
group.
REPRESENTATIVE ROSES asked for confirmation of these figures
from the DLWD.
10:41:12 AM
REPRESENTATIVE CISSNA questioned whether it was possible to
figure out the job categories of the seasonal workers.
DR. RARIG said she believes that the DLWD can analyze the
workforce by quarter worked and by category. She reminded the
committee that many in the fishing industry are not reflected in
this data because they are self-employed.
10:42:27 AM
DR. RARIG further explained that adjusting the estimate for fish
harvesting employment by adding to the 2004 and 2005 seasonal
data increases the estimate of people working in Alaska in July
to 270,000. The percentage of mining and manufacturing firms
that offer health insurance is about 50 percent in Alaska and 70
percent nationwide; the percent of retail and service firms that
offer health insurance is about 30 percent in Alaska and about
50 percent nationwide. Dr. Rarig pointed out that seasonal
workers in Anchorage total about 10,000; in fact, about one-half
of the residents employed in Alaska live in Anchorage.
Southeast, and the fishing area of Bristol Bay, are extreme
examples of seasonal employment. The study also shows that the
percentage of employees holding annualized jobs, and that are
covered by health insurance, is: 48 percent in Anchorage, 35
percent in the rest of Alaska, and 53 percent nationwide. Dr.
Rarig concluded by informing the committee that further analysis
of the household survey will be posted on the DHSS website.
10:46:24 AM
MS. CARR stated that qualitative information has been gathered
from residents of the state, employers, key informant
interviews, focus groups and forums. ISER conducted the focus
groups and the McDowell Group in Juneau conducted the key
informant interviews. Sixteen focus groups were held around the
state by DHSS and they included individuals, representatives of
the Alaska Native population, small business employers, and
health insurance representatives. She highlighted that most
focus group respondents desire preventive coverage and see it as
a way to be healthy. In addition, employers feel a sense of
social responsibility to provide health coverage for their
employees. The focus groups raised concerns about where
residents get medical services and the cost of care and
insurance. The expense can mean that residents feel that
medical service is inaccessible. Individuals and employers cite
cost when asked why health care coverage is not purchased. Ms.
Carr opined that most individuals are willing to pay $100 per
month and that amount does not go a long way to cover the cost
of insurance coverage. In response to a question, she said that
amount included "that dimension as well for coverage for the
family." Ms. Carr continued to explain that uninsured residents
seek health care from hospital emergency rooms and clinics with
sliding fee schedules, such as the 23 federally funded health
centers in the state. Unfortunately, there are residents who
have incurred great debt while trying to pay for medical
services out-of-pocket. In addition, there are those who seek
treatment in Canada, or other destinations, and those who simply
delay care.
10:52:21 AM
CHAIR WILSON observed that Canadians have to wait a long time
for non-emergency procedures and health care.
MS. CARR said that she has only anecdotal information about
residents that travel for medical care. She continued to
explain that there were 50 key informant interviews around the
state. The major issues discussed were: the high cost of
health care and insurance; attitudes and resistance to change;
the low priority of health insurance to other issues; the
challenges of the payment system; and the impact of seasonal
employment to the economy of employment-based insurance.
10:55:12 AM
REPRESENTATIVE GARDNER asked for clarification regarding the
state's perception that the need to address access and the
availability of care is seen by some as more important than
insurance.
MS. CARR responded that some key informants, and others, felt
that it is that more important to provide more financial support
to providers, or primary care delivery sites, rather than to
subsidize insurance coverage.
10:56:15 AM
MS. CARR advised that, through the study, DHSS has gathered
information about what other states are doing to address this
problem, whether it is universal coverage, more comprehensive
care, or incremental steps to coverage. This analysis will be
forthcoming, along with the economic analysis, later in the
meeting. Further, she encouraged the committee and members of
the public to refer to the DHSS web site for the posting of
subsequent reports.
10:58:14 AM
REPRESENTATIVE CISSNA asked whether social costs are included in
the study of this issue. For instance, nationwide, there are
bankruptcies, homelessness, and individuals in the prison
system, due to the lack of medical coverage.
10:59:11 AM
DR. RARIG said that the economic analysis contractor has been
asked to examine the literature on the issues of direct and
indirect costs of people being uninsured. This part of the
question will be difficult to examine thoroughly.
10:59:55 AM
REPRESENTATIVE CISSNA questioned the value of anecdotal survey
information and asked about the possibility of developing good
health policy without spending any money. She asked Dr. Rarig
for recommendations.
DR. RARIG suggested that the economists attending may wish to
address that question. Her division has asked for the economic
cost to cover all Alaskans and for assessments on covering the
uninsured that are presently using the system. She stated that
there are two types of uninsured individuals; those who are
healthy and do not have much need, and the unhealthy who are
passing their costs along to public programs and increasing the
cost of private premiums. Social costs that do not appear as a
cost to the health care system include, but are not limited to;
the loss of life, the loss of a job, and the choice not to work
because of subsequent ineligibility in some type of public
program. She expressed her hope that the report, when
completed, will reveal opportunities for Alaska.
11:03:03 AM
REPRESENTATIVE FAIRCLOUGH asked for the definition of "uninsured
versus access." She observed that many Alaska Natives are
eligible for medical coverage except for the issue of access.
11:03:45 AM
DR. RARIG responded that, for the purpose of considering who is
uninsured for economic assessment, DHSS is using the current
population survey national definition: someone who has not been
insured at all in the past year. About one-quarter of Alaska
Natives are in the category of people counted as uninsured, but
two-thirds to three-quarters of Alaska Natives do have other
coverage. The minority, who do not have other coverage, are
limited to services available in their local area for tribal
benefits.
REPRESENTATIVE FAIRCLOUGH noted that the DHSS number is
including those who have access to health care, but did not use
the services available, and therefore are counted as uninsured.
DR. RARIG clarified that they are counted as uninsured because
they do not have what we typically call insurance coverage.
Those individuals will have access to primary care services if
they live nearby. If living in a remote area of Alaska, an
Alaska Native will not have access to services. There are
limitations to what is available through the tribal care system,
with travel remaining a big issue. Her department is using the
number of 114,000 uninsured as a starting point. Using the data
available from the national surveys and the state study, it is
possible to use actuarial approaches to determine the costs of
coverage for a reasonable and comprehensive plan.
REPRESENTATIVE FAIRCLOUGH observed that the offered definition
is not sufficiently succinct for legislators to explain to the
general public. A clear definition is needed to clarify access
to coverage; whether it is because of heritage or location. She
further asked whether the number of uninsured includes people
who are out of state.
DR. RARIG confirmed that the 114,000 uninsured are residents of
Alaska. In further response to a question by Representative
Fairclough, she clarified that the DLWD data about workers in
Alaska that work one, two, three, or four quarters, includes
non-residents. This data reflects those who just come to work
in the summer and non-residents who may work for periods of all
four quarters. In addition, there are Alaska residents that
choose to work for only three quarters or portions there-of.
Dr. Rarig stated that the data shows that Alaska has a very
complex picture of employment and insurance coverage.
11:11:38 AM
REPRESENTATIVE FAIRCLOUGH expressed her appreciation for the
work of the DHSS on this issue.
11:11:58 AM
CHAIR WILSON said that there are people who have insurance that
do not feel they can afford to use it.
11:12:36 AM
MS. CARR summarized that defining access to coverage includes
the issues of those who may not use insurance because of the
cost of deductibles; those who do not have services in their
community; those who can not receive Medicare services due to
their location; and those with other problems. She expressed
her hope that sharing information from the survey with the
committee will facilitate its exploration for solutions to these
problems.
11:13:44 AM
REPRESENTATIVE ANDREA DOLL, Alaska State Legislature, observed
that there are many organizations that provide health services,
such as Catholic Community Services, and other nonprofit groups.
She asked whether the DHSS has studied data on these services.
11:14:24 AM
MS. CARR confirmed that focus groups have relayed comments that
people can be covered through other services; social service
networks and nonprofits are certainly key players in health
care. However, the study does not summarize this facet of care.
She deferred the question to Karleen Jackson, Commissioner,
DHSS.
11:15:23 AM
KARLEEN JACKSON, Commissioner, Department of Health & Social
Services (DHSS), reminded the committee that the focus of the
grant that funded this report is on the uninsured. At this
time, the presenters are looking at this one small piece of the
many aspects of health care and social services.
11:16:38 AM
The committee took an at-ease from 11:16 a.m. to 11:24 a.m.
11:24:56 AM
CHAIR WILSON announced that the next presenter is Mark Foster,
who will be discussing the ISER report.
11:25:03 AM
MARK FOSTER, Business Consultant, informed the committee that he
has been working with ISER and co-authored the "Health Care
Market in Alaska Report." He stated that he has other clients
in the medical care community, and that he has advised them on
business modeling and business issues. Mr. Foster said that the
views expressed today do not represent the views of a particular
client. He then offered a brief history of the U.S. health care
policy beginning in the 1930s with the implementation of the
Social Security Act. At that time, universal health care began
to be debated. During the Second World War, there were caps and
a freeze on wages, but employment based coverage was excluded
from taxable income, thus began the competition of offering
benefit packages to prospective workers. As health care costs
increase, the federal government begins to take a larger role.
In the 1960s Medicare and Medicaid were introduced; and further
expansions of Medicaid occurred in the 1980s. During the 1990s
there was a large expansion of children's care by the
introduction of the State Children's Health Insurance Program
(SCHIP). Because of the major influence of the federal
government on health care, the state, as a policy maker, needs
to consider the federal funding of medical programs and the long
term effects of federal rules and regulations. Mr. Foster noted
that the state's role in health care is also affected by the
Employment Retirement Income Security Act of 1974 (ERISA). He
explained that this federal law preempts state laws relating to
private sector employee retirement benefit plans, thus if a
self-insured company is impinged by the state, state law will be
preempted. Mr. Foster warned that state health reform efforts
must be mindful of impacts on existing employer's insurance
plans.
11:28:38 AM
MR. FOSTER referred to a health care reform system developed by
the State of Hawaii; Hawaii has a mandate that requires all
employers of full-time employees to provide insurance. Hawaii's
law is exempted from ERISA, thus its situation is very different
from that of other states. The uninsured rate in Hawaii now is
about 10 percent.
11:30:49 AM
REPRESENTATIVE GARDNER asked why the uninsured rate in Hawaii is
that high.
MR. FOSTER explained that employers and employees have adjusted
to the mandate; employees who seek higher wages and no insurance
have migrated to part-time jobs and employers have created more
part-time jobs to avoid the mandated insurance law.
REPRESENTATIVE GARDNER observed that part-time work is the
employee's choice. She then shared her personal experience as
an office manager.
MR. FOSTER agreed that some employees will make the choice of
higher wages.
11:32:19 AM
REPRESENTATIVE FAIRCLOUGH suggested that the preceding report
data should indicate that Hawaii is operating under an employer
mandate.
11:33:05 AM
MR. FOSTER advised that the state can regulate health insurers.
However, regulation of what employers can offer employees is
preempted. He turned to discuss state law in Massachusetts.
11:33:56 AM
CHAIR WILSON observed that the state can make demands on
insurance companies, but not on employers.
MR. FOSTER agreed. He pointed out that the recent reform of
Massachusetts law created potential ERISA problems such as high
fines against employers who do not offer coverage.
Massachusetts set its fines at a low rate to avoid the problem.
11:35:59 AM
REPRESENTATIVE GARDNER opined that the low fine of $250 will be
ineffective.
MR. FOSTER concurred.
CHAIR WILSON observed that because the new laws are not being
enforced yet this data may not be useful.
MR. FOSTER stated that the regulations are in place; there is
some revealing initial data based on the reactions of employees,
employers, and residents. The amounts of fines in the early
stages of legislation are often smaller and are intended to
ratchet up over time.
REPRESENTATIVE GARDNER asked whether there will be options of
lower rates and incentives for employers if Massachusetts
succeeds in increasing the number of residents who have access
to coverage.
MR. FOSTER said that it is too early for him to have a judgment
about that. He continued to explain that another consideration
is whether state regulations on self-insurance plans will
violate ERISA. In addition, the legality of whether there can
be different levels in the quality of Massachusetts insurance
plans, may be challenged in court. This could mean that very
generous executive level compensation packages must be available
for all employees.
11:38:45 AM
REPRESENTATIVE ROSES noted that reform may drive employers to
set higher deductibles on care. For example, when the co-pays
are high, employees opt for higher deductibles, thus the
combination of the deductible for a family, plus the co-pay, may
be as high as the bill for medical services.
MR. FOSTER highlighted that the minimum coverage on the
Massachusetts plan allows a maximum deductible of $4,000 per
family. The result could be that this will become the new floor
for a plan and that there will be an adjustment in the market.
11:42:06 AM
MR. FOSTER referred to the 1990s state health care reform cycle.
The prominent examples of Massachusetts, Minnesota, Oregon, and
Tennessee attempted to expand health insurance coverage through
Medicaid waivers. The results were that state revenues drove
the expansion of coverage and contractions in growth and tax
revenue imposed limits on enrollment and coverage. Initial
projections on the amount of people enrolled were not achieved,
primarily due to the fluctuations in state revenue and decreases
in federal matching funds. Mr. Foster listed aspects of the
Massachusetts plan; an individual mandate, an employer "pay or
play" mandate, an insurance pool for small employers, an
insurance coverage minimum, and a sliding scale subsidy for low
income residents.
11:45:29 AM
REPRESENTATIVE ROSES asked what provisions were included for
employees that did not use the funds set aside under [Internal
Revenue Service Section 125 Cafeteria Benefits and Health
Savings] legislation.
MR. FOSTER answered that there are no provisions for the
employer, but there are penalties for the employee.
REPRESENTATIVE ROSES re-stated his question to ask whether there
are provisions to warn employees when they are going to lose the
funds they have set aside.
11:46:34 AM
MR. FOSTER explained that open enrollment is the time to remind
people of the consequences of different plans.
REPRESENTATIVE ROSES shared his personal experience.
11:47:31 AM
MR. FOSTER stressed that the data from Massachusetts shows that
there is a shortage of primary care physicians. In addition, in
reaction to insurance reform, some physicians stopped seeing new
patients. The result has been increased wait-time to see a
physician throughout the state.
11:48:35 AM
REPRESENTATIVE GARDNER asked whether this data suggests that
people who now have coverage are going to the doctor more?
MR. FOSTER confirmed that there is a strong correlation that
once you have insurance you will use it.
REPRESENTATIVE GARDNER opined that this can create a new
problem.
11:49:38 AM
REPRESENTATIVE ROSES asked whether the increased wait-time would
be a combination of the shortage of physicians for new patients
and a general increase in doctor visits.
MR. FOSTER said that he did not enough analysis of the data to
determine the effect of both influences. He continued to
explain that many early signups for the new plans were people
who were qualified for, but not previously enrolled in,
Medicaid. In fact, the enrollment rate of subsidized programs
has gone up significantly due to the publicity surrounding the
reforms.
11:50:44 AM
CHAIR WILSON asked whether those who were previously qualified,
but who did not sign up before, were influenced by the name of
the program: insurance, not welfare.
11:51:15 AM
REPRESENTATIVE CISSNA commented that the inclusion of the
uninsured will increase the initial cost of coverage, but
ultimately will save the community money by fewer calls to the
hospital emergency room.
11:52:24 AM
MR. FOSTER recalled that the actuarial data in a prior study
suggested that there is not a net system savings; overall,
medical procedures and visits are increased and incremental
savings to emergency rooms are small.
11:54:21 AM
REPRESENTATIVE CISSNA stated that preventive health measures and
lifestyle changes generate economic growth.
CHAIR WILSON opined that residents may not have enough exposure
to prevention recommendations to be aware of its importance.
REPRESENTATIVE GARDNER expressed her belief that the public does
not understand the connection between health issues and money
issues.
11:57:05 AM
MR. FOSTER, again referring to the Massachusetts plan, continued
to explain that about 30 percent of the people with existing
private insurance are interested in switching to the subsidized
plans. This impact is called "crowd out" of private insurance.
Furthermore, some small businesses are reviewing cost options
and attempting to get under the full-time limit cap. The "play
option" may turn out to be more expensive than the penalty "pay
option," and small businesses may pass this expense on to their
employees. He concluded that, even though the goal is increased
access to care, employees and employers have different views
regarding the value of insurance coverage; therefore, the gain
of increased coverage for the uninsured could prove relatively
modest.
11:59:51 AM
CHAIR WILSON surmised that, when people switch from private to
subsidized insurance, there will be an increase in cost to the
provider.
MR. FOSTER recommended that, prior to initiating changes here,
the actuarial work from other states should be studied in order
to take advantage of the accumulation of previous experience.
12:01:28 PM
MR. FOSTER pointed out a number of differences between
Massachusetts and Alaska. Massachusetts began with a lower
uninsured population and the percentage of small businesses
offering health insurance was significantly higher. In
addition, the number of employees working for small business is
higher in Alaska, as are seasonal and part-time employment.
Comparing health outcomes, Alaska has a lower premature death
rate. He suggested that the committee consider how to measure
the existing health care system, and how to measure the change
that reforms will make to resident's health outcomes.
12:04:13 PM
REPRESENTATIVE FAIRCLOUGH pointed out that Alaska has a younger
population and asked what year [is reflected].
MR. FOSTER replied that his information is based on 2002
underlying data with age adjustments to remove the bias of a
younger population.
CHAIR WILSON expressed her understanding that, in the last 15
years, the life expectancy of Alaska Natives has increased by 30
years.
MR. FOSTER commented on Alaska and access trends. Based on
survey data from 2005, employer based insurance coverage is
covering about 400,000 residents. Indian Health Service (IHS),
including Medicaid, Medicare, and private insurance, covers
about 125,000. Additionally, Medicaid covers 100,000; 90,000
are not covered; and Medicare covers about 50,000. Mr. Foster
estimated that one-quarter of the Alaska population may be
uninsured for some time during a period of two years. This
figure is high due to the state's percentage of seasonal
workers, part-time workers, and young people. He further
explained that the number of uninsured is related to the
economic outlook for the state and for the U. S.
12:09:23 PM
REPRESENTATIVE GARDNER pointed out that, in recent years, the
oil prices have been climbing.
MR. FOSTER explained that the current population survey reflects
a decline in the percentage of the population not covered. He
opined that the trends in changing coverage are not dramatic and
the measurement error of the survey is large. Therefore, the
trend data supports a correlation with the economy; the better
the economy, the more people who will get insurance.
REPRESENTATIVE GARDNER expressed her belief that the issue here
may be the degree to which high oil prices correlate with a
strong economy.
12:11:11 PM
REPRESENTATIVE ROSES asked for the impact of the double digit
increases in health insurance costs that took place between 1999
and 2001. Health insurance premiums were increasing at 16
percent to 19 percent per year, and he stated that rising prices
may be the reason for the decrease in coverage more so than a
slump in the economy.
12:11:57 PM
MR. FOSTER stated that the economy, over time, tends to dominate
the insurance underwriting cycle.
REPRESENTATIVE ROSES relayed that, during the time he was
working in the area of insurance benefits, he saw a pattern of
double coverage until the co-pays increased; after that a high
percentage of employees opted out of group insurance altogether.
12:13:16 PM
MR. FOSTER reminded the committee that the uninsured populations
who get served have proximity to the critical care facilities
around the state. Current data indicates that critical care
facilities have increased their care of the uninsured from less
than 25 percent to 35 percent.
12:14:19 PM
CHAIR WILSON asked whether it might be less expensive to fund
community health care centers than to purchase health insurance.
MR. FOSTER speculated that providing Alaskans with health care
must include expanding critical access facilities and expanding
the health care workforce. The long term vision must include
all of these pieces as part of the strategy.
12:16:08 PM
REPRESENTATIVE GARDNER expressed her understanding that it is
less cost effective to have a health insurance mandate than to
expand the health care workforce. She asked whether the cost
effectiveness applied to the state or to individual employers.
MR. FOSTER responded that he is trying to look at it from the
total cost of providing service within the state. The costs are
split between the state and federal government, employers, and
employees. The difference may not be dramatic, but all of these
pieces need to be considered.
REPRESENTATIVE GARDNER commented that the ranking of the "ease
of implementation" [in the report] was intriguing.
MR. FOSTER said that it is useful to think about what we can
achieve.
12:18:00 PM
REPRESENTATIVE FAIRCLOUGH questioned whether the 30 percent
migration of those with private insurance to a subsidized plan
was included.
MR. FOSTER said yes. He explained that this information shows
how effective an insurance coverage mandate is on the net
economic benefit. He encouraged the committee to consider that
the system must provide insurance, facilities, and people.
12:20:01 PM
REPRESENTATIVE FAIRCLOUGH asked Mr. Foster to comment on dental
insurance.
12:20:11 PM
MR. FOSTER informed the committee that one of the challenges
Alaska faces is to find the health care workforce needed.
Increased training is a start; however, the shortage of health
care workers is a function of what they are paid. Alaska is
below average in the ratio of dentists per population when
compared to the U. S., and price premiums are higher. The
number of dentists has increased between 1998 and 2006, at least
partly due to the higher price premiums for dental work in the
state. He concluded that price premiums can make a difference;
however, opportunities in the rest of the country are also a
factor.
CHAIR WILSON offered that the same thing is happening in
education, many other professions, and industry.
12:23:12 PM
REPRESENTATIVE CISSNA opined that dentists are not a good
example of what is happening with other health care workers; in
fact, there are a sufficient number of them per capita, except
where there are none at all. She stated that the uninsured are
only part of the health problem. There is the problem of the
health care worker shortage and sufficient training.
Representative Cissna advised that there must also be analysis
of the cost of medical care facilities, the shortages of health
care workers, and changes in lifestyle habits to effect good
health.
12:26:21 PM
CHAIR WILSON asked Mr. Foster to address her concern about
decreases in federal funding mechanisms for [critical care]
facilities.
MR. FOSTER said that the last 15 years have seen an expansion of
health care facilities across the state. More recently, there
has been an expansion of clinics in rural areas. He
acknowledged that there may be a slowing of money invested in
state infrastructure and choices will have to be made between
insurance, workforce development, and facilities.
12:28:26 PM
CHAIR WILSON thanked the presenters.
12:29:54 PM
The committee took an at-ease from 12:29 p.m. to 1:34 p.m.
HB 140-MEDICAL ASSISTANCE ELIGIBILITY
1:34:18 PM
CHAIR WILSON announced that the final order of business would be
HOUSE BILL NO. 140 "An Act expanding medical assistance coverage
for eligible children and pregnant women; relating to cost
sharing for certain recipients of medical assistance; and
providing for an effective date." [Although not formally
scheduled/noticed, the committee discussed HB 140.]
1:35:12 PM
REPRESENTATIVE LES GARA, Alaska State Legislature, as a sponsor
of the bill, presented HB 140. He informed the committee that
universal health coverage for everybody is a difficult, complex,
and costly issue for debate. However, the sponsors of HB 140
realized that, in the meantime, universal health care could be
provided for kids for very little money. The fiscal notes for
HB 140 indicate that, depending on how much families are charged
to buy into children's health care, the income qualification
level, and the costs through Denali Kid Care, the cost will be
between $2 million and $5 million. Representative Gara noted
that this is a simple bill, complicated only by the fact that
Congress is debating the reauthorization of the federal State
Children's Health Insurance Program (SCHIP) that pays for 70
percent of Denali Kid Care (DKC). He expressed his belief that
the federal program will be continued.
1:37:46 PM
REPRESENTATIVE GARA explained that DKC insures parents who do
not work and working families who earn up to 174 percent of the
federal poverty level (FPL). Thus, HB 140 is only about working
families who do not get health insurance at work and who can not
afford private insurance. For example, a single parent with one
child who earns about $28,000 per year, does not qualify for
DKC. He acknowledged that the number of uninsured children
could be as high as 22,000, but 8,000 of those children may have
some coverage through IHC; therefore, the sponsors assume that
approximately 12,000 to 15,000 children of working families
remain uninsured. Representative Gara pointed out that
approximately 50 percent of Alaska employers do not offer health
insurance; in fact, most businesses with less than 25 employees
do not offer coverage.
REPRESENTATIVE ROSES asked whether the calculations for the
bill's fiscal notes are based on 22,000, or 12,000, uninsured
children.
REPRESENTATIVE GARA answered that these numbers will not be used
for any calculations in this presentation and clarified that
12,000 children are known to be uninsured. He continued to
explain that studies have shown that uninsured children receive
less preventive care and fewer physicals and are treated for
more acute care, later in illness. In addition, uninsured
children are more likely to develop serious dental problems,
asthma, diabetes, and are four times more likely to use the
emergency room. In fact, uninsured kids are 25 percent more
likely to miss school. Hospitals in Anchorage estimated that
they provided $89 million in uncompensated care in 2004; this
cost was passed along to co-payers. Representative Gara
recalled that there was an appropriation to reimburse Alaska
hospitals for some of their losses.
1:42:59 PM
REPRESENTATIVE GARA called the committee's attention to
solutions from other states. Eight other states leverage
federal money from SCHIP and cover children of families that
earn up to 300 percent of the FPL. Forty states provide health
insurance to families earning up to 200 percent of the FPL. He
pointed out that Virginia, New York, and Washington provide free
coverage up to a certain income level, and then let families
above that level buy coverage. This plan keeps the state's cost
very low.
1:44:40 PM
REPRESENTATIVE GARDNER asked whether there is a federal limit to
a family's income level.
REPRESENTATIVE GARA answered that there is not. Right now,
Congress appropriates a certain amount of money to each state;
some states put caps on the qualifying income level to prevent
overspending their allotment. Congress is debating whether to
cap the family income level on the basis that states should not
provide health care to families who can afford to purchase
private insurance. According to the U. S. Department of Health
and Human Services, the federal government pays roughly 70
percent of the cost of DKC insurance; the state share per child
is $420 per year. HB 140 proposes that families buy in on a
sliding scale with the income limits set by policy. In
addition, Representative Gara explained, the bill proposes a
sliding scale that could go up to the state's full cost for
families with higher incomes.
1:48:24 PM
REPRESENTATIVE GARA informed the committee that HB 140 gives
DHSS the flexibility to charge families an acceptable amount
that also maintains federal eligibility. The federal law is
unclear on the acceptable co-pay and the bill allows DHSS to
negotiate with the federal government to protect the federal
SCHIP contribution of 70 percent of the cost. He warned that,
if SCHIP rules are violated, or the state program is non-
qualifying, the state will only receive a 50 percent match.
Currently the cost per policy averages $1,387 and $420 of that
is the state match. However, if higher income families are
allowed to buy in, DHSS assumes that children with higher needs
will be covered and the cost of each policy will double.
1:50:54 PM
REPRESENTATIVE GARDNER asked whether the inclusion of higher
income families will result in the loss of the federal match.
REPRESENTATIVE GARA responded that the federal allocation is
based upon the expansiveness of the state's plan and that other
states have been approved for universal health care. However,
the federal regulations will change in September, 2007. In
response to a question from Chair Wilson, Representative Gara
said that the state can wait until the new regulations are known
to finalize its plan.
1:52:25 PM
REPRESENTATIVE ROSES relayed that he attended a health care
conference in Chicago in April; presenters there warned states
not to expand SCHIP until after the new regulations are issued.
REPRESENTATIVE GARA expressed his understanding that expansion
referred to the federal program and not to state's programs.
REPRESENTATIVE ROSES explained that speakers at the conference
indicated that the expansion of state's programs would be
disapproved.
REPRESENTATIVE GARA disagreed.
REPRESENTATIVE ROSES said, "They were using those states as
examples when they talked about what they meant by expanding the
program."
CHAIR WILSON asked whether an estimate of those who might drop
private insurance is factored in.
REPRESENTATIVE GARA replied that the sponsors have prepared a CS
that includes a qualification to require families to use their
employer based insurance, if available. This will keep the
costs down and prevent this problem.
REPRESENTATIVE ROSES asked whether there has been a legal
opinion on this qualification.
REPRESENTATIVE GARA said no. He noted that the federal
government would have to define this restriction and approve its
purpose. He gave several examples of restrictions that could be
included in the bill.
1:58:04 PM
REPRESENTATIVE GARA stated that there is a provision by some
states that requires an applicant to certify that they have not
had insurance at work within the last six or nine months. This
will prevent families from dropping employer based coverage. He
continued to say that DHSS can negotiate regulations for
coverage and that a portion of Sec. 3 of the bill will cover
that intention.
1:59:26 PM
REPRESENTATIVE GARA stated that it is the committee's
responsibility to set the level at which families can buy
coverage. He suggested that Senator Wielechowski's version of
the bill, that sets a limit of family income at 175 percent of
the FPL, is appropriate. In addition, the committee will need
to set policy to allow, or disallow, families with higher income
levels to purchase coverage and at what premium. HB 140
proposes a cap of 300 percent of the FPL: a middle class
income. Research indicates that private insurance can cost
around $3,000 per child, and $7,000 for a family of three. In
response to a question from Chair Wilson, Representative Gara
said that Premera Blue Cross offers a plan that will just insure
the children in a family. Representative Gara gave an example
of the federal poverty line scale: for a single parent with one
child, 175 percent of the FPL is $35,000 per year; for a single
parent with one child, 300 percent of the FPL is $50,000 per
year. He pointed out that families at the poverty level do not
pay income taxes; however, families with higher incomes do.
Representative Gara concluded by saying that the fiscal notes on
HB 140 are between $2 million and $5 million, depending on the
expansion of coverage. He opined that this is the first step to
universal health care and is a worthwhile investment that will
assist a substantial portion of the population that can not
afford insurance in Alaska. This expense is more important than
some other funding requests and he urged that it be funded.
2:04:19 PM
REPRESENTATIVE GARA reviewed the policy decisions needed for the
bill: the qualification of families that can get insurance at
work, the qualification income levels, and the amount of
premiums charged to families that wish to purchase coverage. He
encouraged the committee to also look at the senate version of
the bill, and concluded that this legislation is an easy
solution.
CHAIR WILSON announced that HB 140 was held over for further
discussion.
2:05:55 PM
CHAIR WILSON stated that her goal for the committee during the
interim is to gather enough information before the start of next
session so that legislation is ready to be drafted. She asked
whether committee members had any suggestions for further
discussion.
2:08:21 PM
REPRESENTATIVE FAIRCLOUGH pointed out that the causes of the
rising cost of health care need to be studied; pharmaceutical
[cost], malpractice insurance, diabetes, and obesity.
Preventive care of the precursors to disease are not covered by
insurance and are not being treated. She cited her experience
with the National Resource Center for Sexual Violence.
Representative Fairclough stressed that a mandate for the
treatment of precursors to diabetes would make a difference in
the treatment of this disease in Alaska.
2:10:54 PM
REPRESENTATIVE GARDNER said that she was troubled about medical
decisions being made on the basis of insurance coverage.
Mandated coverage is acceptable for some, but not all,
procedures.
2:11:48 PM
REPRESENTATIVE FAIRCLOUGH stated that the issue needs to be
raised so that long term solutions can begin. She re-stated her
desire to study the costs of health care in Alaska because they
are rising at a rate above the national average.
2:14:10 PM
REPRESENTATIVE CISSNA distributed reports presented at the
Alaska Legislative Health Caucuses over the last four years.
She said that the reports are also available online at
www.akhealthcaucus.org, and encouraged the committee to review
the information, especially the presentations regarding the
health care workforce.
2:15:38 PM
ADJOURNMENT
There being no further business before the committee, the
Department of Health and Social Services meeting was adjourned
at 2:15 p.m.
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