CHAIRMAN RIEGER called the Senate Health, Education and Social Services (HESS) Committee to order at 1:35 p.m and announced SB 284 4 (COMPREHENSIVE HEALTH INSURANCE ACT and SB 270 (COMPREHENSIVE HEALTH CARE) to be up for consideration. OLIVER KORSHIN, Alaska State Medical Association, testified on behalf of SB 284. He said it was coherent and internally consistent. It utilized an unusual market based single payer approach to achieve universal coverage for Alaskans. It assures high quality of services. He believed that a single payer system is the only one suited to Alaska's unusual patterns of seasonal and part time employment. He believed that the market based features of this bill, such as the posting and publication of provider fees, significant patient co-payments, and controlled utilization of cost and volume by Alaska providers gives this plan a good chance of succeeding. Mr. Korshin said a very similar program exists in the state of Maine which seems to be working. He said the concept of public ownership is why a government sponsored health care program may work well in Alaska. He said that the Anchorage Medical Society voted by a margin of 2 to 1 to support this bill. Number 141 SENATOR LEMAN asked if Alaska does this ahead of the rest of the United States, would others move here to take advantage of the program. MR. KORSHIN answered that his question depended on the failure of the other states or the federal government to enact universal coverage. Alaska is still a cold and distant place and there is also residency language in the bill. Number 166 SENATOR SALO asked what residency requirements were in Hawaii for participation in the program. MR. KORSHIN said he wasn't familiar with residency requirements in Hawaii. She asked what our requirements were. NANCY CORNWELL, assisted in the work group that wrote the legislation, said that a definition of "residency" would be in the section on definitions. She said it is not as stringent as the one required by the Permanent Fund Board, but more restrictive than what is required by Medicaid. SENATOR DUNCAN said the answer to that question is on page 11, section 21.58.140 where there is direction to the corporation as to when the person would become eligible. STEVE CONN, Executive Director, Alaska Public Interest Research Group, deferred much of the detailed testimony to Bonnie Nelson who focused on consumer's rights within health care reforms. He said there are people who desperately need health care and don't want to become welfare recipients. He said quality health care is an inalienable right of all Alaskans. Mr. Conn said that study after study shows that the single payer system (in SB 284) is the cost efficient way to go. They also support the idea of cost control. Consumers need SB 284, although it needs more work. They have real problems with the absence of direct consumer control. Number 279 SALLY SCHLIESMANN, licensed psychologist and President, Alaska Psychological Association, said she was here today to support putting psychological services into state health care reform. She supported SB 284, but her comments apply to any health care bill being reviewed. She said that many people drop out of therapy due to financial struggles. Mental health is an essential component of total health care. THELMA LANGDON, Older Persons Action Group, provided the Committee with a copy of their position paper. She said that overall SB 284 looked good. The findings and purpose of the act are well stated. She supported community and home based service to be available to keep people in their homes and out of institutions as long as possible. She asked how would Medicaid fit into a state plan. Number 380 RON MANGELSDORF, Christian Science Church, suggested an amendment to SB 284 which would expand the definition of health care provider to include the term "sanitorium" as it is included in the definition of hospital in the federal Medicare law. This includes Christian Science Sanitoriums and their doctors. ALICE HOLINGER, Alaska Physical Therapy Association, recognized the need for health care reform. There are many people who have no coverage, or not enough and people with pre-existing conditions. She listed prevention, intervention, industrial health, osteoporosis, and arthritis intervention programs aimed at decreasing follow up in the elderly, cardiac and pulmonary rehabilitative programs, and prenatal and postnatal programs are some of the critical areas. She emphasized that the economies of a small businesses should not be overburdened with the cost of health care. Ms. Holinger said the Physical Therapy Association, in general, supports SB 284. Number 445 VERA GAZAWAY, Executive Director, Older Persons Action Group, endorsed Thelma Langdon's testimony. She was pleased that public health service has been threaded throughout. This is a very important part of a universal health care system. She said SB 284 incorporated the kind of care needed for the well to keep them well while still caring for the ill. She said they would put their questions in writing and address them at a later date. SENATOR DUNCAN commented that the need for some long term care plan with some deadlines was mentioned by a number of people. He said the legislature does require that it be designed and be in place by January 1, 1997. SENATOR ELLIS asked if her membership planned to take a position on health care reform? MS. GAZAWAY said they endorse it wholeheartedly. MARIE DARLIN, State President, National Association of Retired Federal Employees for Alaska, said she is concerned that Alaska will not have a plan by January 1, 1998 when the federal employee health benefits plan is supposed to end. They, therefore, urged the legislature to act on this bill, because it is the beginning of what will definitely be needed. One of the recommendations they have is to provide long term care and health care facilities planning to meet current and future needs. More community and health services should be provided to allow retirees to remain in their home as long as possible. Number 513 JAMES FISHER, Juneau resident, said it is important for the maintenance of a rural community system to start on something of the type that is outlined in SB 284. It's a good start. He urgently recommended speedy action. He thought 4 referrals were excessive considering the many, many years that have gone into the study of this legislation. WALLY KLINGELHUT, Ketchikan, endorsed SB 284. He said his wife is diabetic, he is unemployed, and on COBRA. The bill is $470 per month. Unemployment does not pay that much to keep the coverage. He thought of starting a small business, but even the small business association will not take diabetics. He said this bill is a good start. MARG ELLIOT, Ketchikan, said her husband is uninsurable because of his health problems. She is in the insurance industry and said many people can't afford the coverage and they go without. She suggested setting up coverage in Alaska so that one didn't have to go south for something worse than a hangnail. Number 579 JANET OATES, Eagle River, works at Providence Hospital. She said she sat in on most of the compromise work group discussions. She said they supported SB 284. Their concern is with the limited scope of SB 270. She thought a compromise could be worked out between SB 270 and SB 284. She said the single payer system was a dramatic move, but most agree it makes the best sense for Alaska. TAPE 94-10, SIDE B Number 588 MS. OATES emphasized the urgency to act. She explained the vicious cycle of health care. She stated that SB 284 could serve as a catalyst toward the development of a unique health system in the entire country. She acknowledged the need to have consumer input when the benefit package is developed. She urged beginning soon with the framework that SB 284 sets up. DARYL NELSON, disabled citizen, expressed the need to have choices for consumers. He related some of his own experiences with the health care system and health insurance. BONNIE NELSON, consumer advocate, stated that the committee could refer to her position paper. She noted that Commissioner Usera had mentioned that the Governor and his Administration believed that quality and affordable health care was an inalienable right; however, she did not find such sentiment in SB 270. She expressed the need for a benefit package. Ms. Nelson was concerned with the pre-existing condition clause due to the discrimination and inequality it creates. She noted that New York was the only state that had abolished the pre-existing condition clause. She related her personal situation when explaining that employers should not be punished if they hire someone with a pre-existing condition or a disabled individual. Ms. Nelson pointed out that consumer involvement should be utilized in whatever infrastructure. She asserted that whichever bill passes should realize and encourage having individuals with good mediation skills. She stated that everyone will have to sacrifice and pay. She explained different cost control methods that she believed were unfair to the people whom health care reform is attempting to address. She suggested having a comprehensive package like Governor Hickel's $5 payment. She discussed the need for price control, but not to cap control or limit services. She asserted that what is best for the consumer should be done. Number 468 JOHN HANCHETT, insurance agent, opposed both SB 270 and SB 284. He explained that cost factors need to be addressed before setting up a state entity. He does not see how the cost of health care insurance can be decreased when including every needed area and uninsurables. SENATOR ELLIS asked for which insurance companies Mr. Hanchett writes policies. JOHN HANCHETT stated that he was an independent agent in Fairbanks working with Blue Cross of Washington, Alaska Principle Mutual, Golden Rule, Washington National, and various smaller companies. DAVID BUSEY, private citizen and consumer, testifying from Sitka stated that SB 284 is a good bill. He commended the required public involvement process of SB 284. He explained that the corporation was a good foundation representing all Alaskans while being somewhat removed from the political arena. He recommended that the terms be extended to seven years rather than four years. He noted that removal from the corporation should be difficult and with proven reasons. Removal should be in the same manner as the appointment to the corporation, by action of the Governor and the legislature. He expressed the need to have compromise seeking individuals, not political right thinkers as members of the corporation. He stated that the Tort Reform must occur concurrently with this legislation so that the insurers and providers can be protected as well. MIKE LOCKWOOD, Executive Director of Central Peninsula General Hospital, member of the work group and Co-Chair of the Physician Hospital, supported SB 284. He agreed with the comments of Dr. Korshin and Janet Oates. Originally he opposed the single payer system; however, after being involved in the health reform process he now believes that the market based single payer system is the only system appropriate for Alaska. SB 284 will decrease administrative costs and unnecessary utilization while increasing access to sick care, preventive care, and public health services. SENATOR SALO thanked Mr. Lockwood for his work on the health reform and enlightenment on the single payer system. Number 354 BARBARA WONG, health insurance agent, member of the Southern Alaska Life Underwriters and National Association of Underwriters, stated that she would address SB 284. She questioned if there is research proving people are not receiving care. She pointed out that there is a significant difference between care and coverage and should be addressed. She expressed concern that the solution is greater than the problem. She did acknowledge that there is a problem with coverage for a portion of the population. She questioned whether the Alaska Health Insurance Corporation would be able to provide coverage at a more reasonable price. Ms. Wong expressed concerns with SB 284: It does not offer a plan or an estimate for funding the insurance corporation, and the corporation does not require anything beyond public opinion input with the Governor appointed and Legislature approved members. She noted that the individual risk pool without application of the pre- existing condition clause is now in place and available to Alaskans denied insurance coverage. She stated that in her opinion, the rates of the pool are reasonable. She pointed out that the Small Reform and Reinsurance Program should allow guarantee issue and coverage for employees of small corporations without application of the pre-existing condition clause. Those rates appear reasonable. She suggested reviewing how those systems may work before revamping the system to a single payer system. She stated that the terms market based and single payer are a conflict in terms. She did not understand where the market base would be in a single payer system. She suggested considering the Anchorage Chamber of Commerce Resolution on Health Care Reform before passing this bill. SENATOR DUNCAN stated that one of the basic principles of SB 284 was universal coverage not just universal access. He agreed with Ms. Wong's assessment that access is available to everyone at some point. He explained that the level of access is the problem. Those who do not have insurance coverage have access; but at the most expensive level, the critical care level. He noted that often the results are uncompensated care which creates cost shifting which in turn results in higher costs to those who are insured and increases the number of uninsured people. It is a vicious cycle. Only through the universal coverage of SB 284 does the inflationary spiral and the vicious cycle end. BARBARA WONG stated that now and under SB 284 everyone is paying for the care, so it does not seem to be less. She reiterated that the solution is greater than the problem. SENATOR ELLIS asked if Ms. Wong had read the final report of the Health Resources and Access Task Force. MS. WONG said she had read SB 284. SENATOR ELLIS encouraged Ms. Wong and others involved in this debate to review the Health Resources and Access Task Force which includes the number of uninsured Alaskans. Number 239 ED BURGAN, representing the Anchorage Chamber of Commerce, read the Anchorage Chamber of Commerce's Resolution on Health Care Reform. The Resolution listed thirteen items that they urged the Legislators and the Governor to address. The Resolution also stated that town meetings should be held on any proposed changes before voting on reform. The final statement of the Resolution acknowledged the need to review and make some changes with the health care system, but it discouraged tearing it down. SENATOR DUNCAN asked if the Anchorage Chamber of Commerce supported universal coverage. MR. BURGAN said yes. SENATOR DUNCAN asked if businesses in Anchorage have seen increases in premiums over the years or a decline in the benefits the businesses can offer. MR. BURGAN said yes. SENATOR DUNCAN asked if health care costs were a major portion, an increasing portion, of the businesses' budgets. MR. BURGAN stated that health care costs are a big cost, but it is not a major cost. KEN TAYLOR, Executive Director of Anchorage Community Mental Health Services, stated that the business operation has seen approximately a 30 percent increase in health costs annually. He referred to an article on the editorial page of the Anchorage Times. He gave statistics that pointed out that the poor in Alaska are not covered by Medicaid. He asserted that whether one believes there is a health care crisis or not depends on the situation; are you in the health system or not. He agreed that Alaska has a very high quality health care system; however, he believed that if one is not in the system, individuals without money or resources, there is no access for these people. Mr. Taylor referred to Elizabeth McNeil's article in the Metro. He He urged doing effective mental health treatment with respect to offsets. He stated that the Anchorage Community Mental Health governing board and management supported universal coverage and inclusion of behavioral health in that coverage. Furthermore, he supported certain facets of SB 284. He stated that they opposed the lack of attention to mental health. Number 064 VERNON MARSHALL said that Alaskans will benefit by establishing a universal health care plan prior to the adoption of a national plan. He pointed out that the National Education Association of Alaska (NEA-AK) is committed to a comprehensive health care single payer system guaranteeing universal access regardless of pre- existing conditions or economic circumstances. He explained that the plan needed to address problems unique to Alaska, such as health care delivery systems, transportation, and provider incentives to locate in areas not served or under served. He stated that any plan should support and include collective bargaining, simplification of forms, and reducing unnecessary paperwork. He also noted that controlling health care costs through reduction of administrative costs and increased budget discipline on health care providers and insurance companies should be included in any plan. The plan must also contain preventive care. He noted that in order to achieve the National Education's Goal that all children will start school ready to learn, health care must be universally available. NEA-AK supports SB 284. TAPE 94-11, SIDE A Number 002 H. P. GAZAWAY stated that Alaska has the most costly and the poorest coverage of health insurance of any other nation. He encouraged forming an Alaskan plan because if another plan passes it will not fit the needs of Alaska. JOE SONNEMAN, a Doctor of Government and lawyer, informed the committee that he had campaigned for a single payer Canadian style system in the 1992 Senate race. He explained that the Canadian style system allows the individual to choose their own physician. The physicians remain in private practice, but are paid government rates negotiated between the government and the medical societies. The government pays the physicians from a combination of federal and provincial, state, income and other taxes. He noted that this system leads to early treatments because individuals are willing to go to physicians since they do not pay directly. This system also leads to a more caring attitude of health care providers who are no longer concerned with making personal fortunes. Mr. Sonneman noted that both SB 284 and SB 270 set up some sort of entity and as previous hearings have expressed they partially intend to avoid government; the avoidance of government would be a serious mistake. He explained Alaska's history of public control over governmental functions. Both bills try to avoid this public control which would be a serious flaw. He noted that problems in our current system are present in SB 284: maintaining control by the providers and maintaining a market based system. He stated that SB 284 will not fix the current system. He suggested that income taxes, as in the Canadian system, would be a way of ensuring that those who are able to pay higher payments will do so. RUTH CALLEN, resident of Chugiak Senior Center, related her own experience to illustrate the need for universal coverage. JESSIE YEARSLEY, resident of Chugiak Senior Center, supported Ms. Callen's testimony and noted that many residents of the center only have Medicare and need help. Number 145 RON ZOBLE, testifying from Anchorage, explained that when he was an Assistant Attorney General advising the Division of Insurance and later when he dealt with Insurance and Anti-Trust matters the crisis in health care insurance system became obvious. He said that universal coverage was long overdue. He expressed his surprise that there is no control over health care rates. There should be some control over these rates. He noted that SB 284 does include some cost controls. He emphasized that the current system does not bring security to the individual. Mr. Zoble stated that there was more bureaucracy in the present system than could be in the proposed system. He related personal experiences illustrating the present health care insurance system's bureaucracy and its cost. He said that the free market does not work well with health care insurance. There are very few forms of insurance where true competition occurs in the state of Alaska. Most often health insurance companies in Alaska are based elsewhere and they want to insure those who will not get sick. He stated that self intervention into a pure free market is necessary. He expressed his disappointment with the pre-existing condition issue and the fact that other countries offer better health care than the U.S. even without health insurance. He suggested that the Senate give universal coverage or repeal their legislative health coverage. He said that it was time to act. MARJORIE LINDER pointed out that this health care crisis could happen to anyone. She related her personal experience with what she called "gotcha clauses" and suggested changing from premiums to taxes. She implied that this would alleviate the employers' budget and therefore, employees should ask for a raise. Number 266 DENNIS DEGROSS, representing the Alaska Public Health Association, stated that SB 284 is a much better alternative than SB 270. He believes that health care in Alaska is at a crisis. He emphasized that insurance companies are only interested in maintaining the status quo. He was surprised with the Anchorage Chamber of Commerce's stance toward health care reform. He explained that health care must be moved out of the business community due to its limitations on employers and employees. MARY ELLEN GORDIAN, Physician and Public Health Officer for the City of Anchorage, thanked the committee for their time and effort with the health care. She noted that Ms. Wong had stated the essence of the problem: people do have access to care but they do not have coverage. She explained that the current health care system does not benefit society because it does not make people productive. She expressed the need to have a system that allows individuals to receive needed care so that they can be productive members of society not just living members. She stated that SB 284 is a comprehensive and innovative approach to health care reform. She pointed out what she felt were important elements of SB 284: universal coverage, board representing the people, market based single payer system, and cost containment. She mentioned that SB 270 seems to lack cost containment. Number 354 MANO FREY, Executive President of the Alaska AFL-CIO, stated support for SB 284. He reiterated the belief that there is a crisis in health care. He opposed waiting for a federal plan to be imposed upon Alaska. He stated that SB 284 should be used as a starting point from which a comprehensive package could be developed. He urged the legislature to approve SB 284. KAY LEHDENPEREN, a public health nurse, appreciated all the work of the health reform committee. She noted that SB 284 emphasizes public health and a consumer partnership which SB 270 does not seem to address. She commended the senators involved who had shown vision and care for Alaskans. CHARLES MCKEE opposed SB 270. He referred to page 17 line 23 of SB 284 as a point of concern. He explained that the insurance companies do not seem to be interested in public involvement. He asked if the insurance companies do not want SB 284, how can we have FDIC. He questioned the guarantee fund of insurance companies. Number 468 BARBARA HUFF TUCKNASS, representing the Teamsters Local 959 and members of the Anchorage Chamber of Commerce, noted the struggle through their own health welfare trust with increasing health care costs. She stated support for comprehensive health care reform and a market driven single payer system. SB 284 will address current rising costs and provide needed health care coverage for the uninsured for which covered individuals pay. She urged passage of SB 284. DAVID ALEXANDER, Anchorage pediatrician and Alaska Medical Association on CHIPRA and member of the joint action health group, stated that he was pleased with the base SB 284 provides. He expressed concern with the funding, the benefit package, the Tort Reform, and specific cost containment issues. He preferred SB 284 over SB 270. He cited the Governor appointed members as the problem of SB 270 whereas SB 284 identifies members as individuals interested and experts in the medical field. Mr. Alexander referred to page 12 line 19 of SB 284 when recommending changing the language to avoid the trigger word problem. He suggested using the language on page 10 Section C. of the February 8, 1994 report of the Health System Reform Work Group. He expressed concern that the corporation being subject to appropriation on page 13 line 5 of SB 284 would be a problem. He stated that the implementation of dates for development of the uniform claims form could be done quicker than projected. He noted that there was no implementation date for the benefit package and recommended providing a date. HELEN BEIRNE, Director of Health and Human Services for the Municipality of Anchorage, commented that SB 284 was a good comprehensive bill. She identified the following as areas that should be maintained in SB 284: a seven member corporation, upgrading the data system, comprehensive health care plan, preventive care, long term care, and good time frames. Number 562 CHAIRMAN RIEGER noted that SB 284 and SB 270 would be before the committee again. He thanked everyone for participating in the teleconference.