CHAIRMAN RIEGER called the Senate Health, Education and Social Services (HESS) Committee to order at 1:45 p.m. He introduced SB 284 (COMPREHENSIVE HEALTH INSURANCE ACT) and SB 270 (COMPREHENSIVE VE HEALTH CARE) as the only business before the committee. He noted that public testimony would be heard on these two bills. JUSTINE MUENCH, representing the Alaska Nurses Association, stated support of universal coverage for all Alaskans. The Association supports a single payer approach to ensure a basic set of benefits for every citizen. She welcomed the development of the corporation which would control costs, increase coverage, and provide a structure for addressing the health care needs of the state. Under SB 284, she applauded the recognition of the need for strong public health. Ms. Muench expressed concern that as written, SB 284 does not clearly prevent the exclusion of coverage for any reason. She asked for the committee's careful consideration of any amendments that would ensure universal and comprehensive coverage. She noted that the Alaska Nurses Association supports the efforts to include all appropriate providers in the cost reimbursement mechanism. The incentives provided for primary care providers, which will significantly impact accessibility for rural populations, is also supported by the Alaska Nurses Association. Ms. Muench acknowledged the required public involvement under SB 284; however, she urged the committee to add language to demonstrate a commitment to greater consumer representation on the board itself. The Alaska Nurses Association endorses SB 284. Number 090 SENATOR DUNCAN thanked Ms. Muench for her testimony. He explained that the language was not intended to exclude anyone, therefore it should be clarified. JUSTINE MUENCH said that the language was fairly clear on employment, but the pre-existing conditions portion seems a bit vague. SENATOR DUNCAN noted that a pre-existing condition would not be a reason to exclude anyone because SB 284 does state that every resident of the state would have the insurance policy of the corporation. SENATOR DUNCAN said that the seven member board should ensure that there are consumers present. He explained that "experts" was not intended to imply that they were health care providers. He suggested that the term knowledgeable would be better. STEVE LARSEN, American Federation of State County and Municipal Employees, noted that he had sent a letter of support for SB 284. He expressed support for universal coverage and the single payer system. He related his experience that health care was a major problem when negotiating a collective bargaining agreement. He applauded the efforts of the committee. JOHN SHAFFER, representing the State Legislative Committee (SLC) and the American Association of Retired Persons (AARP), stated that for many years SLC and AARP have placed health care reform as the main priority in their legislative program. Increased health care costs effect every citizen. He emphasized that now is the time for action not the time for additional study. He urged movement of SB 284, especially before the federal government imposes their own plan. Number 188 MIKE BROGAN, Licensed Insurance Representative, testifying for himself stated that universal access should be considered. There are two mechanisms available for universal access: the individual high risk pool, and the small group pooling reform program. He noted that the individual high risk pool should be stripped of the pre-existing conditions clause. He expressed the need to have provisions for an access mechanism, mainly to provide security for uninsurables within the health care reform. He explained that the economic incentives should be left in place so that the individual can determine their own deductibles and take responsibility of their own affairs. CHAIRMAN RIEGER asked what firms in Alaska offer individual policies. MIKE BROGAN said that Principal Mutual, Golden Rule, and Blue Cross were the primary firms he knew. SENATOR ELLIS asked if Mr. Brogan believed that the individual high risk pool and the small group market reform did not solve the problem of universal access. In his opinion, everyone has access and the problem is that individuals cannot afford coverage. He asked if the problems with the individual high risk pool and the small group market reform were corrected, would that solve the health care problem. He asked what was Mr. Brogan's opinion of rate review authority. MIKE BROGAN informed the committee that the individual high risk pool has a six month pre-existing condition clause which seems to defeat the purpose of having a high risk pool. He suggested higher contributions to the pool so that the pre-existing conditions can be covered or the state could work out a relationship with the company. He pointed out that the small group pool does not allow exclusion of anyone with a high risk; however, the enabling legislation creating the pool for the insurance companies to fund those high risks has not been provided. Regarding the rate review authority, there should not be a loophole. He said that the rates should be public and fair. SENATOR ELLIS asked Mr. Brogan for which companies he writes health insurance policies. MIKE BROGAN said he represented Blue Cross, Principal Mutual, New York Life, Guardian, AETNA, and Golden Rule. Number 294 JOHN RILEY, Alaskan Academy of Physicians Assistants, stated support for SB 284. He noted that SB 284 addresses the increasing costs of health care and the 15 percent of Alaskans who do not have health care coverage. He pointed out that SB 284 will control increases in cost by setting a target budget and by encouraging the training and attention of lower cost primary care providers. The notion that lower income Alaskans have access to Medicaid or general medical relief is a myth; 30,000 Alaskans who live 200 percent below the poverty level have no health coverage. He also negated the myth that those without health care are non-productive and living off the system; 90 percent of those who are uninsured Alaskans are working people and their dependents. He related some of the health care problems he sees on a daily basis. He stated that many who do receive charity care often only receive it when the problem has reached a critical level. He urged taking action on SB 284. GREG DEVEREAUX, Deputy Director of the Washington Federation of State Employees, testified on behalf of the American Federation of State County and Municipal Employees International. He stated that the AFSCME International Union supports the concept of single payer health care reform. He discussed the Clinton plan. He noted the importance for Alaska and other states to consider health reform options in order to have greater leverage when and if the national plan passes. He commended the work done on SB 284. He pointed out Alaska's unique geographical and market place health care obstacles: the dispersed low density population and the transportation issues. He said that it would be unlikely that a competitive health care market place would develop in much of Alaska, therefore, one state level entity makes more sense. The establishment of the Alaska Health Insurance Corporation would ensure the establishment of a minimum benefit package, expenditure targets, and long term examination of the provider network which are all critical to cost containment. He noted that the data section in SB 284 would permit the corporation to make better informed decisions regarding utilization and cost containment. Mr. Devereaux stated that generally SB 284 merges the best of the managed care model with the strengths of the single payer system. AFSCME International supports SB 284. Number 389 TERESA LYONS, President of the Fairbanks District of the Alaska Nurses Association, testified in support of SB 284 with consideration to reviewing the composition of the board. The board should be consumer-driven with access to knowledgeable advisors. She also stated that the pre-existing conditions clause are not acceptable. She explained that just because everyone may be covered by some sort of insurance plan does not guarantee that health care services will be available in a timely, cost effective, and quality manner, especially with the current delivery system. She said that the current health care system is an illness driven system. She discussed the access problems in Fairbanks. She urged support of SB 284 in order to enter the twenty-first century as healthy, educated, and productive individuals. CHAIRMAN RIEGER asked what would be present in a wellness driven system as opposed to an illness driven system. TERESA LYONS said that a wellness driven system would be willing to pay for early diagnosis. Ms. Lyons noted that such a system would look at substance abuse from the source not the symptoms. Ms. Lyons also noted the need to review the issues of violence. The benefits package should be geared toward prevention and paying in the beginning rather than late in life. Number 443 MARLENE LEAK stated that she believed that health care problems are really a Congressional crisis. She referred to information she had sent the committee. She indicated that cost shifting due to Congress' passage of COBRA increased health care costs. She pointed out that SB 270 and SB 284 suggest that cost shifting would be allowed at the state level under view of the state established commission. She did not believe that would be necessary, especially when costs are increased due to the creation of a large state bureaucracy. She stated that the creation of a bureaucracy increases costs and bureaucracy, while service goes down. Ms. Leak pointed out that the board in SB 270 would determine if claims were legitimate while it also determines what services are covered. The board's dual responsibility for judicial and executive functions would create a conflict of interests. She opposed SB 270 and SB 284. She emphasized the need to address the acts of Congress such as ERISA in order to support private sector health care where there is accountability and responsibility. She expressed that the best value for the patient would occur when decisions are made by the patient and the physician, not by bureaucrats. WALLY KLINGLEHUT opposed SB 270. He said that there had been enough study on health care. SB 284 is a step in the right direction. He commended the work group on SB 284. He also noted the need for consumer involvement. He related his own health experiences when stating that SB 284 would address health care problems. Number 547 PATTI HONG, Registered Nurse, supported SB 284. She explained that universal coverage and direct access to the full range of appropriate providers would be an effective strategy to achieve what she saw as the ultimate goal, a healthy population. She stated that the data collecting aspect of SB 270 has already been collected. Furthermore, SB 270 does not commit to universal coverage, long term care, or wellness and prevention. She urged the legislature to pass SB 284. SENATOR SALO asked if Ms. Hong believed that the study called for in SB 270 was redundant. PATTI HONG said yes. Ms. Hong noted her belief that many of those on the task force did not originally support the single payer approach, but after the months of input from a variety of sources the task force did support the single payer approach. CHAIRMAN RIEGER asked Ms. Hong if she knew what the financial mechanism would be, the amount per capita, or the forum in which the money would be collected. PATTI HONG deferred to the findings of the task force. She did not believe that the task force had an actual dollar amount. She noted that one of the duties of the insurance corporation would be to formulate such a plan. TAPE 94-14, SIDE B Number 591 SENATOR DUNCAN stated that the question of the cost of delivering health care under the single payer system and the inquiries regarding cost savings under the single payer system are good questions. He pointed out that the task force had an estimated savings of $200 million a year or $1.2 billion over ten years. The Congressional Budget Office reports and the General Accounting Office (GAO) reports regarding the savings under the single payer system at the federal level have identified tremendous savings. He noted that the last GAO report estimated that due to the single payer system a $114 billion reduction in the deficit would be present by the year 2003. Senator Duncan discussed the Vermont evaluation of the single payer system versus the multiple payer system in delivering health care. Solutions for Progress, the research firm who did the Vermont cost analysis, estimated tremendous savings under the single payer system. He emphasized that in general, there are tremendous savings overall under the single payer approach to providing health care due to administrative savings, universal access, and cost controls. PAUL WORREL, President of the Anchorage Medical Association and physician, stated opposition to SB 284. He said that many of the doctors in Anchorage had just found out about the bill and were opposed to its content. He believed that the Anchorage Medical Society would probably change its support of SB 284. He explained that he was in the process of collecting the replies of an opinion survey regarding SB 284; he stated that the majority were opposed to the bill. Dr. Worrel expressed concern that SB 284 does not have any funding in place. He was concerned that his industry would be giving up pricing control with nothing in return if funding did not develop, eventually; they would be giving up their economic future. He explained that the majority of physicians do not have any confidence in the government's ability to solve the problems or the cost of health care. Most of these physicians have worked in government run hospitals during their training years and they complain that these hospitals are poorly run. He did not want such sloppy management to spread to private hospitals. Number 520 Dr. Worrel cited the last paragraph of SB 284 as a point of concern. He also pointed out that page 2 of SB 284 presents the underlying premise of the bill which places physicians responsible for cost controls. He said that to single out physicians for price control is not a real solution. The hypothesis that physicians have a lot of control over there overhead is false. He referred to page 11, line 22 which does not allow the physician the choice of who to see or not to see. That would eliminate an important legal right of the physician. He explained that both the physician and the patient should be able to choose who they would or would not see. Dr. Worrel suggested that the committee use the Tort Reform as a starting point to decrease costs. He expressed the desire that SB 284 be kept in committee. He supported the concept of SB 270. Number 469 SENATOR ELLIS asked Dr. Worrel if he wrote an opinion piece about health care reform in the Voice of the Times . PAUL WORREL said yes. SENATOR ELLIS asked if that opinion piece concluded that health care reform was a plot by Democrats and President Clinton to get re-elected and stir the country up. PAUL WORREL did not agree. Dr. Worrel said that the health care issue is very complicated with a historical background. SENATOR ELLIS encouraged everyone to read Dr. Worrel's article. PAUL WORREL informed the committee that another article would be published in a week or so. This article suggests that many hospital expenses could be decreased by eliminating the federal government rules from the hospitals. SENATOR ELLIS asked if Dr. Worrel was unaware of the physicians and health folks participating in the discussions of the task force and other health related groups. He asked if Dr. Worrel was unaware of the effort to create a change in health care. PAUL WORREL vaguely recollected the meetings and such. Dr. Worrel said that the physicians that were involved were not known by he and many other physicians. Dr. Worrel suggested that changes to the health care system should be done through rational thinking with real numbers and real solutions. SENATOR ELLIS clarified that Dr. Worrel believed that the financial figures being suggested regarding health care were insignificant, but that Tort Reform would be a help in addressing the health care problem. He encouraged Dr. Worrel to get up to date on the numbers and their proportions. PAUL WORREL explained that there are a lot of opinions on the exact figures. He said that no one has actually measured the cost of health care. He discussed his interaction with Senator Stevens regarding federal information for analyzation of this issue. He noted that his analyzation was different. SENATOR ELLIS agreed that Dr. Worrel had analyzed the facts and figures differently. Number 381 SENATOR DUNCAN referred to Section 13 when clarifying that the 1.5 percent increase is the cost increase on top of other factors. PAUL WORREL did not believe the language was to that effect. SENATOR DUNCAN pointed out that SB 284 said "not withstanding" which means in addition to the 1.5 percent increase. PAUL WORREL said he would be glad to work with the committee on these problems. SENATOR DUNCAN asked Dr. Worrel how long he had been president of the Anchorage Medical Association. PAUL WORREL said he had been president for a couple of months. SENATOR DUNCAN noted his presence at the Anchorage Medical Association's meeting that voted to support SB 284. Senator Duncan pointed out that the physicians who worked on SB 284 have been involved in the Anchorage Medical Association for years and are well known. Senator Duncan asked Dr. Worrel if he was a member of Alaska State Medical Association (ASMA). PAUL WORREL said yes. SENATOR DUNCAN informed Dr. Worrel that ASMA supported SB 284. PAUL WORREL stated that many physicians oppose SB 284 and the votes referenced by Senator Duncan could change. JOHN HANCHETT, President of the Alaska Association of Life Underwriters, stated that the Alaska Association of Life Underwriters support health care reform, affordability, the Tort Reform, and improved access. He stated that they oppose SB 284; there is no need for more bureaucracy to further raise health care costs. He noted the need for realistic funding mechanisms before legislation is passed that could further current deficit problems. He explained that Vermont and its solutions for health care are different than Alaska. SENATOR ELLIS asked if Mr. Hanchett supported SB 270 and its proposed rate review authority for health insurance companies. JOHN HANCHETT indicated that he had not reviewed SB 270 in depth. Mr. Hanchett stated that he would be in favor of rate review authority. Mr. Hanchett noted that they represented the people of Alaska who need the health care reform and the taxpayers who will incur the cost. SENATOR ELLIS asked for which companies Mr. Hanchett writes policies. JOHN HANCHETT said he wrote policies for Blue Cross, AETNA, Principal Mutual, Golden Rule, and New York Life. SENATOR DUNCAN clarified that the Vermont study reference was intended to point out that the study indicated tremendous savings in the single payer system. JOHN HANCHETT stated that he opposed the single payer system. STEVE LEBRUN, AETNA Account Manager, noted that AETNA has the largest share of the Alaska health insurance market. He said that AETNA agrees that changes are needed in health care and access system and that Alaska is different from other states. Managed care principles could and would work in urban Alaska. He expressed the belief of AETNA that federal legislation is likely to pass this year and some requirements will effect every state, even Alaska. SB 270 has advantages to approaching the health care issue. He stated that SB 270 would allow the legislature to know: (1) the federal requirements to be applied to all states and those requirements left to the discretion of the states before finalizing their own plans; (2) which specific health care benefits would be guaranteed or required by Congress; (3) how universal care can, should, or would be financed at the federal level; and (4) an estimate of the cost of additional health care reform recommendations made by the proposed State Health Care Commissioner. Mr. LeBrun explained that when more information is available, the effects of federal and state health care reform legislation on individuals and Alaskan businesses will be clearer. He noted immediate improvements to Alaska's health care system as recommended by SB 270: (1) reduction of administrative costs by requiring uniform claims forms for providers and consumers; (2) design and implementation of a comprehensive data collection system in order to improve financial and quality of care decisions; (3) formation of voluntary insurance pools to achieve better rates and purchasing power while lowering the costs of small business employees; (4) requiring an annual public health plan to improve coordination among public health agencies, promote primary and preventive care, and to set public health objectives; and (5) reduction of health care costs and the utilization impact through Tort Reform. Mr. LeBrun pointed out that the Health Care Commission should focus on such long term objectives as the development of alternative benefit packages and costs for universal care with submission to the next legislature, and development of recommendations for additional legislative action which would be compatible with federal legislation but tailored to Alaska. Mr. LeBrun stated that SB 284 is premised on the conclusion that Alaska would appoint a commission who would be responsible for decision making and financing of health care under a single payer system. The single payer system would give the Commission the power to decide what benefit package should be available to all Alaskans, who would pay for it and how the payment would be distributed among individuals. The single payer system could act as its own insurer and claims payer which would replace the role of private insurers. He also noted that the single payer system would give the Commission the power to regulate health care provider rates if providers do not meet statewide expenditure limits as set by the Commission. Finally, this system would allow the establishment of health care spending limits including private expenditures if the voluntary limits fail within the specified time period. He stated that SB 284 goes too far with governmental control of Alaska's health care system with no assurances that the new system would be better than the one it replaces. There is too much responsibility given to the Commission with no future thought, trade offs, financing impacts or consequences. Number 152 SENATOR ELLIS asked if AETNA was a member of Health Insurance Association of America (HIAA). STEVE LEBRUN said no. SENATOR ELLIS asked if AETNA supported the rate review authority. STEVE LEBRUN stated that any rate review procedure should be consistent with the prevailing approach used by most state insurance departments. Mr. LeBrun expressed limited concerns with the two tier review approach in SB 270, but they would be supportive of reasonable rate regulations. SENATOR ELLIS asked if they supported SB 270, but were going to attempt to change the portion relating to rate review. STEVE LEBRUN offered to provide written comments on rate review. Mr. LeBrun was not opposed to the general concept of rate review at the level practiced in other states. SENATOR DUNCAN asked if Mr. LeBrun supported SB 270 and the requirement that they come before the next legislature with a defined benefit package. STEVE LEBRUN said yes. SENATOR DUNCAN stated that even SB 270 realizes that a benefit package cannot be designed in four or five months. SENATOR DUNCAN pointed out that Mr. LeBrun testified that the Corporation would decide upon its own the benefit package that would be available to Alaskans which is at odds with Mr. LeBrun's earlier statement that the benefit package would be controlled by federal requirements as to what would be in a benefit package. STEVE LEBRUN stated that the federal picture has not become clear. In general, there will be a move toward defining a comprehensive benefit package whether the federal government will exercise authority or not. SENATOR DUNCAN asked if both bills approach a comprehensive data system and the collection of comprehensive data on health care in a similar manner. STEVE LEBRUN said that both bills are similarly seeking comprehensive data, cost, and utilization factors. Number 049 HAMLIN FAURE, Social Work student at UAA, stated that as a student intern for the Governor's Council on Disabilities and Special Education she has been following health care reform in Alaska for the Council's subcommittee. This has increased her awareness of health care issues that face disabled individuals and their families. She noted that she was not speaking on behalf of the Council or its subcommittee. She said that consumer representation on any health care commission or corporation is important. Consumer Representation would ensure that health care concerns of the consumer are considered and acted upon. Furthermore a feeling of ownership would be promoted with consumer representation. She appreciated the inclusion of consumer representation in SB 284. Ms. Fore pointed out that universal coverage is essential to those with disabilities. Often disabled individuals have complex and specialized medical needs which increases the importance of provider choice and full coverage for services. A benefit package that addresses the needs of disabled individuals is of major importance. She expressed appreciation that SB 284 specifically includes long term health care provisions. She noted the importance of public involvement of all Alaskans and their feeling of ownership. Without public ownership, reforming Alaska's health care system is nearly impossible. She asserted that input from disabled individuals when defining a benefit package is necessary in order to fill the gaps in services currently in the system. She encouraged anyone interested in health care concerns of disabled individuals to contact Kathy Fitzgerald, Chair of the Governor's Council on Disabilities and Special Education. TAPE 94-15, SIDE A Number 008 BONNIE NELSON, representing Alaska Public Interest Research Group, stated support for SB 284 conditional upon the principles AKPIRG had suggested. She emphasized that they believe comprehensive universal coverage is a right. Both AKPIRG and the U.S. Public Interest Research Group believe that the single payer system is the only way to provide guaranteed coverage. She pointed out that there is no assurance of universal coverage in SB 270. She stated that pre-existing conditions clauses currently in many statutes are discriminatory. She explained that businesses often face increased claims and premiums when they hire disabled individuals. There should be incentives provided to businesses and municipalities when they hire the handicap. Ms. Nelson noted that consumer control in the composition of the corporation is very important. She stated that they believe that the presence of a health care provider or anyone in a health related field on the corporation would have a conflict of interest. She explained that disabled individuals or parents of disabled individuals have valuable life experience that is often more ethically important than a health care provider or legal professional's expertise. She asserted that the public process of decision making has to be done by those who have had or been with or know the emotions of the experience. She is trying to come up with language to define a consumer that would include the disabled. She said that a board of disabled individuals would probably arrive at the single pool faster due to their vested interest. Number 129 Ms. Nelson believed that many national disability coalitions are supporting the single payer concept because it is inexpensive, good for business, and it encourages businesses to hire disabled individuals. The single payer system provides equality and comprehensiveness. She explained that disabled individuals should not be considered a special interest group, but rather the litmus test for any reform that passes. Ms. Nelson pointed out that AKPIRG supports the notion that regulations are the responsibility of the state not the federal or local government. She stated that there could not be any free- riders. Disabled individuals want to pay their fair share. She expressed concern with high payments and co-payments. She noted that successful developed and industrialized countries use cost sharing from the wealthy in order to control costs. She suggested that cost sharing from those at the top should be reviewed for Alaska. Most disabled individuals are willing to pay the same as wealthy individuals if that means higher premiums spread in a single pool concept in order to eliminate high deductibles and co- payments. She reiterated the need for the young and healthy to think about what would happen if they were in an accident or became ill. She noted that the Tort Reform takes money from individuals at the bottom, the poorest individuals. Number 206 GORDAN EVANS, representing the Health Insurance Association of America (HIAA), offered to present his written testimony. HIAA supports SB 270 with some changes. He noted that HIAA supports the following building blocks of comprehensive health care: measurable quality and outcome standards, physician choice, and administrative simplification. Reform must shift from an emphasis on sickness and repair to an emphasis on health and wellness. He pointed out that HIAA does not agree with the sponsor of SB 284 placing the government as the most appropriate mechanism for delivering health care to Alaskans. HIAA supports the government as an enabler and not a doer. He stated that HIAA believes that everyone is entitled to health care coverage and in order to accomplish this goal the employer based system should be built upon to create a consumer responsive prevention focused affordable and cost effective health system. A government run, single payer system would not provide the service or access to technology that most Americans expect and deserve. He said that the Canadian style single payer public health insurance is not the solution. He discussed the problems Canada's health care system is facing such as the incredible waiting lists for surgery and treatments which leads to many Canadians seeking health care in the U.S. He stated that there is no reason to assume that the U.S. government will financially restrain health care when it has failed to restrain other government run programs. He noted that the position of HIAA is paralleled by Mr. LeBrun's testimony. SENATOR DUNCAN clarified that SB 284 does not refer to free health care but rather a much more cost efficient and effective way to pay for health care. SB 284 does not address a Canadian style system. He noted that SB 284 speaks to a uniquely Alaskan system. He pointed out that the HIAA expresses concern about health care, but no action has been taken by the insurance industry to assure that there are not increases in the number of uninsured Americans or increases in costs. He asserted that if there is any crisis in this country, it would be an insurance crisis which SB 284 addresses. Number 275 GORDAN EVANS noted the small group employer bill that Senator Duncan voted for last year. That legislation would address many of the health care problems when it goes into effect. He stated that SB 284 does not have a financial system. CHAIRMAN RIEGER proposed that Mr. Evans return for further testimony in the future. He asked Mr. Walsh to be prepared to testify on Friday, March 11th, on the fiscal notes of SB 270 and SB 284, the uniform claims form, and the regulation of insurers. SENATOR DUNCAN asked if Mr. Walsh, the Division of Insurance had been directed to prepare a detailed fiscal note on SB 270. DAVE WALSH said no, they had prepared a fiscal note for only their portion. SENATOR DUNCAN said that fiscal notes should be prepared by the same people. Senator Duncan requested that the Division of Insurance be directed to do a fiscal note on SB 270; currently the fiscal note only addresses rate review.