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[The State of Alaska Health Resources and Access Task Force] [loose, letter and booklet]
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56
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�Alaska State
Legislature
Health Resources & Access Task Force
State Capitol • Juneau, AK 99801-1182
(907) 465-2933• (907) 465-3234 Fax
January 11,
1993
Dear Alaskan,
The Health Resources and Access Task Force, created by the Alaska
State Legislature i n May 1991, was charged with the responsibility
for developing a strategy that would provide health care coverage
for a l l Alaskans and that would contain r i s i n g health care costs.
Between September 1991 and November 1992, the Task Force held
fourteen two-day meetings. They labored d i l i g e n t l y to examine the
health care financing and delivery problems facing Alaskans and to
identify the appropriate strategies for making quality health care
available and affordable to a l l .
In carrying out t h e i r r e s p o n s i b i l i t i e s , the Task Force reviewed the
relevant
health services research and
related s c i e n t i f i c
information, examined the relevant experiences i n other states and
countries that have enacted health care reform measures, held
community meetings/public
hearings, heard presentations from
interest groups, conducted public opinion surveys, and reviewed
written comments from numerous individuals and organizations.
Their work lead them to develop fourteen major findings, a number
of important subfindings, and a comprehensive reform strategy
designed to improve the health of Alaskans by making health care
coverage available and affordable to a l l . Both t h e i r findings and
recommendations are included i n t h e i r f i n a l report which i s
enclosed.
The
Task
Force
will
be
presenting
their
findings
and
recommendations to the Governor and Legislature in Juneau on
January 27 and 28, 1993. A s p e c i f i c schedule and agenda for these
presentations i s not yet available.
For further information
regarding these presentations, please c a l l 465-2933.
(continued, next page)
JttCBVEO JAM 15 m
�Page 2
The Task Force w i l l sunset on February 1, 1993. Their o f f i c e w i l l
close on February 15, 1993.
Thereafter, a l l requests f o r
i n f o r m a t i o n should be made through t h e o f f i c e s o f e i t h e r Senator
Jim Duncan or Senator Johnny E l l i s who served as t h e Task Force's
Co-Chairs:
Senator Jim Duncan
Address:
Phone:
State C a p i t o l
Juneau, Alaska
99801-1182
465-4766 (session/interim)
Senator Johnny E l l i s
Address:
State C a p i t o l
Juneau, Alaska
99801-1182 (session)
3111 C Street
Anchorage, Alaska
Phone:
99503 ( i n t e r i m )
465-3704 (session)
I t has been my pleasure t o serve as the p r o j e c t d i r e c t o r f o r t h e
Task Force. On behalf of the Task Force, I would l i k e t o thank you
f o r your i n t e r e s t i n these important issues.
For other i n f o r m a t i o n (through February 15), please c a l l 465-2933.
Sincerely,
Nancy Cornwell
Project Director
enclosure: f i n a l r e p o r t
�THE STATE OF ALASKA
HEALTH RESOURCES AND ACCESS TASK FORCE
FINAL REPORT
to
the Governor and Legislature
January 1993
Alaska State Legislature
Health Resources and Access Task Force
State Capitol
Juneau, Alaska 99801-1182
�THE STATE OF ALASKA
HEALTH RESOURCES AND ACCESS TASK FORCE
FINAL REPORT
to
the Governor and Legislature
January 1993
Alaska State Legislature
Health Resources and Access Task Force
State Capitol
Juneau, Alaska 99801-1182
�MEMBERS
Legislative Branch
Public Members
Senator Jim Duncan
Co-Chair
Mano Frey
Representing Labor Organizations
Senator-Elect Johnny Ellis
Co-Chair
Roxanna Horschel
Representing Private Employers
Representative Mark Boyer
David Mather, Dr. P.H.
Representing Non-Profit Organizations
Senator Jalmar Kerttula
Representative Mike Navarre
Jerry Near
Representing Health Insurers
Senator Robin Taylor
Patricia O'Gorman
Representing Medically Indigent
Executive Branch
Karen Perdue
Representing Consumers
Commissioner Nancy Bear-Usera
Department of Administration
Commissioner Theodore Mala, MD, MPH
Department of Health & Social Services
Commissioner Glenn Olds
Department of Natural Resources
STAFF
Nancy Cornwell
Project Director
Bonnie Gruening
Administrative Assistant
Sister Dona Taylor
Representing Providers
Rodman Wilson, M.D.
Vice Chair
Representing Providers
CONSULTANT
Lawrence Bartlett, Ph.D.
Director
Health Systems Research, Inc.
�The Health Resources and Access Task Force wishes to acknowledge the
assistance of many people and organizations.
We would like to recognize the 17th Alaska State Legislature for creating the
Task Force and for dedicating the necessary resources for our work. We also offer
our appreciation to Senator Virginia Collins who served as an original member of the
Task Force until she resigned in September 1992 and Senator Arliss Sturgulewski who
attended and participated in many of our meetings.
Several members of the Executive Branch actively participated in the Task
Force meetings, including Deputy Commissioner of Health and Social Services Jay
Livey, Deputy Commissioner of Administration Roberley Waldron, and Director Dave
Walsh and Deputy Director Thelma Snow Walker of the Division of Insurance. In
addition, numerous Executive Branch staff provided important information to the Task
Force, including Kim Busch, Deb Erickson, Gordon Landes, Peter Nakamura, M.D.,
Jack Nielson, Larry Streuber, Chris Ulmann, and Brad Whistler. Both Janet Clarke
and Larry Streuber deserve a special thanks for assisting the Task Force in securing
initial resources for our office and for the services of the Institute of Social and
Economic Research.
Many private organizations including the twenty-nine which made brief
presentations to the Task Force deserve our recognition. Several made considerable
contributions to our process including Steve LeBrun of Aetna Life Insurance Company,
Harlan Knudson and Garrey Peska of the Alaska State Hospital and Nursing Home
Association, and well as many representatives of the American Association of Retired
Persons, the Green Party, and the League of Women Voters who consistently
followed our deliberations and asked questions of us.
Worthy of special acknowledgement are the hundreds of member of the public
who participated in our community meetings and public hearings, submitted written
comments, and completed our surveys. Their stories reminded us of the personal
struggles people face in trying to gain access to health care. We would also like to
thank the Anchorage Daily News for publishing our public opinion survey on their
editorial page. As a result, hundreds of Alaskans responded.
We are grateful to Lawrence Bartlett, Ph.D., Director of Health Systems
Research, Inc. who served as our consultant and provided us with invaluable research
and guidance throughout our process. We would also like to thank Scott Goldsmith,
Ph.D., with the Institute of Social and Economic Research for the reports he prepared
for us.
And finally, a special thanks to Nancy Cornwell, our project director, whose
dedicated assistance with all facets of our work added immensely to our success, and
to Bonnie Gruening, our administrative assistant, who responded to many, many
requests and kept all the information coming.
�TABLE OF CONTENTS
EXECUTIVE SUMMARY
CHAPTER ONE:
CHAPTER TWO:
II
BACKGROUND AND PURPOSE
OF THE TASK FORCE
1
TASK FORCE FINDINGS
3
CHAPTER THREE: GUIDING PRINCIPLES
37
CHAPTER FOUR: TASK FORCE RECOMMENDATIONS
39
A.
OVERVIEW
39
B.
TASK FORCE RECOMMENDATIONS
41
C.
IMPLEMENTATION TIMETABLE
75
REFERENCES
79
LIST OF APPENDICES
83
�EXECUTIVE SUMMARY
The Health Resources and Access Task Force was created in 1991 by the
Alaska State Legislature and charged with the responsibility for developing a strategy
that would provide health care coverage for all Alaskans and that would contain rising
health care costs. Over the past sixteen months, the Task Force has labored
diligently to thoroughly examine the health care financing and delivery problems that
exist in the state and to identify the appropriate strategies for making quality health
care available and affordable to all Alaskans. In carrying out its responsibilities, the
Task Force carefully examined a significant amount of data and research on health
care issues both in and outside of Alaska, held numerous community meetings and
public hearings, conducted surveys of the Alaskan public, and received and reviewed
written comments from numerous individuals and organizations across the state.
The Task Force found the health care financing and delivery systems in Alaska
to be in a state of crisis. Specifically, the Task Force found that:
•
Over the past dozen years, health care costs have grown out of control,
far outstripping the growth in the overall economy. Unless steps are
taken to address this problem, future costs can be expected to continue
to spiral upward.
•
Despite the significant amount of health care dollars spent in Alaska, a
significant portion of the state's population-over 76,000 persons-have
no health care coverage. Not only does this lack of coverage have a
negative impact on the health of these persons, but it also results in
higher health care costs to those of us who do have insurance.
•
There are many problems inherent in our current health care financing
system that result in so many uninsured Alaskans. For example, many
insurers who sell coverage to small businesses will refuse to insure or
charge unaffordable rates to those businesses and individuals who most
need health care protection.
•
Significant problems exist within the state's health care delivery system.
For example, in some areas of the state people lack access to even the
most basic of health services, while in other areas a lack of coordination
among providers results in the unnecessary duplication of services.
•
The State does not have the proper policies in place to assure a strong
and stable public health infrastructure.
•
The manner in which we resolve medical malpractice claims is in need of
improvement.
�As a result of the above problems, the Task Force also found that:
•
The health status of Alaska's population is among the worst in the
nation; and
•
A significant portion of the state's population believes that fundamental
reform is necessary to correct the problems in the state's health care
financing and delivery systems.
The Task Force agrees with the message it received from the Alaska public
calling for a significant overhaul of the state's existing health care financing and
delivery systems. We recommend the implementation of a comprehensive health care
reform strategy designed to improve the health of the Alaskan people by making
health care coverage available and affordable to all. The specific components of this
strategy include:
•
The establishment of a statewide health care expenditure limit to bring
skyrocketing costs under control and make health care affordable once
again;
•
The establishment of a single payer system under which health care
coverage will be available to all Alaskans at no additional increase in
total spending. While a single payer system is being developed and
implemented, the Task Force has also recommended a series of interim
measures designed to provide an immediate increase in access to care
for many uninsured and underinsured Alaskans;
•
A series of measures designed to improve the availability, efficiency and
coordination of health care services throughout the state;
A commitment to provide a strong public health infrastructure; and
•
Improvements in medical malpractice claims resolution.
The Task Force firmly believes that enactment of these recommendations will
improve the availability, affordability and quality of health care provided in Alaska. As
a result, Alaskans will live healthier, happier, and more productive lives.
�BACKGROUND AND PURPOSE OF THE TASK FORCE
During the 1991 legislative session, the Alaska State Legislature passed
Legislative Resolve 45 which created the Health Resources and Access Task Force.
The primary purposes of the Task Force were:
1.
To design a cost-efficient program that allows access to a basic level of
health care services for all state residents;
2.
To continue the work of the Health Care Cost Containment Task Force in
seeking ways to achieve savings in the cost of health care in the state;
and,
3.
To define a strategy for implementing a health care program covering all
Alaskans and a strategy to contain the costs of health care in the state.
(The resolution creating the Task Force includes fourteen specific tasks related to
these primary purposes. See Appendix A for resolution.)
The Health Resources and Access Task Force consists of seventeen members
including three members of the Senate, three members of the House, three members
representing the executive branch, and eight public members representing health care
providers (two members), the medically indigent, employers, health insurers, nonprofit
organizations, consumers, and labor organizations.
The Task Force, created in May 1991, sunsets on February 1, 1993. The Task
Force held fourteen two-day meetings between September 1991 and November 1992.
During these meetings, we developed an understanding of the health care access and
cost problems facing Alaskans by reviewing relevant health services research and
related scientific information. Task Force members also drafted "guiding principles"
which we followed in the development of our recommendations. In addition, we
reviewed the full array of possible approaches for addressing identified problems,
including the relevant experience of other states and countries with health care reform
measures. For many of these approaches, we explored how, if implemented in
Alaska, they would change our current health care system.
As a means of getting public input from Alaskans on their health care problems
and recommendations for reform, the Task Force heard brief presentations from
twenty-nine organizations including advocacy groups, professional service and other
provider organizations, private and public sector employers, and business groups. We
also held community meetings and public hearings in Anchorage, Bethel, Cordova,
Delta Junction, Dillingham, Fairbanks, Glenallen, Haines, Homer, Juneau, Kenai,
1
�Ketchikan, Kodiak, Kotzebue, Nenana, Nome, Palmer, Petersburg, Seward, Skagway,
Soldotna, Sitka, Tok, Unalaska, Valdez, Wasilla, and Wrangell. In addition, 495
Alaskans responded to two separate public opinion surveys distributed by the Task
Force. And finally, many Alaskans provided invaluable written comments to us.
(Written comments from interest groups and individuals, summaries of the community
meetings/public hearings, and the survey results are published in a separate
document.)
One important part of Alaska's health care system which we excluded from our
recommendations was long-term care. During our early meetings, we discussed the
daunting scope of the Task Force's charge. We also noted that the financing
problems for primary, preventive and acute care are significantly different from those
for long-term care. The Task Force felt that our principal charge was to address the
problems of spiraling health care costs and lack of health care coverage for primary,
preventive and acute care services. However, our decision to exclude long-term care
from our recommendations should not be interpreted as our believing that this problem
is insignificant. On the contrary, the Task Force concluded that the long-term care
problems facing Alaskans are so significant, and the effort required to address them
so large, that the State should pursue those issues in an arena dedicated solely to
that subject.
The Task Force published an interim report of our findings in January 1992 and
interim recommendations in March 1992. This report represents our final findings and
recommendations.
Chapter Two of this report presents the Task Force's major findings and subfindings. Chapter Three contains our guiding principles, and Chapter Four describes
both the Task Force's short-range and long-range recommendations for health care
reform in Alaska.
�TASK FORCE FINDINGS
Between September 1991 and November 1992, the Task Force examined the
health care access and cost problems facing Alaskans. Our examination led us to a
number of important findings, which we have summarized in this chapter. We also
highlight and discuss a number of important subfindings within each of these areas.
And finally, throughout the chapter we have included excerpts from the letters and
testimony we received that illustrate in very human and personal terms the problems
that Alaska's health care financing system has created for many of its people.
Finding #1: In the 1980s, health care costs in Alaska grew at a rate far
above other measures ol the state's economy.
(
•
In the twelve-year period from 1979 to 1991, total health care spending in
Alaska more than tripled, rising from $479.7 million fo $1,598 billion.
Details on 1979 expenditures can be found in Malhotra and Wills (1981).
Table 2-1 below identifies the sources of health care spending in Alaska in 1991 by
major payer category. Table 2-2 on the following page provides further detail on the
sources of 1991 spending, while Appendix B to this report describes the data upon
which this estimate was developed.
1991 Health Care Spending in Alaska by Payer Category
AMOUNT
PERCENT
OF TOTAL
$ 549 million
34%
Individuals
377 million
24%
State Government
318 million
20%
Businesses
235 million
15%
Local Governments
118 million
7%
PAYER
Federal Government
Total 1991 Spending
$1,598 billion
100%
�:
Table 2 - 2:>::.-.
E S T I M A T E D 1991 HEALTH S P E N D I N G IN ALASKA
BY S O U R C E O F FUNDS
(In Thousands 61 Dollars)
Detail
Employment- Based:
Individual
Business
Local
State
Federal
Insurance Premiums
$61,164
$121,418
$30,861
$65,379
$39,906
$48,774
$47,929
$9,290
$35,402
Self-Insured Plans
Subtotal/Employment- Based
$92,024
$186,796
$88,681
$57,218
TOTAL
$460,121
28,80%
$35,402
Other Private
Individual Policies and Coverage
$77,547
$29,458
4.85%
through Fraternal Orgs and Auto
Liability Insurance
Workers' Compensation
$48,089
Out-Of-Pocket:
Expenses of Uninsured
$255,602
16.00%
$255,602
Co - pay ments/Deductibles
Non-covered Services
$964
Medicare:
$90,000
$90,964
5.69%
$214,550
Medic aid:
Federal
State
$109,248
$95,326
$4,276
Medicaid Administration
13.43%
$5,700
Other Public
Federal:
$206,153
IHS/AANHS
Veterans' Affairs
$46,476
CHAMPUS payments
$14,647
Military Support
$308,561
19.32%
$41,284
$160,455
State:
Pioneers' Homes
10.04%
$12,436
$662
$19,270
Youth Corrections Health Care
API, Harborview
$7,066
$27,977
Grants to Regional Health Corporations
Selected state health services
$313
$5,026
$21,799
$27,995
Revenue Sharing for Health
Other grants for health
Community Mental Health Grants
$1,230
Fisherman's Fund
$7,672
$29,009
General Relief Medical
Other State Health Spending
$29,713
Local:
1.86%
Local Taxes in Support of Hospitals
Other Local Health Spending
$29,713
(net of state grants)
Total
As a % of total spending
$377,084
$234,885
$118,394
$317,926
$549,223
23.60%
14.70%
7.41%
19.90%
34.38%
$1,597,513
Source: Data originally compiled by ISER, UAA from various sources. Selected entries updated by Health Systems Research, Inc.
�•
Per capita health care spending in Alaska increased nearly two and onehalf fold over the past twelve years, growing from $1,160 in 1979 to $2,783
in 1991.
1
A certain portion of the growth in overall health spending in Alaska is due to an
increase in the size of the state's population. The Task Force found that even after
accounting for population growth, 1991 per capita health care spending in Alaska was
roughly two and one-half times greater than in 1979.
•
In Anchorage, while consumer prices for all goods and services grew 28.9
percent since the early 1980s, medical costs grew 81.5 percent
(Anchorage Daily News 1992), or nearly three times the rate of inflation.
The Task Force found that increases in the prices charged for health care
services contributed significantly to the growth in health care spending. For example,
during the last decade, health care prices in the United States increased at nearly
twice the rate of general inflation. Although comparable data is not available for the
entire state, an analysis of Anchorage consumer prices indicates that medical costs
there increased three times faster than overall inflation.
Finding #2: Alaska's per capita /iea/f/7 c a «
the national average, is expected to continue to grow at a fast
•" 7''-; -^ce-M"'-v
In 1991, Alaska's per capita health care spending was roughly equal to the
national average. However, this comparison does not take into account the fact that
Alaska's population is much younger than the nation as a whole. As discussed below,
after adjusting for these age differences, health care spending per person in Alaska
was found to be much higher than the national average.
Alaska's 1991 age-adjusted per capita health care spending was 27
percent above the national average.
U.S. and Alaska 1991 per capita health care spending was estimated to have
been roughly the same, at $2,872 and $2,783, respectively. However, these figures
According to the Alaska Department of Labor, the state's population in 1979 was 413,700. The
1991 population was projected by the Department to be 574,000, see middle series projections
in Alaska Population Projections, November 1991.
�are not adjusted to reflect differences in the age composition of the populations.
Because Alaska's population is younger than the nation as a whole, and because the
young have lower health care costs than the elderly, the age distribution of Alaska's
population would be expected to result in lower health care costs overall than for the
U.S. When per capita costs are adjusted for age, Alaska's 1991 per capita health
spending is estimated to have been twenty-seven percent higher than the national
average.
2
•
Total health care spending in Alaska under our current system is
projected to more than double over a seven year period, increasing from
slightly below $1.6 billion in 1991 to nearly $3.34 billion in 1998. By the
year 2003, health care spending in the state will be nearly $5.6 billion.
3
While the historical rates of growth in health care spending were of great
concern to the Task Force, they found that projections of future health care spending,
which assume "business as usual," were even more alarming. Statewide health care
spending is expected to more than triple over the next twelve years, reaching nearly
$5.6 billion in the year 2003.
Figure 2-1
Projections of Health Care Expenditures in
Alaska under the Current System, 1991-2003
Billions ol $
6
5 -
3 -
1991
1997
tans
tasu
199«
ina?
199B laaa
2000
2001
20*1?
2003
Source- Health Systems Research. Inc.
2
Bartlett, L, Health Systems Research, Inc. For expenditures by age groups, see CRS 1991.
3
See Chapter Four for a fuller discussion of the Task Force's projections of future health care
spending in Alaska.
�Between 1991 and 2003, per capita health care spending under the current
system in Alaska is expected to increase over two and one-half fold to
$7,341, up from $2,783 in 1991.
Figure 2-2
Estimated Per Capita Health Care Spending in
Alaska 1979, 1991, and 2003
$6,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1979
1991
2003
Source: Maholtra and Wills 1981 and Heallh Systems Resoarch, Inc.
In considering projections of health care spending in Alaska, the Task Force
took special note of the proportion of health care spending that is likely to be
consumed by the elderly. During the 1980s, Alaska's elderly population grew at a
faster rate than the U.S. elderly population, and faster than Alaska's population as a
whole (Appendix C, Section IV). Such population growth, together with the fact that
per capita health care costs for the elderly are three times greater than average (CRS
1991), suggests that the elderly will consume an even greater share of health care
spending in future years. This was of great concern to Task Force members, since
services for the elderly are financed disproportionately by the public sector, principally
through Medicare and Medicaid.
Finding #3: Health care costs are having an increasingly negative effect on
Alaska's employers, including both private businesses and
governments, as well as on workers and their families.
As health care spending has grown, it has absorbed a larger percentage of the
Gross Domestic Product, business profits, payroll, and family incomes.
7
�The U.S. spends a larger share of its Gross Domestic Product on health
care than any other industrialized country (see Figure 2-3). As a result,
U.S. industries find it increasingly difficult to compete in the world's
economy (CRS 1991).
Figure 2-3
Health Care Spending as a Percent
of Gross Domestic Product, Selected Countries, 1989
Percent
14
n.8%
12
10
8
6
4
2
0
Source.
•
United States
Sweden
Canada
France
United Kin'gdonn
Congressional Research Service
Rapidly rising health care costs have had a negative impact on the
profitability of most businesses.
According to the Employee Benefits Research Institute, in 1970, health care
benefits paid for by businesses were equivalent to about 35 percent of after-tax profits
for corporations. By 1980, health benefit payments, as a business expense, were
equal to about 48 percent of after tax profits, and by 1989, they had reached roughly
the same level (103 percent) as after-tax profits (see Figure 2-4).
4
Employee Benefit Research Institute tabulations of data from the U.S. Department of Commerce,
Bureau of Economic Analysis, Survey of Current Business, selected years.
8
�Figure 2-4
Employer Spending on Health Insurance
as a Percentage of Corporate After-Tax Profits
Percent
120
1(13%
100
Source:
Employee Bcnefil Hcsoarch Institute tabulation ol U.S Department ol Commerce data
Rapidly rising health care costs have meant less take-home pay for
Alaska workers.
Health care benefits as a percent of payroll have been the fastest growing
component of labor compensation over the last two decades, limiting employers' ability
to increase real wages. As shown in Figure
2-5 on the following page, in 1970, health
care spending by U.S.
businesses
P R O A S O I S ...
E S N L T RE
represented 3.5 percent of total wages and
salaries. By 1987, business health care
7 am a 31 year old, lifelong Alaskan, who
; i has not .had the luxury of being covered by a.
spending had increased to 7.4 percent of
health care plan via the work place. For
wages and salaries
(GAO 1990).
seven years, I went without any coverage at
a//. Fearingfinancialruin due to escalating
health care costs, I obtained a pwate policy ^
in March 1990. My monthly pramium, with a :•
•
$500 deductible, was $55. Today m
y
• premium is $98. My premium increased four . ;
ftmes in 24 months. For certain, I can expect :
more increases. I would also like to mention
that this policy contains three riders for
; excluded coverage for pre-existing conditions." :
-- Anchorage Resident
�Figure 2-5
Business Health Expenditures as a
Percentage of Wages and Salaries, 1970 - 1987
1970
1975
1980
1985
1987
Source. U.S General Accounting Office
In Alaska, the disparity between growth in health care spending and growth in
wages has been especially great. Between 1984 and 1991, health care spending in
Alaska is estimated to have grown by 125 percent, while total wages and salaries for
workers have increased by only 16 percent (see Figure 2-6 below).
5
Figure 2-6
Growth in Total Health Spending and in Total Payroll
for Non-Agricultural Workers in Alaska, 1984 to 1991
Percent
_ 124.9*
140
120
100
80
60
40
20
0
Health Care Spending
Total Payroll lor
Non Agrlcultiiral Workers
Cultural'
Sources: Heallh Resources A Access Task Force and Alaska Department of Labor
Total yearly payroll (nonagricultural earnings) in Alaska were $6,360,017,668 in 1984 and $7,347,053,592 in 1991, see
Alaska Department of Labor, Employment and Earnings Report: 2nd Quarter 1991 and Alaska Statistical Quarterly; 2nd
Quarter 1985. Total health care spending in Alaska is estimated to have been $710.3 million in 1984 (Noble Lowndes
estimate) and $1,598 billion in 1991 (ISER and Health Systems Research, Inc. estimate).
10
�•
In an attempt to offset rising health care costs, businesses have
increasingly required their employees to pay a greater portion of their
health care premiums and often have increased the levels of copayments
and deductibles in their plans. This trend, along with rising provider
rates, has meant that families are spending a larger percentage of their
income on health care.
During the 1980s, both the percentage of plans requiring premium cost-sharing
and the dollar amounts contributed by employees increased. According to the Bureau
of Labor Statistics, between 1982 and 1988 the proportion of workers required to
contribute to the cost of their coverage increased from 21 to 46 percent for workers
with individual coverage, and from 51 percent to 65 percent for those with family
coverage. In addition, over the same time period the average monthly premium cost
increased from $31 to $72 for workers with individual coverage, and from $171 to
$320 for those with family coverage (Short 1988).
As a result of the trend toward requiring larger contributions from employees, as
well as the overall growth in health care spending, the burden that health care costs
have placed on families has increased. In 1980, average family spending on health
care accounted for 9 percent of family income. By 1991, average family health
spending had increased to 11.7 percent. If these trends continue, out-of-pocket health
care expenditures for an average family can be expected to absorb over 16 percent of
annual income by the year 2000 (Families USA Foundation 1991).
Figure 2-7
Family Health Payments as a
Percent of Average Family Income
16.4%
20
e
E
o
15-
f -0
1980
1991
Average Family Health Payments
Source:
Families USA Foundation
11
2000
�Not surprisingly, rising health care
costs also have been at the core of many
disputes between employers and their
workers. In 1989, nearly two-thirds of fortythree major labor walkouts in the United
States were disputes over health benefits
(New York Times 1991).
PERSONAL STORIES . .
"Out own health care system: has
changed dramatically since I started
working here in 1980: At first my
employer paid all the premiums. Now. ?;
every year, we have to pay more and
more and the, benefits are jess'and.
Eagle River Resident
Finding #4: In spite of significant spending on heanbicmr mariy Alaskan*
lack coverage for even the most basic health care services.
While $1.6 billion (the estimated total health care spending in Alaska in 1991)
seems like it should be sufficient to provide a basic level of care to all Alaskans, the
Task Force observed that:
In the late 1980s, over 76,000 non-elderly Alaskans had no health care
coverage.
An analysis of Alaska-specific data from the 1988 through 1991 Current
Population Surveys revealed that approximately 76,000 non-elderly Alaskans had no
health care coverage. That means that they had no coverage for any service, whether
it be private insurance, Medicaid, Medicare, Indian Health Service coverage, or any
other type of third-party health care coverage.
6
The Current Population Survey is a national survey conducted each year by the U.S. Bureau of
the Census. While the number of persons included in the CPS from states with relatively low
populations (such as Alaska) is small, most states nonetheless rely on CPS data to provide
rough estimates of the number of uninsured because better estimates are expensive and
difficult to generate. One technique used to compensate for the small sample size is to analyze
survey results over a several year period. This approach was used in the analyses conducted
for the Task Force. We would also note that in the Task Force's Interim Report (January 11,
1992), 90,000 Alaskans were reported as being uninsured. This number included a certain
number of Alaska Natives who responded in the survey that they had no health care coverage,
despite the fact that they are eligible to receive care through the AANHS/IHS system. Dr.
Bartlett of Health Systems Research, Inc., in response to the Task Force's request to develop
an estimate using the "assumption that all Alaska Natives have health care coverage through
the Indian Health Service system," removed the Alaska Native respondents from the sample
and reanalyzed the data. This reduced the estimate of the number of uninsured Alaskans from
90,000 to 76,000. For complete results of Dr. Bartlett's analyses, see Appendix D.
12
�Over 21,000, more than one in every four, uninsured Alaskans are under
the age of 18
Figure 2-8 presented below displays the distribution of Alaska's non-elderly
uninsured population by age. Because of the nearly universal coverage provided by
Medicare to the elderly population, our analysis focuses on the characteristics of the
non-elderly uninsured population. As can be seen from this chart, over a quarter (28
percent) of uninsured persons in the state are children, while another 15 percent are
young adults aged 18-24. The remainder of the state's uninsured population are
adults aged 25 - 49 (48 percent) and older adults aged 60 - 64 (9 percent).
Figure 2-8
Distribution of Uninsured Non-Elderly Alaskans, by Age
< 18 YRS
(28%)
50
18
64 YRS
(9%)
TOTAL NUMBER OF UNINSURED = 76.000
Source:
24 YRS
(15%)
25 - 49 YRS
(48%)
Hoaltti Systems Research, Inc. analysis ol 1988-91 CPS
In the late 1980s, many uninsured Alaskans did not have sufficient income
to purchase health care coverage on their own.
A 1989 study by the National Health Care Campaign found that, in most states,
it is only when families earn more than 250 percent of the poverty level that they begin
to accumulate the disposable income required to contribute toward a portion of
7
In the Task Force's Interim Report, we reported that there were 28,000 uninsured children.
When Dr. Bartlett removed Alaska Native respondents from the CPS sample, the estimate of
the number of uninsured children was reduced to 21,000. See Appendix D.
13
�premium costs (Appendix D). When the Task
Force compared this finding to its analysis of
the incomes of uninsured Alaskans, it
. • 'When my daughter; and son-in-law were
discovered that a significant portion of the
-] expecting their first child, my daughter was
state's uninsured population could not afford to
unable to work . • v Our son-in-law was
making just enough to pay for essentials.
purchase coverage on their own.
For
The state welfare system declined their
example, the Task Force realized that even
request for medical coverage claiming our
though the federal and State governments
son-in-law's 'i income was too high, wasn't •
making, more than $6 per hour \ :•; . / was
together spent over $214 million in 1991 in
informed that (a particular) hospital would
Alaska for the Medicaid program, more than
help. .The hospital charged according to
13,500 uninsured Alaskans lived in households
:income. They paid all of the hospital bill."s
in the late 1980s with incomes below the
federal poverty level. An additional 16,000
-• Anchorage Resident
uninsured Alaskans lived in households with
incomes between 100 and 200 percent of
poverty (with incomes between $15,120 and $30 ,240 for a family of four).
8
Of particular concern to the Task Force was the fact that so many thousands of
low income children were without basic health care coverage. We found that of the more
than 21,000 uninsured Alaskan children, about 3,900 lived in households with incomes
below the federal poverty level, while another 4,500 were in families with incomes
between one and two times the poverty level.
Given the financial risks of being uninsured, the Task Force also found it
disturbing that nearly 30,000 uninsured Alaskans were in families with incomes in
excess of 300 percent of poverty. Of these,
roughly 18,000 were employed full-time for
the entire year. The Task Force concluded
PERSONAL STORIES . . .
that, under the current system, there may be
a number of reasons why persons with
7 can't get health., insurance because. • I
.
have been diagnosed recently with MS. I
adequate incomes are without coverage.
was working in a full-time position (for a:
Some may be uninsured because they wish
large employer), I was pregnant at the time
to avoid the expense or consider
I was diagnosed.
Unfortunately, . the
themselves to be "immortal." Others have
employer is here in the state and felt a
need to lay me off, when I was pregnant
significant health care needs and cannot
and recently diagnosed. I have contacted
find an insurer who will offer them a policy
several health insurance companies in the
at an affordable price. The Task Force
private sector and to my disbelief, people
further recognized that as long as some
with tuberculosis, any form of cancer within
the last ten years, diabetes, overweight,
Alaskans remain uninsured and continue to
MS. AIDS, or even having open heart
incur health care expenses which they
surgery cannot obtain: health insurance in
cannot afford, providers will continue to shift
the private sector, even though we are
the costs of caring for the uninsured and
willing to pay the premium, we are unable
to get health insurance.": •
underinsured to employers who provide
health care benefits to their employees.
;
-- Anchorage . Resident
The 1989 federal poverty level for a family of four in Alaska was $15,120.
14
�Figure 2-9
Distribution of Uninsured Non-Elderly Alaskans,
by Poverty Status
5 100% of FPL
(18%)
Over 300% o( FPL
(39%)
101 - 200% o l FPL
(21%)
201 - 300% of FPL
(22%)
TOTAL NUMBER OF UNINSURED = 76.000
Source:
Hoalth Systems Research, Inc analysis ol 1988-Bt CPS
Finding #5: Nearly nine out of ten Alaskans without health care coverage
are "working uninsured" Alaskans and their dependents.
•
Contrary to what many believe, the vast majority of uninsured Alaskans
are workers or dependents of workers.
Analysis of Alaska's uninsured population also revealed that in the late 1980s,
over 68,000 uninsured non-elderly Alaskans, or 89 percent of uninsured Alaskans,
lived in a household where the head of household worked some or all of the year (see
Figure 2-10 on the following page). Only 8,000 uninsured Alaskans lived in
households where the head of household was unemployed for the entire year
(Appendix D).
Nearly half of all uninsured Alaskan workers and their dependents are in
families where the head of household worked in seasonal job. Given the
Task Force's charge to design a program to provide access to health care
for all Alaskans, we concluded that efforts to tie health care coverage to
employment would not readily achieve our goal of "universal access."
15
�Figure 2-10
Distribution of Uninsured Non-Elderly Alaskans,
By Employment Status of Head of Household
Full-Time
Full-Year
(43%)
Full-Tlme
- Part-Year
(34%)
Not Employed
(11%)
Part-Time
Part-Year
(9%)
TOTAL NUMBER OF UNINSURED = 76,000
Source:
Heallh Systems Research, Inc analysis ot 1988-91 CPS
Of the 68,000 uninsured Alaskans who
lived in a household where the head of
household worked some or all of the year,
26,000 were in households in which the family
head had a full-time (but not full-year) seasonal
job, while another 6,800 uninsured Alaskans
were in families in which the head of household
had a part-time seasonal job (Appendix D).
The Task Force felt it likely that, even if
employers were required to provide coverage to
their employees, the seasonally-employed and
uninsured in Alaska would still be without
coverage while they were unemployed. Further,
this group would create considerable "churning"
in the health insurance market as they gained
coverage when they worked and lost it when
they did not. The large number of uninsured
Alaskans who have a link to the state's
significant seasonal economy raised doubts
within the Task Force about relying on
employment-based coverage as a viable
approach for achieving universal coverage.
This issue is discussed in greater detail in
Chapter Four.
16
PERSONAL STORIES . .
"You go to an insurance company,
and as soon as they! find put you are
a diabetic, which is my case, or a
number of other diseases, they slam
the door in your face ;'.; . / ran the
Iditarod a few years ago, I had
diabetes then too. They don't come
much healthier than me, I'd like to
think. And the fact that I can't get any
son of insurance is absolutely
disgusting . . . There is very blatant
discrimination that takes place, on a
regular basis throughout the insurance
industry, and if there is a way that the
government can somehow overcome
that or create a system where the
people can •• take the place of the.::
insurance company, let's do it. . . . /
have had a job for years, it's full-time
(full-year) this year (its usually
seasonal), anyway, it's even with the
federal government,
but it's
considered temporary .::: there is no..
coverage involved.
-- Anchorage Resident
�Finding #6: Hard hit by the problems of our current health} care financing
system are Alaska's small businessesrand their workers.
1
•
Small businesses must purchase coverage in an insurance market which
includes high and unpredictable premium increases and onerous
underwriting practices.
As
insurers.
excluding
coverage
health care spending has increased, so has competition among small group
Today, insurers commonly reduce their exposure against losses by
some groups, some individuals, and some health conditions from the
offered.
The rating approaches used by small group insurers can also result in high and
unpredictable rate increases, particularly when pre-existing condition limitations expire.
As a means of attracting groups, insurers have been known to offer groups low rates
in the first year only to raise them dramatically in subsequent years. Additionally,
insurers charge higher premiums for small groups particularly those with groups with
high health needs, women, and older workers, as well as for certain "higher risk"
industries (Butler et al. 1991).
For comparable benefit packages, small employers (defined as employers
with fewer than twenty-five employees) pay 10 to 40 percent more in health
premiums than large employers
(ICF Incorporated 1987). Because
benefits packages for small
PERSONAL STORIES . . .
employers are more expensive, it is
not surprising that small business
: "An uninsured woman I know can only *
owners overwhelmingly cite the
afford going to a neighborhood health
cost of coverage as the most
clinic where she can pay a sliding fee
important reason for not offering
for only the very basic of services.
health care benefits (Butler et al.
• V When she or her children , need a;:
specialist, because:: she is uninsured, •
1991; Formisano 1988; Hall and
the doctors refuse to see her without
Kuder 1990). In Alaska, nearly half
cash up front. It is humiliating to her
of all of the uninsured adults or
to try to beg for medical care for her
26,000 workers were employed by
famijy and this makes me furious."
small businesses in the late 1980s.
9
• -- Anchorage Resident :
In the Task Force's Interim Report, we reported that there were 28,000 uninsured Alaskans
who worked for small businesses. When Dr. Bartlett removed Alaska Native respondents from
the sample, the estimate of the number of uninsured Alaskans who worked for small
businesses was reduced to 26,000. See Appendix D.
17
�One of the reasons why health premiums are significantly higher for small
groups than for large groups is the administrative costs of insurers. As illustrated in
Table 2-3, one national study reported that the smallest groups may pay as much as
40 percent of their incurred claims toward administrative costs while the largest groups
pay as little as 5.5 percent (CRS 1990).
10
Breakdown of Insurance Company Administrative Expenses
(Percentage of Incurred Claims)
Number of Employees
Profit
& Risk
General*
Commission
Total
1
to
4
23.1
8.5
8.4
40.0
5
to
9
21.0
8.0
6.0
35.0
10
to
19
17.5
7.5
5.0
30.0
20
to
49
14.9
6.8
3.3
25.0
50
to
99
10.0
6.0
2.0
18.0
100
to
499
8.9
5.5
1.6
16.0
500
to
2,499
7.8
3.5
0.1
12.0
2,500
to
9,999
5.9
1.8
0.3
8.0
10,000
or
more
4.3
1.1
0.1
5.5
* Includes claims administration, general administration, interest credit, and premium taxes
Source: Congressional Research Service
In January 1991, the Division of Insurance estimated that there were only
nine insurers that were significantly active in Alaska's small group
market. Alaska's small businesses purchasing coverage therefore not
only face onerous underwriting practices and higher premiums than large
groups, but they do so in a market with relatively limited competition.
11
10
The Health Insurance Association of America also reports administrative expenses. Their data
reflect a similar distribution in the types of administrative expenses, but a smaller range for
employers of different sizes (25 percent of incurred claims for groups with fewer than 25
employees and 6 percent for groups of 2,500 or more employees), see Health Insurance
Association of America, 1991. Statement of HIAA on Health Care Reform and Insurers'
Operating Expenses. Presented Before the Subcommittee on Education and Health, Joint
Economic Committee, U.S. Congress. Washington, D.C. (October 16).
11
Chris Ulmann, Alaska Division of Insurance, January 15, 1992.
18
�Alaska's health insurance market can be divided into two segments, self-insured
plans and conventionally-insured plans. Alaska, like all states, is prohibited by the
federal Employment Retirement Income Security Act (ERISA) from regulating selfinsured plans. Therefore, we know very little about this market. The conventionallyinsured market, made up of both commercial and nonprofit insurers, is dominated by
two large insurers, AETNA Life Insurance Company and Blue Cross of Washington
and Alaska. Together, AETNA and Blue Cross wrote 70 percent of total premiums in
the Alaska private insurance market in 1990. The remaining 30 percent of the
market included over 400 insurers, of which only twenty companies had over one-half
of one percent of the market, and many of whom sold few if any policies. Of these
twenty additional insurers, only nine were significantly active in the small group
market.
12
Finding #7; The lack of adequate health care coverage can have a negative
effect on the health of uninsured and underinsured.
The Task Force discovered that the health of the uninsured often suffers because
they delay seeking care for medical problems.
»
The uninsured report a lower health status than the insured (Freeman et al.
1987) and use fewer services overall than the insured. When the uninsured
do use services, if is more likely fo be late in the course of an illness and
occur in costly institutional settings such as emergency rooms (The Robert
Wood Johnson Foundation 1987;
CRS 1988).
Cost is an obvious factor that deters
the uninsured from receiving care. Indeed,
over a third of uninsured Alaskans reported
that "within the last year, there was a time
that they needed to see a doctor, but could
not because of the cost," compared to only
one in ten insured Alaskans. Not surprisingly,
uninsured Alaskans also report waiting longer
periods than the insured for routine preventive
PERSONAL STORIES . . .
7 am one of many Alaskans who has
no health insurance:; / have a partner
:;•: who is in private business who. cannot
afford ; health insurance. I am
unemployed and have been without
insurance for two years. My two
children are without insurance • also.
We all have medical conditions which
should be treated, but we cannot
afford to go the doctor. Our lives are
challenged often by this fact. A major
or emergency illness would be
catastrophic to us."
:
;:
- Nenana Resident
12
Total health insurance premiums written in 1990 were $297 million, of which AETNA wrote
$127 million and Blue Cross wrote $82 million.
19
�13
checkups with a doctor. The fact that the uninsured often do not receive needed
preventive care increases overall health care costs because when the uninsured do
seek care, they may be sicker and incur greater costs in treating their illness-costs
that could have been avoided with adequate preventive care.
Finding #8: The uninsured and underinsured generate unpaid medical bills
the costs of which are uttimately paid in the form of higher
provider charges by persons with health care coverage.
As health care expenditures have increased, there has been an increase in the
amount of "uncompensated" care that providers must cover, which they do by
increasing their charges to those who have health insurance. Data provided by the
Alaska State Hospital and Nursing Home Association was used to estimate the costs
associated with charity care, bad debt, and Hill-Burton free care. In 1990, ten
hospitals, representing 86 percent of the acute care community hospital beds in
Alaska, provided $16.8 million in charity care, care which resulted in bad debt, and
Hill-Burton free care (Appendix E). To remain financially viable, these facilities had
to "cost-shift," that is, increase their charges to insured patients in order to cover these
unpaid or "uncompensated" expenses.
14
This $16.8 million figure may actually understate the magnitude of cost-shifting
by Alaska's acute care community hospitals. Industry representatives have stated that
reimbursement from public payers such as Medicare and Medicaid do not cover the
cost of delivering services to those clients. If this is the case, then the losses
associated with the delivery of services to Medicare and Medicaid patients must also
be shifted to private payers.
The net result is that to recover
uncompensated care costs and insufficient
payments from public programs, Alaska
hospitals must set their charges to privately
insured patients at levels that are 15 to 20
percent, or more, above the actual cost of
caring for these patients.
Although of no less interest to the Task
Force, we were unable to obtain information
on cost-shifting associated with physician
services.
.: "The cost of health care prohibits
routine health visits, therefore my
::family's health care suffers. I can only
hope that my family will not be
affected by an illness before
comprehensive and affordable health
care can be provided to them."
-- Anchorage Resident :
13
Preliminary results from the 1991 Behavioral Risk Factor Surveillance Survey, Alaska Division
of Public Health, November 1992.
14
The costs associated with this care may have been offset by the $3.7 million in revenues from
state and local governments.
20
�Finding #9: Many Alaskans who currently have health care coverage fear
The Task Force asked Alaskans to express their views about our current health
care system by circulating a survey. Four hundred and sixty-two (462) surveys were
returned to the Task Force. They included 124
from our community meetings/public hearings,
PERSONAL STORIES . ..
243 from the Anchorage Daily News (who put
the survey in their editorial column), 79 from
"My insurance has become too costly
the Anchorage Neighborhood Health Center, 6
and next month I will have to do
without. . . / am endangering my life from the Anchorage Rescue Mission, and 10
daily and the financial future of my from Bean's Cafe. Obviously, the survey
family. No one should have to live in results were not generated using a random
this fear that grows daily."
method, but nonetheless, they did give the
Task Force some indication of the concerns of
- (signed) "Helpless," Anchorage
certain Alaskans about our health care system.
(Complete survey results are published in a
separate document.)
Of those Alaskans who returned our survey the vast majority expressed
significant concern about the adequacy and stability of their health care coverage and
their ability to pay for out-of-pocket medical expenses. Specifically:
85 percent of respondents worry "a great deal" or "quite a lot" that their
out-of-pocket costs for medical bills will increase rapidly over the next
few years.
82 percent worry "a great deal" or "quite a lot" about having to pay very
expensive medical bills which are not covered by health insurance.
75 percent worry "a great deal" or "quite a lot" that the benefits under their
current health care plan will be cut back substantially.
75 percent worry "a great deal" or
"quite a lot" that they will have to pay
a much larger premium for their
current health care plan.
67 percent worry "a great deal" or
"quite a lot" that they will lose health
insurance which they now have.
PERSONAL STORIES
"As my health declined, I wasn't able
to work . , .: The constant hassles
:: concerning medical coverage were
overwhelming. My credit was scarred
as I was unable to continue minimal
payments.."
- Kenai Resident
21
�Finding #10: In spite of the significant amount it spends on health care,
the health status of Alaska's population is among the worst
Although Alaska's age-adjusted per capita health care spending is 27 percent
above the national average, the Task Force found that this higher spending has not
translated into a better health status.
•
A 1992 study by Northwestern National Life Insurance Company (NWNL)
ranked the "general health of Alaska's population" the 46th worst among
the 50 states (Eckstein, T.E., and Associates, Inc. 1992).
Rankings such as those in the NWNL study are used by insurers to establish
premiums. For each state, the population's overall health is measured using
seventeen criteria in five major areas: disease, lifestyle, access to health care,
occupational safety and disability, and mortality. Examples of Alaska's rankings for
specific criteria include:
Selected Health Criteria
Support for Public Health Care
Infectious Disease
Occupational Fatalities
Unemployment
Access to Primary Care
Premature Death
Prevalence of Smoking
Violent Crime
Infant Mortality
Ranking
50
49
48
45
43
40
40
28
25
The American Public Health Association recently published a state-bystate report of the health of each state's population. Alaska ranked higher
in this report than in the NWNL ranking in part because of the indexes
chosen. Even so, Alaska ranked lower than might have been expected,
15
The American Public Health Association (APHA) examined statistics on twenty-five measures of
health for each state. These measures were the basis for the five categories for which APHA
developed composite rankings. There were several measures where Alaska ranked high.
Some of these high rankings reflect Alaska's unique service delivery system, while others
suggest high levels of government spending for health and other services. Alaska ranked
relatively high in the following measures: primary care physicians per capita, adequate prenatal
22
�given the higher than average level of age-adjusted per capita health care
spending (APHA 1992).
APHA tabulated statistics for five health categories and ranked each state. Alaska's
rankings were as follows:
Category
Healthy Behaviors
Healthy Environment
Medical Care Access
Healthy Neighborhoods
Community Health Services
Ranking
44
36
25
23
3
The Task Force also examined additional data on the health of Alaskans at
several meetings. We found that age-adjusted death rates in Alaska for certain
preventable diseases were substantially higher than the national average. Alaskans
have above average death rates for unintentional injuries (primarily occupationrelated), for chronic obstructive pulmonary disease (primarily attributable to smoking),
for chronic liver disease (primarily attributable to alcohol), and for suicide (Alaska
Bureau of Vital Statistics 1992).
Finding #11: A strong public health program based on disease
prevention, health promotion, and public health protection Is
essential to controlling health care costs and to achieving a
po//cy that assures the presence of a strong, fullyfunctioning public health program.
Given the overall poor health of Alaskans described under Finding #10, and the
fact that effective public health programs can improve health status, the Task Force
felt it was particularly important to examine the state's public health system.
care, fluoridated water, average public assistance payment per family, education spending per
capita, childhood poverty rate, government health spending per capita, sanitation and sewerage
spending per capita, and public health workers per capita.
23
�Several public health officials briefed the Task Force on the roles and
responsibilities of public health providers in Alaska. While we were reminded of the
State's responsibility to provide health assessment, health policy development, and to
assure the presence of essential, effective public health services, the Task Force
nonetheless found that:
-
The capability of the Division of Public Health to carry out the State's
public health responsibilities continues to be diminished at a time when
program responsibilities are increasing.
In the last decade, the level of per capita public health spending by the State of
Alaska from the General Fund has remained flat after being adjusted for inflation
($48.99 in 1982 vs. $49.15 in 1992). This has occurred despite the fact that during
this period, the Division of Public Health's program responsibilities have grown
substantially due to new technologies and changing patterns of disease (e.g., AIDS,
drug-resistant tuberculosis, substance abuse) (Appendix F). Unfortunately, the Task
Force fears that State funding for public health programs will be further diminished
unless there is greater recognition of the role they play in protecting and maintaining
the health of the state's population.
Finding #12: The financial access issue aside, basic health care services
transportation problems and problems with the mix,
distribution, arid coqrdinatldn of the state's health care
The Task Force observed that Alaska has access and cost problems because
of the maldistribution of health care resources. Many Alaskans live in areas where
health care services are not available or where there are shortages of health care
personnel. In other areas, there is more capacity in the system than is needed. While
sufficient resources exist in some communities, Alaskans will often go outside of those
communities for care. Finally, even though Alaska Natives have access to health care
through the Alaska Area Native Health Service, their health needs far outstrip available
resources.
Alaskans living in remote and rural areas often find that only the most
basic health care services are available in their communities. Access to
advanced services requires travel, frequently hundreds of mile by air.
Many cannot afford to travel and defer their medical treatment.
24
�Alaskans living in remote and rural areas of the state often travel great
distances at significant cost to obtain health care. The Alaska Native Health Board
reported the unmet need for patient travel was $4.9 million in Fiscal Year 1990. Forty
percent of all their patients who need to travel for medical care defer treatment
because they lack money for airfare (Alaska Native Health Board 1991).
-
Alaska has an inadequate supply and maldistribution of primary care
practitioners.
Alaska is directly affected by the nationwide shortage of primary care
practitioners. Alaska currently has twenty federally designated Health Professional
Shortage Areas and ten designated Medically Underserved Areas. Together, these
areas include nearly a third of the population and cover two-thirds of the state
(ADHSS 1992). In many Alaskan communities, the population base is too small to
support a financially viable physician practice. The State of Alaska, recognizing this
aspect of Alaska's health care system, has liberal practice standards that allow midlevel practitioners, such as nurse practitioners and physician assistants, to practice
with minimal supervision and to write prescriptions (ADHSS 1992). Although many
communities rely on mid-level practitioners for care, Alaskans still encounter serious
difficulties in receiving needed primary care, and additional primary care physicians
are still needed.
The Task Force was advised, on a number of occasions, that:
Difficulties in recruiting and retaining health care professionals in Alaska
contribute to the lack of access to appropriate, cost-effective health care
for Alaskans, particularly in rural areas.
Alaskan providers have the greatest difficulty retaining adequate numbers of
nurses, physical therapists, occupational therapists, and diagnostic technicians. Other
categories of health care professionals which are difficult to find are administrators,
physicians, bio-medical technicians, and workers in the areas of patient billing, medical
records, personnel, social work, and alcohol and mental health counseling (Rural
Alaska Health Education Center 1992).
Further, individual Alaskan health care practitioners, particularly in rural areas,
experience high rates of turnover. In Alaska's many small, isolated communities,
health care professionals do not have a peer support group and must be on-call 24
hours a day, 7 days a week. In addition, the undersupply of health care professionals,
cultural and social barriers, isolation, and limited transportation and communication
systems all contribute to "burnout" among practitioners.
Recruitment has become increasingly difficult as salary expectations have
increased. Salaries, particularly those offered in rural Alaskan communities, have
25
�become less competitive than those offered outside of Alaska over the past decade
(ADHSS 1992).
Efforts to recruit health care practitioners in Alaska are limited by the lack of
data on such items as the characteristics of professionals who are most likely to want
to practice in Alaska (particularly rural Alaska), factors that increase the number of
applicants for positions in these areas, and provider characteristics most important to
employers and consumers (ADHSS 1992).
Recruiters have found an important factor in getting practitioners to locate and
practice in rural areas is their exposure to rural settings during their medical education.
Alaska lacks formalized in-state clinical sites for primary health care students. In
addition, there are only rudimentary free-standing medical residency programs in the
state, and none for family practitioners (ADHSS 1992).
While there are significant shortages of health care professionals:
It is estimated that nearly one quarter of the hospital beds in Alaska's
acute care community hospitals represent excess capacity, yet it costs
Alaska's health care payers as much as $21 million annually to maintain
them.
There has been a lack of direction from the State of Alaska regarding standards
for hospital size. Further, there were some major renovations and new construction of
community hospitals when Alaska's revenues from oil peaked in the early 1980s.
These projects were based on occupancy rates using the rapid rate of population
growth experienced in the state at that time. As population growth rates diminished,
the recession hit in the mid- to late 1980s, and a national trend toward decreasing
utilization of care for patients in "inpatient" settings was realized, it became apparent
that the State had overestimated the need for hospital beds.
16
Also in the mid-1980s, the State significantly reduced its health planning efforts
and has not issued a state health plan since 1984. The Certificate of Need process
continues in Alaska and achieves some savings but without the goals and standards
that a state health plan could provide. Capital grants continue to be provided to some
individual communities for facility construction without a clear policy from the State.
Alaska's acute care community hospitals are on the average much smaller than
U.S. hospitals as a whole. Using the national average as the benchmark, the Institute
of Social and Economic Research (ISER) found that twelve of Alaska's sixteen acute
16
Anchorage projects were more justified, but some projects in smaller communities created
significant excess capacity. Not all the projects which were proposed were built however as
State funding declined in the 1980s.
26
�care community hospitals had excess capacity in 1989. At the U.S. average
occupancy rate, 229 (or 22 percent) of the 1,027 acute care beds in Alaska were
surplus. The total annual cost to Alaskans to pay for surplus beds was estimated to
range from $5.8 to $11.6 million or 2 to 4 percent of the total annual acute care facility
costs. However, applying a more rigorous standard, and what some consider a more
reasonable goal for occupancy, 75 percent, and a fixed cost assumption of 20
percent, the annual cost of excess capacity in Alaska's acute care facilities was found
to be as high as $20.8 million. (The complete analysis is in Appendix C, Section 1.)
17
Compounding this excess capacity problem, the Task Force observed that:
Even as Alaska's small communities continue to maintain fully-licensed
hospitals, many residents leave their communities to go to a larger
hospital for care.
The Task Force found that many of Alaska's small hospitals have very low
occupancy rates. However, because residents of communities with small, underutilized hospitals often go to larger hospitals in other areas to receive care instead of
to their local hospitals, the Task Force felt that these facilities will find it difficult to
substantially reduce their surplus capacity.
18
The Task Force reviewed approaches taken in rural communities in other states
when faced with the possibility of closing under-utilized, financially troubled community
hospitals. Often, these hospitals are converted and licensed as "alternative"
facilities, thus maintaining some type of medical facility presence in the community.
Many different models for converting hospitals to alternative facilities exist, but in
general they involve changing the mix of services, limiting the length of stay, providing
only certain core services, and establishing transfer policies with more advanced
facilities. For example, a "converted" hospital might continue to provide only
emergency services, routine obstetrical care, and outpatient services.
19
The Task Force was concerned to find that instead of moving towards an
"alternative facility" model, many Alaskan hospitals with low occupancy rates are
17
In the 1970s, the occupancy rate for mid-sized hospitals in the U.S. approached 75 percent. In
addition, Alaska's 1984 State Health Plan established occupancy rate goals of 80 percent for
Level IV communities (population between 40,000 and 750,000) and 65 percent for Level III
communities (populations between 1,500 and 60,000).
18
Examples of small Alaskan hospitals with low occupancy rates, based on 1989 figures, include:
Cordova Hospital, with 13 beds and a 15 percent occupancy rate; Petersburg Hospital, 8 beds
and 12 percent occupancy; Wrangell General Hospital, 9 beds and 11 percent occupancy; and
Seward General Hospital, 32 beds and 11 percent occupancy. (See Appendix C, Section 1.)
The Task Force reviewed models from the States of Montana, California, Washington,
Colorado, and Kansas for converting hospitals into alternative inpatient facilities.
27
�moving in the opposite direction. In order to attract patients who may currently be
seeking care at larger hospitals, some small hospitals are seeking to duplicate costly,
high-tech services offered in Alaska's tertiary care centers.
Finally, the Task Force found that the State of Alaska has not created
incentives to encourage the conversion of under-utilized hospitals into alternative
facilities. Indeed, the ability and willingness of Alaskan communities to convert underutilized hospitals to alternative facilities is restricted by State licensure standards,
Medicare's conditions of participation, and Alaska's revenue sharing statute (AS
29.60.120) which greatly favors hospitals of ten beds or more (Appendix G; Agency for
Health Care Policy Research 1991).
Alaska does not presently have excessive amounts of expensive high-tech
medical equipment. However, in recent months, physicians and physician
groups in Alaska's urban areas have shown increasing interest in offering
high-tech services that will duplicate services offered at hospitals in these
areas. Small community hospitals have also shown an increased interest
in acquiring high-tech equipment.
It is widely recognized that the increased use of high-tech medical equipment
and services has improved the quality of health care in the United States. However,
at the same time the proliferation of new technology has been a driving factor behind
escalating health care costs.
In October 1991, the Department of Health and Social Services reported to the
Task Force that the current levels of high-tech medical equipment and services
available in Alaska were not excessive (see Appendix I). However, recent interest by
physicians in providing high-tech services in their offices may change this situation.
In Alaska, a Certificate of Need (CON) is currently required for new medical
services or equipment located in a hospital setting and costing $1 million or more.
Because current CON law does not apply to projects in non-hospital-based settings,
many of the high-tech projects under consideration by private physicians and physician
groups would not require review or approval by the State. Even purchases of such
equipment by small hospitals may avoid the Certificate of Need process if they obtain
used equipment that costs less than $1 million. The excessive proliferation of medical
technology could thus become an additional factor contributing to rising health care
expenditures in Alaska.
A lack of effective coordination between the four principal health care
systems in Alaska, the private sector, the Alaska Area Native Health
Service (AANHS), the State of Alaska, and the military, has contributed to
excess capacity in some rural communities and a lack of access to
28
�facilities and some services for some segments of the population in
others.
In some Alaska communities, services are duplicated at facilities run by
different segments of the health care system because of insufficient coordination of
health care resources. For example, Sitka, with a population of 9,000, has two
general acute care hospitals, one operated by the local government and the other by a
tribal organization under contract to the AANHS. Both hospitals, which offer virtually
identical services, are under-utilized.
Other communities suffer from the opposite problem-facilities whose services
are needed by the community are unable to offer those services to some segments of
the population due to restrictions on who is eligible for treatment. The Task Force has
noted recent progress in this area, however. For example, in the western and
northern regions of the state, four out of the five general acute care facilities are
federally-owned, and have historically been restricted to serving only Alaska Natives.
Contracts to operate three of these hospitals-in Dillingham, Bethel and Kotzebuehave recently been awarded by the AANHS to local organizations that are attempting
to expand services to all residents of these communities.
By nearly all measures, the health status of Alaska Natives is significantly
lower than other Alaskans. The health needs of Alaska Natives far
outstrip the resources available through the Alaska Area Native Health
Service and its tribal contractors. Many villages do not have basic water
and sanitation services which are essential to the control of disease.
As part of the their trust responsibility, the federal government is required to
provide health care to all Alaska Natives. This is accomplished through the Alaska
Area Native Health Service and its tribal contractors. Funding for this system in
Alaska, which serves approximately 90,000 Alaska Natives, has not kept pace in
recent years with the growth of the Alaska Native population and health care spending
trends. Providers in this system have been encouraged to enhance collections from
Medicaid, Medicare, and other third-party payers in an effort to make up for the
shortfall in funding. Yet, as a group, Alaska Natives' health needs are greater than
other Alaskans. Their HIV infection rate is the highest in the state and death rates for
suicide and homicide continue to be three to four times the national average.
Substance abuse problems, including fetal alcohol syndrome/effect and brain damage
associated with inhalant abuse are still on the rise. Alaska Natives have one of the
highest age-adjusted mortality rates from cancer in the U.S. and diabetes is
increasing. Water and sanitation services, which are taken for granted in urban
Alaska, are not available in many Alaska Native villages (see Appendix H).
29
�Finding #13:
The way in which we handle claims of injury arising from
medical care is unsatisfactory to almost everyone. It
compensates only a few of the victims, is slow, costly, and
The Task Force recognized that there is considerable disagreement over how
much our system of resolving claims of medical malpractice contributes to rising health
care expenditures and inappropriate patterns of practice. We also acknowledged that
our current system is not necessarily the best way to resolve such claims. Many of
the Task Force's observations of our system of handling claims are based on national
studies and studies in other states, although there is considerable documented
experience on the subject in Alaska (Weeks 1992).
Every year, patients in Alaska are injured by medical care. Comprehensive
data on the numbers of medical injuries are not available. Two landmark studies, one
in New York and one in California, showed that 3.7 percent and 4.65 percent,
respectively, of large samples of hospitalized patients are injured by medical care.
About one quarter of those patients are injured because of negligent care - 1.0
percent in the New York study and 0.8 percent in California. The majority of adverse
events were minor and transient, but many were serious, and some caused or
contributed to death (Harvard Medical Practice Study 1990; Danzon 1985). It is
reasonable to assume that the age-adjusted rate of injury in Alaska is roughly the
same as in New York and California.
>
Most medical injuries caused by negligence do not result in lawsuits.
The New York study (Harvard Medical Practice Study) found that for every eight
hospitalized patients negligently injured, only one patient filed a medical malpractice
claim. In the California study, at most one in ten patients negligently injured filed a
claim.
-
Many lawsuits alleging medical malpractice are without medical
foundation.
The New York study also found that more than eight of ten medical records of
those who file claims show "no evidence of negligence or even injury".
On several occasions, the Task Force was advised that because the costs
of bringing a case to trial are high, plaintiff attorneys in Alaska generally
are reluctant to take a case unless they expect a settlement or award of at
least $100,000 (Weeks 1992).
30
�A significant part of the high cost of pursuing a medical malpractice lawsuit is
the high cost of engaging expert witnesses. One plaintiff attorney says it is impossible
to bring a medical malpractice case to trial in Alaska for less than $75,000 (Weeks
1992). By the same token, NORCAL, which insures about 240 Alaskan physicians,
reports that the "average cost of defending a case through trial is around $60,000"
(Appendix J).
•
Nationwide, studies have shown that fewer than half of all medical
malpractice claims result in any payment to the claimant.
Studies of closed claims found that payments to the claimant were paid in only
40 - 50 percent of cases (40 percent, Danzon 1985; 41 percent, Appendix J
(NORCAL); 43 percent, GAO 1987b; "no more than half," Harvard Medical Practice
Study 1990).
Less than half of the medical malpractice premium dollar goes to the
patient in settlements and awards.
A 1987 Rand Corporation study found that only 43 percent of every dollar spent
on "higher-stakes" litigation, including medical liability, reaches the injured parties as
compensation. A.M. Best estimated that the "total cost of medical malpractice direct
losses paid" were $2.29 billion or 41 percent of the $5.6 billion paid in malpractice
insurance premiums in 1989. The rest is spent on attorneys' fees for both sides,
litigation expenses, and administrative expenses of insurers (Hensler et al. 1987;
Lembo 1992).
•
Medical malpractice claims take a long time to be resolved.
The 1987 GAO study also reported that the median length of time from injury to
claim was 13 months (range <1 to 229 months), from injury to closing for claims
without any payment was 17 months (range <1 to 132 months), and from injury to
closing for claims closed with payment was 23 months (range <1 to 132 months)
(GAO 1987b).
In a study of only obstetrical malpractice cases, the average time
from event to resolution was 33 months (Bovbjerg, Tancredi, and Gaylin 1991).
On numerous occasions, the Task Force voiced concern about the costs
of and practices associated with defensive medicine. We found that the
estimates of the costs of defensive medicine are inconclusive.
Defensive practices include, in order of frequency as established in a 1983
study: (1) maintaining more detailed records, (2) referring more cases to other
physicians, (3) ordering additional diagnostic tests, (4) spending more time with
31
�patients, (5) not accepting certain types of cases, (6) increasing fees, and (7)
providing additional treatments (Zuckerman 1984).
The American Medical Association (AMA) estimated in 1989 that the cost of the
practice of "defensive medicine" by physicians was nearly $21 billion. Of that, $5.6
billion was spent by physicians for malpractice insurance premiums and $15.1 billion
on defensive medicine practices (AMA 1991). In 1989, $21 billion represented about
18 percent of the total expenditures for physician services. Although the AMA's
estimate appears to be made based on a thoughtful analysis, it is important to note
that the core of the study was a physician survey. In addition, the AMA's estimate
includes only costs associated with physicians' services and not other providers, most
notably, hospitals. Therefore, it understates the total cost of defensive medicine in the
U.S.
Other estimates of the cost of defensive medicine exist but the AMA's estimate
is the most frequently cited. All the estimates are controversial, in part because of the
difficulty in defining defensive medicine. The Office of Technology Assessment, a
bipartisan research agency of the Congress, is currently developing its own estimates.
While the Task Force was concerned about costs associated with defensive
medicine, we were also concerned how these practices can effect the quality of care
provided and the level of trust between the physician and patient. For example, some
tests and treatments can be detrimental to the health of the patient.
While total malpractice insurance premiums represented only 5 percent of
total expenditures for physician services, individual physician premiums
represent a significant cost of practicing medicine in Alaska.
Medical Indemnity Exchange of California reports that the current annual rates
for a $1 million/$3 million (most commonly purchased) professional liability insurance
policy in Alaska are: $79,948 for obstetrics, neurosurgery, orthopedics with spinal
surgery; $42,328 for general surgery, orthopedics without spinal surgery, ENT (ear,
nose, and throat) with more than 5 percent plastic surgery; $26,456 for ENT with less
than 5 percent plastic surgery; $13,524 for ophthalmology; $11,760 for internal
medicine and pediatrics; $10,584 for family practice, no surgery; and, $6,468 for
psychiatry. NORCAL rates for a $1 million/$3 million policy for obstetrics are:
$64,519 for OB/GYN and $37,751 for family practitioners with obstetrics (Appendix K).
The system for resolving claims of injury from medical care generates
considerable uneasiness and disgruntlement among providers (Charles et
al. 1985).
32
�The threat of litigation is perceived by providers to be ever-present. It colors
virtually everything they do with respect to patients. While providers agree that their
undivided attention should be focused upon what is best for their patients, physicians
and other providers continually consider what is safest for themselves. This legal
milieu influences clinical decisions when it should not, warps decisions on where to
practice and whom to see, and shortens careers. For example, 29 percent of
physicians practicing obstetrics stop delivering babies before age 45 and 67 percent
before age 55 (Institute of Medicine 1989). Studies show that over 79 percent of
practitioners of obstetrics report that they have been sued at least once during their
careers (American College of Obstetricians and Gynecologists 1992).
•
Obstetricians in Alaska pay between $65,000 and $80,000 annually and
family practitioners delivering babies between $35,000 and $40,000
annually for professional liability insurance. Nationally, practitioners of
obstetrics and gynecology are sued more frequently than any other
specialty (U.S. DHHS 1987). The average damage award paid by an
obstetrician in 1984 was $178,000, more than double the average paid by
other specialties (Gehshan 1991). Nationally, one million dollar-plus
awards are frequent in birth-injury cases (Nocon et al. 1987). Several
have been awarded in Alaska.
20
No group or specialty class of physicians is inherently more negligent than
another, but some groups, such as obstetricians are sued more often than other
providers (GAO 1987a). Settlements tend to be high and award by juries are typically
high because the consequences of serious injury at birth are usually lifelong.
Physicians who have practiced obstetrics and discontinued indicate professional
liability issues as a primary cause including both the expectation for increased
malpractice premiums and the fear of lawsuits (Rosenblatt and Wright 1987; Nesbitt et
al. 1992).
Under the state's statute of limitations, malpractice cases involving injury
to children can be filed up to two years after the age of 19. This requires
physicians to have "tail" insurance to protect against claims filed many
years after an alleged event. However, virtually all residua from birth or
early-life injury or illness are obvious by the time a child is eight years
old.
21
Rodman Wilson, MD, December 2, 1992.
21
"Virtually all sequelae of birth injuries and illnesses early in life should be apparent by the time
a child is eight years old", statement made by Marianne von Hippel, MD, behavioral
pediatrician, November 6, 1992, Anchorage. "Most major residua of birth injuries and early life
illnesses will be clearly apparent by six to eight years of age", statement made by Ron
Brennan, MD, neurodevelopmental pediatrician, November 10, 1992, Anchorage.
33
�<
<
Alaska law requires interest on civil judgments to be paid at rate of 10.5
percent per year from the date of notification of a lawsuit (AS 9.30.070).
The accrued interest can add substantially to medical malpractice and
other awards.
The Task Force learned that the pre-judgement interest rate of 10.5 percent
currently used in Alaska has not been adjusted since 1980. In contrast, federal courts
use an approach that is more responsive to changing economic conditions, awarding
pre-judgement interest using the yield of the 52-week U.S. Treasury bills (3.75% in
November, 1992) as the rate of interest (Title 28, U.S. Code, 1961).
Pre-judgement interest is designed in part to deter casualty insurance
companies from delaying settlement. However, interest payments can add
significantly to medical malpractice awards. For example, if it takes five years to
reach a verdict and make an award of $500,000 in a case of injury from negligent
medical care, an additional $262,500 is added in accrued interest, making the total
award $762,500. In addition, it is possible that interest rates that are high may
provide an incentive for plaintiffs' attorneys to delay in order to increase potential
awards and thereby their contingency fees.
22
Finding #14: Most Alaskans believe that fundamental changes are heeded
in our health care system in order to make things work
better. They also believe health care reform is an Important
issue that State government should address.
>
Nearly 90 percent of respondents to the Task Force's public opinion
survey indicated that Alaskans want substantial change to our health care
system.
Of those Alaskans who returned the survey, 60 percent responded that "there
were some good things in our health care system, but fundamental changes are
needed to make it work better," while an additional 28 percent indicated "that so much
is wrong with it, that we need to completely rebuild it."
Nearly all respondents indicated that health care reform is one of several
important issues, if not the single most important issue, for State officials.
22
Testimony by Dan Hensley to the Health Resources and Access Task Force, November 13,
1992.
34
�Seventy-six percent of survey respondents indicated "that reform of Alaska's
health care system should be one of several important issues for State officials" while
an additional 21 percent believe that it is "the single most important issue for State
officials."
Respondents overwhelmingly believe that the State government should
play a role in controlling health care costs and ensuring access to basic
health services for all Alaskans.
Ninety-four percent of Alaskans who answered the Task Force's survey
responded that "in the absence of national health care reform, the Alaska State
government should play a more active role in controlling rising health care costs" while
96 percent indicated that "the State government should play a more active role in
ensuring access to basic health services for all Alaskans."
These fourteen findings, together with principles used by the Task Force to
guide their policy decisions, are the basis upon which the Task Force made its
recommendations. The Task Force's guiding principles are described in the next
chapter.
35
�CHAPTER THREE:
GUIDING PRINCIPLES
At our September 1991 meeting, the Health Resources and Access Task Force
developed guiding principles to be followed in the development of public policy. Our
original principles were further refined in September and October 1992. The Task
Force used these principles to evaluate alternative health care reform strategies.
PREAMBLE
The Alaska Constitution provides that the State of Alaska is responsible for the public
health. However, each Alaskan bears individual responsibility to maintain and improve
his or her own physical, mental, and emotional health and to pursue a healthful
lifestyle. This fundamental responsibility lies with the individual--not the family, not
schools, not churches, not employers, not health care providers, and not the
government.
The vision of health care reform for Alaska must go beyond the issues of access,
financing, and cost containment. It must include a health care program that merges
the personal health care delivery system with a population-oriented public health
program based on the principles of health promotion, health protection, and disease
prevention.
Health care costs can best be contained by an educated public, committed to
wellness. The state must take an aggressive role in working with all Alaskans on
health and safety education and the prevention of illness.
ACCESS
All Alaskans should have access to timely and appropriate health care without regard
to personal financial means.
A health care plan should include prevention, primary care, early diagnosis and
treatment, and incentives for healthful lifestyles.
FINANCING
All Alaskans have a responsibility to obtain and pay for health care for themselves and
their dependents. It is the responsibility of society at large to finance care for those
unable to pay.
Responsibility for the financing of care should be equitably distributed among payers.
37
�COST CONTAINMENT
Health care services can be extended to everyone only if overall costs are contained.
Duplicate coverage should be avoided.
Cost sharing requirements may be considered as a way of controlling excessive
utilization but should take into account ability to pay.
Health care should be provided in the most efficient and cost effective manner and
location and may include contractual arrangements for patient management and
utilization controls.
Payments to providers should be reasonable and fair.
Health services based on disease prevention, health promotion, and health protection
must be promoted as a major way to lower costs.
GENERAL
Individuals should have an informed and reasonable choice in selecting health care
providers. However, they may be restricted to certain providers in cases where such
arrangements are more cost-effective.
Systems to maintain and expand access and to control costs should be as simple to
administer as possible.
Design of programs should be sensitive to cultural differences and community needs,
including the special problems in rural areas of access and availability of providers.
A public health system based on the core functions of assessment, policy
development, and assurance of essential public health services must be established
and maintained as the foundation of an effective health program for Alaska.
The Task Force's recommendations, which draw upon these guiding principles, are
presented in Chapter Four.
38
�CHAPTER FOUR:
TASK FORCE RECOMMENDATIONS
A
.
OVERVIEW
This chapter presents the Task Force's recommendations for improving the
financing and delivery of health care in the State of Alaska. In developing these
recommendations, the Task Force recognized the skill and dedication of the hundreds
of health care providers working throughout the state to improve the health status of
its residents. However, the Task Force also has come to realize that these efforts are
hampered by many aspects of the Alaskan health care system itself. In fact, to call
the current method of health care delivery and financing in the state a "system" is
inappropriate. The existing structure could more aptly be described as a "non-system"
that allows health care costs to continue to spiral out of control, that leaves even the
most basic health care coverage unaffordable for a large number of Alaskans, and
that leaves an even greater number of Alaskans worried about the possible financial
consequences of a serious illness in the family.
Given this situation, the Task Force agrees with the view expressed by the vast
majority of Alaskans responding to its health care survey, who believe that
fundamental changes must be made to the current structure of our health care system
(see Finding #13). In our view, minor tinkering with the current structure is not
sufficient to address the current health care crisis in Alaska. This conclusion is based
upon our review of a considerable body of evidence indicating that, although a wide
variety of incremental approaches and piecemeal solutions have been attempted over
the past several decades, none has succeeded in controlling health care costs or
providing access to basic health services to all Alaskans.
The Task Force has thus come to the unavoidable conclusion that "business as
usual" approaches to dealing with the problems of our health care system will no
longer suffice. We therefore propose a comprehensive strategy designed to:
1.
Bring runaway health care costs under control and make health care
affordable for all Alaskans;
2.
Move to a unified health care financing system that will provide financial
access to needed care for all Alaskans and eliminate the concerns and
fears that many Alaskans have with our current health insurance system;
3.
Increase the effectiveness and efficiency of the current health care
delivery system by increasing the availability and coordination of health
services throughout the state;
39
�4.
Improve the health status of Alaskans by ensuring adequate support for
vital public health activities and emphasizing the importance of healthy
• lifestyles and access to preventive care; and
5.
Make improvements in the way in which we resolve medical malpractice
disputes.
The recommendations developed by the Task Force to achieve these objectives
are as bold and as ambitious as the charge given to us by the Alaska State
Legislature. They are based upon a careful assessment of the full array of possible
approaches for addressing identified problems, a review of the relevant health services
research and related scientific information, and the examination of the relevant
experience of other states and countries that have enacted health care reform
measures. We believe that they reflect Alaska's unique environment and the concerns
and values of its residents. At the same time, they are also consistent with many of
the major health care reform proposals being discussed at the national level.
The Task Force strongly believes that our proposed strategy represents the
best way to improve the health of the state's population and to provide access to
affordable, high quality health care to all Alaskans. We recognize, however, that our
recommended solutions may be considered quite controversial. There are several
reasons this may occur. The first is that our strategy includes a number of concepts or
terms that may be unfamiliar to or misunderstood by the Alaskan public. The second
reason is that, because our strategy calls for significant changes in the way in which the
health care system currently operates, there
may be certain individuals or groups who may
feel threatened by these reforms and seek to
The Task Force proposes a
paint an unrealistic picture of their implications.
comprehensive health care reform
For these reasons, the Task Force
recognizes that the enactment of meaningful
health care reform in Alaska may require a
significant public education effort. We have
begun this effort by documenting Alaska's
health care problems in earlier chapters of this
report. In this chapter, we will describe in detail
our recommendations for addressing these
problems. In doing so, we have attempted to
further the public's understanding of this
important issue by describing: the range of
options we considered in many areas; why we
selected certain alternatives; and what the
impacts of our recommendations on health care
costs and coverage are expected to be.
40
strategy that will:
1. Bring runaway health care costs
under control and make health
•: care affordable for all Alaskans.
2. Move to a unified health care
financing system that will provide
financial access to needed care
for all Alaskans., •....
:
3. Improve the health status of
Alaskans by ensuring adequate
support . for vital: public.. health
: [activiti&MmyiiM
4. Make improvements in . the way
we resolve medical malpractice
pidisputestpppd
�B.
TASK FORCE RECOMMENDATIONS
The Task Force's recommendations, which together provide a comprehensive
strategy for improving the health of all Alaskans, can be broken down into the
following major components:
•
Cost Containment Efforts
Health Care Access Improvements
•
Public Health/Service Delivery System Enhancements
•
Medical Malpractice Reform
Our recommendations in each of these areas are presented below.
COST CONTAINMENT RECOMMENDATIONS
Tfce Task Force recommends the establishment of a statewide health care
expenditure limit that would bring increases in health care spending in
Because spiralling health care costs have had a negative economic impact on
Alaskan individuals and businesses and have been an important factor contributing to
the growing number of uninsured persons, the Task Force spent considerable time
reviewing possible approaches to bring health care costs under control. Unfortunately,
none of these approaches was found to be completely effective in controlling costs.
Among the approaches examined were:
1
•
Utilization controls, such as prior authorization, second surgical opinion
programs, etc. In general, these measures do decrease utilization, but
have not brought overall costs under control.
Managed care. More formal managed care systems, such as health
maintenance organizations (HMOs), have not been accepted in Alaska
and are therefore virtually non-existent. In other areas of the country
where HMOs are more prevalent, they have resulted in initial reductions
in health care spending, although over time, their health care spending
grows at essentially the same rate as overall health care costs.
'
For a good review of the experiences associated with different cost containment approaches,
see Congressional Research Service. 1990. Controlling Health Care Costs. Washington, D.C.
(January).
41
�Government price setting. Governmental price regulation, particularly in
the area of hospital rate setting, has been shown in a number of cases
to reduce the growth in health care spending. However, price setting
approaches that focus on controlling the growth in unit prices (e.g.,
charges for physician office visits) may cause providers to increase the
amount of services they provide to offset the effects of the price controls.
a
Market-oriented competitive strategies. These efforts may enable larger
purchasers to reduce their costs by negotiating discounts from providers.
However, unless overall cost levels are reduced, the revenues lost to
providers from these discounts may be recovered by charging higher
prices to smaller purchasers, such as individuals or small business policy
holders. In addition, in many ares of the state where the numbers of
providers are limited, competitive strategies are likely to be ineffective.
Based upon this review of possible cost containment options, the Task Force
concluded that any effective strategy to bring costs under control and make health
care affordable to all Alaskans must include the establishment of an overall limit on
health care spending in Alaska. Such expenditure limits or "global budgets" have
succeeded in keeping increases in health care spending in a number of other
countries, including Canada and West Germany, at levels that are more in line with
growth in other segments of their economies.
Within the United States, a global budgeting approach for hospitals has also
been used with considerable success by the State of Maryland and by the Rochester,
New York community to control the growth in hospital spending without diminishing
either the quality of or access to care. The establishment of statewide health care
expenditure limits covering all services has also been the centerpiece of major health
care reform legislation recently passed in the States of Minnesota and Vermont. At
the national level, the concept of global budgeting, including the establishment of
state-specific expenditure limits, has been a key component of a number of major
health care reform proposals and was an important element of the health care reform
strategy put forth by President-elect Bill Clinton during his campaign.
How Would a Statewide Health Care Expenditure Limit Work?
Under a global budgeting approach, an overall limit would be established for
health care spending within the State of Alaska. This limit would not be set so as to
cut health care spending below current levels, but would rather be designed to reduce
its current rate of growth, which far outstrips the growth in inflation and in other
sectors of the economy (see Finding #1 in Chapter Two). The Task Force believes
that the objective of global budgeting should be to limit annual increases in health care
spending to the overall rate of inflation, as reflected in the growth in the Consumer
Price Index (CPI). We recommend that the limits be phased in over a three-year
period beginning in 1994, with the data collection efforts initially required to establish
the limits to be conducted in 1993. Annual adjustments to the target rate of growth
could be made, as appropriate, to reflect such factors as:
42
�•
Changes in the size and/or demographic characteristics (e.g., age
distribution) of the state's population that may affect the need/demand for
health care in the future;
•
Changes in technology and health care delivery that may increase or
decrease health care costs;
2
•
The identification and reduction of the provision of unnecessary health
care;
•
Desired changes in some segments of the population's (e.g., the
uninsured's) access to adequate health care services;
•
Increases or decreases in the costs associated with medical malpractice
premiums and awards as appropriate;
•
Reductions in administrative costs; and
•
Other such factors as a newly established Alaska Health Care Authority
(AHCA) (to be described later in this chapter) may determine to be
appropriate (e.g., changes in the burden of disease, epidemics,
disasters, etc.).
To the extent possible, the overall statewide health care expenditure target
should be subdivided, with separate subtargets established, at a minimum, for such
major services as hospital care, physician services, etc. The Task Force also believes
that it may be appropriate to establish a separate subtarget for capital expenditures,
and to link the State's Certificate of Need policies to the global budgeting process to
ensure that this target is not exceeded.
Once expenditure targets for different services have been established,
reimbursement rates for health care providers would be set at levels that are expected
to result in expenditures that fall within the limit for each provider type. This does not
necessarily mean that the State would unilaterally set rates for each class of provider.
Instead, the Task Force envisions that after establishing the expenditure targets for
different services, the newly established Alaska Health Care Authority would then work
with designated representatives of the various provider groups (e.g., the state medical
The Task Force recognizes that the introduction of new health technologies has been a
significant contributor to the rapid growth in health care costs. And while some technologies
can improve patient outcomes, we also recognize that in many instances new technologies and
procedures may be utilized inappropriately and may not necessarily have demonstrated a
positive impact on health care outcomes. For these reasons, the Task Force felt that upward
allowances for technology changes should be incorporated into the expenditure limits
judiciously and be limited to technologies whose effectiveness has been clearly demonstrated
through scientific study and for which utilization standards have been developed in a similarly
scientific manner.
43
�association and the state hospital and nursing home association) to identify a mutually
acceptable set of reimbursement rates.
These reimbursement rates can initially be developed entirely by the provider
community and could vary across providers of similar services. From the State's
perspective, these reimbursement structures must meet the following basic
requirements:
1.
Given reasonable assumptions concerning anticipated utilization levels,
reimbursement rates should result in total expenditures which will fall
within the expenditure limit;
2.
Different rates may not be charged to different payers by a provider;
3.
For health care facilities overall, the base for the statewide expenditure
goal will be actual costs in a base year. Actual base year costs will also
be the basis for reimbursement levels for individual facilities;
4.
For hospitals, the unit of payment will be on a DRG-specific per
discharge basis. Price or charge levels will be increased above cost
levels to account for uncompensated care and/or rates from any public
payers (e.g., Medicare) that are not sufficient to cover costs;
3
5.
For physician services, the reimbursement schedules will utilize a
resource-based relative-value scale (RBRVS); and
6.
For other services, the Authority will work with the provider community to
develop the specific reimbursement schedules as appropriate.
Only if (a) a provider group fails to initially propose an equitable reimbursement
structure that can reasonably be expected to result in expenditures that fall within
predetermined targets, and (b) subsequent negotiations between the State and that
provider group fail to reach agreement on such a reimbursement schedule, will the
State as a last resort establish and put into effect its own reimbursement schedule for
their services.
If expenditures exceed the target in a given year without good cause, the
Authority will be able to take appropriate measures to ensure compliance with the
expenditure targets, including reducing the subsequent year's reimbursement levels to
bring spending back within the expenditure limit. For example, if the target annual
rate of growth for total hospital expenditures is 7.5 percent, but overall hospital
spending in a given year increases by 9 percent, the Authority could bring hospital
3
It is the Task Force's expectation that the State of Alaska would request the necessary federal
waivers to ensure that all payers comply with the reimbursement rates established as part of
the global budgeting process.
44
�spending back into line with the budget by allowing an increase of only 6 percent in
the following year.
A key feature of the expenditure limit process will be the establishment of
mechanisms through which detailed information on health care spending will be
furnished to the various provider groups. This information will enable these groups to
analyze spending patterns and assist them in identifying and addressing problems,
such as inappropriate utilization or price increases in their own areas. The Task
Force recommends that the State take the appropriate steps to provide the necessary
anti-trust protections to providers participating in negotiations with the Authority or
working with data from the Authority to address problems that are identified.
4
The State's involvement in data-related activities is discussed further in the next
recommendation.
What are the Anticipated Impacts of Establishinp Statewide Health Care Expenditure
Limits?
It is the Task Force's view that the establishment of these expenditure limits will
be effective in bringing skyrocketing health care costs under control. We believe this
can be achieved without harming health care quality or causing health care to be
"rationed." Rather, we would expect these limits to provide incentives for improving
the efficiency of the state's health care delivery system and reducing the utilization of
inappropriate and unnecessary services. The Task Force believes that the potential
reductions in unnecessary utilization could be significant. For example, national
research has found that a substantial portion of a growing number of expensive hightechnology procedures have been found to be "medically inappropriate."
5
The Task Force further anticipates that the establishment of expenditure limits
would provide incentives for existing health care organizations or groups of health care
providers to form new coordinated health care systems that would offer to provide
comprehensive quality care to patients on a prepaid capitated basis. An incentive for
the establishment of such managed care plans would be to exempt them from any
reduction in their subsequent year's rates if they came in within their budget, even if
fee-for-service providers exceeded their expenditure targets. These managed care
systems would achieve their efficiencies through internal patient care management
rather than through heavy-handed "over the shoulder" government regulation. Where
the population base was sufficient to support several of these coordinated care plans,
4
For an interesting discussion of the use of information feedback to providers, see Lasker, R. et
al. 1992. Realizing the Potential of Practice Pattern Profiling. Inquiry 29 (Fall): 287-297.
5
See, for example, Chassin, M. et al. 1987. Does Inappropriate Use Explain Geographic
Variations in the Use of Health Care Services? Journal of the American Medical Association
258:2533-37.
45
�competition between different managed care plans would provide a further incentive to
holding down costs. These plans would be able to compete on the basis of price,
quality, and patient satisfaction, but not on the basis of selecting only healthy patients
and avoiding those with significant illness.
While the Task Force does not anticipate
that the availability or the quality of health care
services would be diminished by expenditure
limits, as noted earlier, we do anticipate that
the affordability of health care in Alaska would
be substantially improved.
The following
analysis illustrates this point by assessing
anticipated future growth in health care
spending with and without an expenditure limit.
As indicated in Chapter Two (see
Finding #1), health care spending in Alaska is
estimated to have reached nearly $1.6 billion in
1991.
To estimate the cost impact of
establishing spending limits, the Task Force
developed projections of health care spending
in Alaska, both with and without the limits,
through the year 2003. Our projections reflect
anticipated changes in the state's population
and increases in health care spending due to
other factors.
STATEWIDE HEALTH CARE
The establishment: of statewide
health care expenditure limits would:
•
Bring runaway health care
costs under control;
" : Not harm quality of care or
result in health care rationing;
»
•
Provide incentives --for-; Hie
development of coordinated
: health care systems that
provide comprehensive quality
Significantly •••:improve the
affordability of health care in
:
Based upon population projections developed by the Alaska Department of Labor,
the growth in the state's population can be expected to cause aggregate health care
spending to rise by approximately 2.76 percent per year from 1991 through the year
2003. The aging of Alaska's population is expected to result in increases of
approximately 0.4 percent per year during the same period. In addition, we assume that
other factors, such as increases in prices, utilization levels, or intensity of care, would
increase health care spending by another 8 percent per year. The combined effect of
these three factors, when compounded, is an 11.4 percent annual rate of growth in health
care spending. As indicated in Table 4-1, under this scenario health care spending in
Alaska would increase from roughly $1.6 billion in 1991 (column 1) to nearly $5.6 billion
by the year 2003 (see column 13), an increase of over 275 percent. That translates to
approximately $7,340 in health care spending per Alaskan in 2003.
The lower half of Table 4-1 presents projections of health care spending in
Alaska under a system with expenditure limits. Under this scenario, the increases in
health care spending due to population growth and aging remain unchanged.
However, the target rate of growth due to factors other than population changes is
reduced from 8 percent per year to 4 percent, which is assumed to be the average
46
�•• Table 4 - 1 •
A COMPARISON O F P R O J E C T E D HEALTH C A R E EXPENDITURES IN ALASKA
UNDER THE CURRENT SYSTEM AND A SYSTEM WITH EXPENDITURE LIMITS, 1991 - 2003
(In BUIIohs of $)
(1)
1991
(2)
(3)
(4)
(5)
(6)
{7)
(8)
1992
1993
1994
1995
1996
1997
1^8
(9)
(10)
(")
(12)
(13)
(14)
1999
2000
2001
2002
2003
CUMULATIVE
$1,598
$1,598
$1,787
$1,983
$^202
$2,446
$2712
$3,008
$3,339
$3,706
$4,117
$4,559
$5,051
1. Increase Due to Population Growlti
$0,053
$0,043
$0,048
$0,053
$0,057
$0,064
$0,071
$0,080
$0,090
$0,086
$0,096
$0,108
2. Increase Due to Aging of Population
$0,004
$0,006
$0,008
$0,009
$0,009
$0,010
$0,011
$0,013
$0,015
$0,019
$0,022
$0,025
3. Increase Due to Other Factors @ 8.0%
$0.132
$0.147
$0.163
$0.181
$0.201
$0.223
$0.247
$0.275
$0.305
$0.338
$0374
$0415
$1,598
$1,787
$1,983
$2202
$2446
$2,712
$3,008
$3,339
$3,706
$4,117
$4,559
$5,051
$5,599
$1,598
$1,598
$1,787
$1,983
$2175
$2356
$2516
$2687
$2872
$3,070
$3,283
$3,502
$3,736
1. Increase Due to Population Growth
$0,053
$0,043
$0,048
$0,052
$0,055
$0,059
$0,064
$0,069
$0,074
$0,068
$0,074
$0,080
2. Increase Due to Aging of Population
$0,004
$0,006
$0,008
$0,009
$0,008
$0,009
$0,010
$0,011
$0,013
$0,015
$0,017
$0,019
3. Increase Due to Other Factors under Expenditure Limits
$0.132
$0.147
$0.136
$0.119
$0.097
$0.103
$0 110
$0.118
$0-126
$0.135
$0144
$0153
$1,598
$1,787
$1,983
$2,175
$2356
$2516
$2687
$2,872
$3,070
$3,283
$3,502
$3,736
$3,988
$0,000
$0,000
$0,000
($0,027) ($0,090) ($0,196) ($0,321) ($0,467) ($0,636) ($0,833) ($1,057) ($1,315) ($1,611)
ALTERNATIVE A: Current System
Baseline/Prior Year Expenditures
TOTAL: Projected Net Cost/Current System
$42,107
ALTERNATIVE B: System With Expenditure Limits
Baseline/Prior Year Expenditures
TOTAL: Net Cost of System With Expenditure Limits
ADDITIONAL COST (SAVINGS) O F
S Y S T E M WITH EXPENDITURE LIMITS
$35,552
($6,555)
�6
annual economy-wide inflation rate during this period. The information presented in
Table 4-1 assumes that the 8 percent annual increase due to non-population changes
is reduced to the target rate of 4 percent over the course of three years, beginning in
1994 and reaching the 4 percent per year level in 1997. As a result, once the
expenditure limits are fully implemented, annual health care spending is projected to
increase a total of 7.3 percent per year, rather than the 11.4 percent anticipated
without the limits.
Based upon these assumptions, the establishment of expenditure limits would
result in aggregate health care spending of $3,988 billion in the year 2003 (column
13). This translates to a per capita cost of slightly less than $5,000 per Alaskan in the
year 2003, or about a third less than what it would have been without expenditure
limits.
Further, cumulative health care spending
over the period from 1991 through 2003 would
total $42.1 billion without expenditure limits
(column 14), compared to less than $35.6
billion with expenditure limits in place. This
represents cumulative savings of $6.55 billion
statewide over the period in which the
expenditure limits are in place. This represents
cumulative savings of over $8,500 per Alaskan.
This difference in the growth in health care
spending is depicted in Figure 4-1.
HEALTH CARE EXPENDITURE
LIMITS: ANTICIPATED SAVINGS
During the first ten years of operation,
statewide health care expenditure
limits could result in $6.55 billion in
statewide health care savings. That
translates to over $8,500 per Alaskan.
The target growth rate used in this analysis is consistent with that included in the State of
Minnesota's health care reform legislation, which calls for increases in spending to be reduced
to half of what they would otherwise have been. An earlier draft of this report used slightly
higher assumptions for non-population based growth in health care spending in the absence of
expenditure limits and for overall inflation (10% and 5%, respectively). In this analysis the
assumptions concerning projected non-population-based health care spending increases and
overall inflation rates have been reduced to 8% and 4%, respectively, to make them consistent
with those used in federal projections of future health care spending. See Sonnefeld, S. et al.
1991. Projections of National Health Expenditures through the Year 2000. Health Care
Financing Review 13 (Fall). To the extent that non-controlled growth in health care spending
and inflation would exceed our assumptions, the savings resulting from the expenditure limits
would increase.
48
�Figure 4-1
Projected Health Care Expenditures in
Alaska under Alternative Systems, 1991 - 2003
Billions of $
$5.6 Billion
Current System
$3,988 Billion
System With
Expenditure
Limits
1991
1992
1993
1994
1995
1996
1997
1998
1
2000
2001
2002
2003
Source: Health Systems Research, Inc.
The Task Force supports the passage of legislation to establish a single
administrative entity to oversee the State's health care cost containment
and access initiatives.. • •.
The Task Force recommends the establishment of the Alaska Health Care
Authority (AHCA) at the State level, which would have responsibility for overseeing the
development, implementation, and enforcement of the statewide expenditure limits, as
well as other cost containment and access initiatives discussed later in this chapter.
To ensure that it is able to carry out its significant responsibilities as effectively as
possible, the Task Force further recommends that the Authority be structured to:
•
Function as independently as possible;
•
Be staffed by the most qualified individuals available; and
•
Not include representation from provider groups, since the Authority will
be responsible for negotiating with these groups.
49
�The AHCA will be responsible for implementing the expenditure limits, which will
include the conduct of negotiations with provider groups concerning reimbursement
arrangements that will meet expenditure targets. The collection and analyses of
comprehensive data on health care utilization and expenditures are also essential
elements of the proposed global budgeting process. The AHCA must have the
authority and capacity to collect and analyze all health care data necessary for the
development, implementation, and monitoring of the health care expenditure limit
process. As discussed under the prior recommendation, the Authority must also be
able to share data on cost and utilization with the provider community in a timely
manner through some form of feedback mechanism. Sharing information on utilization
and expenditures with provider groups will assist in identifying possible problem areas
and in making adjustments in their activities, as appropriate.
In addition to its responsibilities in the area of global budgeting, the Authority
will also be charged with implementing other initiatives designed to reduce costs by
increasing the efficiency of the current health care financing system. These initiatives
include:
The development of uniform billing and common claims forms which are
to be used by all payers and providers;
The development of uniform utilization review standards and criteria; and
•
The establishment of requirements for the timely payment of claims by all
payers, with the goal of providing payment within fifteen working days of
receipt of an error-free or "clean" claim.
As a complement to the development of uniform utilization review standards by
the proposed Alaska Health Care Authority, the Task Force also recommends the
passage of legislation requiring the registration of utilization review agents operating in
Alaska and the development of regulations by the Department of Commerce and
Economic Development (DCED) to ensure their competency and their use of the
uniform standards developed by the Authority.
Additional responsibilities of the Authority will be discussed in later
recommendations.
WCOMMEflMfld
The Task Force supports expanding the State's authority to review and
approve or disapprove rates filed by health insurers.
In addition to establishing the Alaska Health Care Authority, the Task Force
also supports expanding the authority of the State Director of Insurance to allow him
50
�or her to approve or disapprove rate requests filed by all health insurers, both nonprofit and commercial, that sell group and/or individual health insurance policies in
Alaska. Currently the Director of Insurance does review rate filings submitted by
insurance carriers. However, his ability to deny a rate filing is quite limited, even if it
determined that the rates requested are excessively high in relationship to the benefits
to be paid. This expanded authority will provide the State with the ability to deny rate
requests in such instances and will improve the State's ability to ensure that insurance
premiums charged by all health insurers in Alaska are reasonable.
HEALTH CARE ACCESS RECOMMENDATIONS
The cost containment measures called for in the previous recommendations will
slow the erosion in health care coverage caused by rapidly escalating costs.
However, these efforts alone cannot be expected to remove the health care access
barriers faced by the tens of thousands of Alaskans who lack health care coverage.
To address the very real needs of uninsured Alaskans and to meet our mandate from
the Legislature to design a program that will provide universal coverage to all of the
state's residents, the Task Force believes that a major, fundamental change to our
current health care financing structure is required.
As will be discussed in greater detail later in this section, after a careful
assessment of the Alaskan environment as well as pros and cons associated with
alternative approaches to providing universal coverage, including pay-or-play
proposals and employer mandates, the Task Force has concluded that a single payer
financing system is the most efficient, equitable, and appropriate model for Alaska.
The Task Force is committed to the belief that all Alaskans will benefit from a
single payer system. Nonetheless, as noted earlier, we also recognize that the
benefits of a single payer system may not be immediately evident to the Alaska public
and to policymakers. Programs must be put in place to educate the public concerning
the benefits of moving to such a system and to stimulate an expanded public dialogue
on the issue. However, such a public education process may require time for it to
have an effect.
Unfortunately, during the period in which this public education process and
public debate will take place, the problems that exist within our current financing
system will continue. Uninsured persons will die or be admitted for expensive hospital
care for problems that could have been avoided through access to adequate primary
care. Children without access to preventive care may develop lifelong limitations due
to conditions that could have been treated if detected early. And thousands of
Alaskans will continue to live with the fear that their current insurance may not be
there when they need it.
51
�Given this situation, the Task Force felt that, in spite of its commitment to a
single payer system, it should also put forth recommendations for making incremental
improvements to the existing financing system that have already been adopted in
many other states and that could be enacted immediately by the Alaska State
Legislature. The first four of the Task Force's access-related recommendations
(Recommendations 4 through 7) focus on this short term strategy. Our final
recommendation describes the Task Force's rationale for proposing a single payer
system as the preferred approach for providing universal coverage.
The Task Force Commends Me enactment
establishing
regulatory reform measures in the small group healtfr insurance market
As described in Chapter Two (see Finding #6), a significant proportion of
uninsured Alaskans are either employees in small firms or dependents of these
employees. As was also noted, a number of serious problems in the current small
group health insurance market are likely to make health care coverage unattractive to
many small businesses. These problems include:
•
The refusal by some insurers to provide coverage to certain small
businesses because of the type of work in which they are involved or the
health status of their employees or their dependents;
Premium levels charged by the same insurer that may vary widely across
firms with similar employee characteristics;
•
Premium setting practices that result in many small businesses being
offered very attractive first year rates, but then being hit by double-or
even triple-digit increases in their premium costs in the following years.
These staggering increases cause many businesses not to enter the
market in the first place, to drop their coverage, or to switch to another
carrier;
•
High administrative costs due to medical underwriting activities and the
frequent switching of insurers that is promoted by insurer practices; and
•
The dropping of some small businesses without notice or refusing to
renew their coverage because of their claims experience.
52
�A number of organizations, including the National Association of Insurance
Commissioners (NAIC) have worked to develop a package of regulatory reform
measures that would enable states to address these problems. The NAIC has
developed a Small Employer Health Insurance Availability Model Act that incorporates
many desired reform provisions. These provisions, which would apply to policies sold
to employers with fewer than twenty-five employees, include:
•
Guaranteed Issue and Renewability: All small group insurers must
provide coverage to all eligible firms applying for coverage and may not
terminate such coverage for other than good cause, such as nonpayment of premiums.
•
Whole Group Coverage: Insurance policies sold to small groups must
provide coverage to all eligible employees and their dependents and
cannot exclude certain individuals based upon their health status.
•
Elimination of Multiple Waiting Periods for Pre-existing Conditions:
Waiting periods for individuals with pre-existing conditions are to be
waived if these individuals have previously fulfilled a waiting period and
maintain continuous coverage.
•
Development of Standardized Plans: To allow comparison shopping by
small employers, each small group insurer must offer two standardized
plans, one of which is to be a "bare bones" plan.
•
Premium Rating Restrictions: Premium rate "bands" or restrictions would
be established to limit variation in:
annual premium increases faced by individual small businesses;
and
premium rates charged to different types or classes of small
businesses.
•
Reinsurance Pool: A statewide reinsurance pool should be established
to spread the risk associated with the guaranteed issue requirements in
the small group market.
•
Data and Disclosure: Small group insurers must disclose their premium
rating practices and renewability provisions to small businesses. Insurers
must also maintain their records in proper order and submit an annual
statement certifying that the rates they charge small businesses are
actuarially sound and comply with all the above requirements.
53
�Over half of the states have already enacted small group health insurance
market reforms similar to those included in the NAIC Model Act. The Task Force
believes that enactment of such regulatory reform efforts could reduce many problems
that Alaska's small businesses encounter in attempting to obtain or maintain health
care coverage for their workers. The Task Force therefore recommends that the
Legislature enact the NAIC model statute as part of a short term strategy to improve
access to health care coverage in the state. The Task Force further recommends that
the elimination of multiple waiting periods for pre-existing conditions should also apply
to persons moving from group to non-group coverage.
REQpMMEND$TtONm
H
The Task Force recommends that the State of Alaska require insurers to
move toward community rating in establishing premiums in the small
With respect to the development of premiums to be charged in the small group
insurance market, the Task Force viewed the provisions in the NAIC Model Act calling
for the use of specific rate bands to limit variations in premium rates as a starting
point, rather than the endpoint, for reform in this area. To further reduce the variations
in premiums in this market, the Task Force calls for the phased-in use of quasicommunity rates in the small group marketplace. Specifically, the Task Force
recommends:
•
The use of health status/medical underwriting and gender as factors in
the setting of premium rates should be phased out over a three- to fiveyear period.
At the end of the phase-in period, the only allowed variations in
premiums charged to small businesses in a given geographical region of
the state (to be defined by the State Director of Insurance), would be for
differences in age composition and occupation/industry among small
groups, as well as for differences in the family status of group members
(i.e., single vs. family coverage).
•
Limits should be placed on the maximum variation allowed in a
geographic region due to age and industry differences across small
groups. In reviewing the approaches of several other states that recently
passed legislation calling for the use of some form of community rating,
the Task Force viewed favorably an approach incorporated in a
Massachusetts statute, which specified that no small business could be
54
�charged a premium greater than twice that of the lowest small group
premium within a given geographical area. During the phase-in of this
2:1 rate band requirement, the statute requires that renewal rates not
exceed the trend for the class, plus allowable adjustments, plus 10
percent.
Within this quasi-community rate setting structure, the Task Force
recommends that insurers be allowed to offer discounts for non-smoking
and for participation in wellness programs.
While this shift to community rating will mean lower premiums for some higher
risk groups, the Task Force recognizes that it may also mean, at least initially, higher
premiums for some lower risk groups. However, the Task Force believes that the
enactment of the expenditure limits described in an earlier recommendation will reduce
the magnitude of these premium increases. We also recognize that other aspects of
our recommendations-including prohibiting insurers from cancelling policies because
of changes in health status or use and the gradual elimination of medical underwriting-mean that the higher premiums that may be paid by some groups will provide them
with much more predictable and stable health care coverage than they had in the
past.
It also should be noted that the Task Force's recommendations with respect to
community rating are directed at the small group market, which we defined as
including firms with two to twenty-five employees. At this time, we did not extend our
recommendations concerning community rating to larger firms because of the concern
that this requirement might spur them to drop coverage or to self-insure, thereby
avoiding the State's regulatory requirements completely. However, the Task Force
does recommend that the State Director of Insurance explore the feasibility and
implications of extending these community rating requirements to firms with up to fifty
employees.
7
The Task Force was also interested in extending its recommendations to the
individual, non-group market. However, because of the significant potential for
adverse selection that exists in the individual market, unless otherwise specified, our
recommendations do not extend to that segment of the insurance marketplace.
7
The provisions of the federal Employee Retirement and Income Security Act of 1974 (ERISA)
do not allow state governments to regulate self-funded employee health benefit plans.
55
�The Task Force recommends the establishment of State-sponsored health
':insM^^ii^^
During its deliberations, the Task Force reviewed information indicating that
nationwide as much as 40 percent of premiums charged to very small businesses may
be attributable to administrative costs. While the small group market reform provisions
included in earlier recommendations are expected to reduce the administrative costs
associated with providing coverage to small businesses, the Task Force also
considered it appropriate for the State, through the newly established Health Care
Authority, to establish one or more pooling arrangements through which both
individuals and businesses, small and large, could purchase health care coverage. It
is anticipated that certain additional efficiencies and economies could accrue to the
members of these pool arrangements that would further reduce their premium costs.
In designing these pools, the Task Force noted the importance of considering their
medical underwriting and premium setting practices in relation to those of other
insurers governed by the small market reform proposals to ensure that these Statesponsored pools are not damaged by the adverse selection that would result from
other insurers subtly "dumping" undesirable risks into these pools.
mCOMMENDATtON0:
tation providing tor
The task Force recommends ihe passage of legist
:: puDiiciysuosiQizsa cpy@r39" '
rle
and children who are hoi eiigfl for Medicaid.
Even with the recommendations concerning cost containment, market reform,
and pooling measures in place, the Task Force recognizes that it would be necessary
to provide some level of public subsidy to certain low-income uninsured persons if they
are to be able to afford health care coverage (see Finding #4).
The Task Force determined that the populations to be given highest priority for
receiving subsidized coverage should be low income pregnant women and children in
families with incomes too high to be eligible for Medicaid but too low to be able to
56
�8
purchase private health insurance on their own. Priority was given to these groups
because of the documented improvements in birth outcomes and the cost savings
associated with the receipt of prenatal care by pregnant women and the positive
lifelong benefits associated with providing adequate primary and preventive care to
children. The Task Force also determined that the positive health improvements
resulting from public health care subsidies for these populations could be maximized
by providing coverage of comprehensive services (e.g., prenatal and other preventive
sen/ices, plus other ambulatory and inpatient care) for low income pregnant women
and ambulatory care services for low income children.
Given these priorities, the Task Force recommends that legislation be enacted
to establish a program providing State-subsidized insurance coverage for low-income
children who are not eligible for Medicaid or Indian Health Service coverage and who
are in families with incomes below 300% of the federal poverty level. In order to make
the program more affordable at the outset, coverage would be provided for primary
and preventive and/or ambulatory care services, but not for inpatient care.
Experience in other states has shown similar programs to be more attractive to
families if they were perceived to foster self-sufficiency and were similar to private
insurance in design. Therefore, the Task Force recommends that the program be
given an identity apart from Medicaid, particularly the eligibility system. This would not
preclude the Medicaid agency from administering the program if it proves most costeffective, however serious consideration should be given to having a private insurer
administer the program under contract to the State. The Task Force was heartened
by expressions of interest from two major carriers in Alaska in being involved in such
a program.
While coverage would be substantially subsidized by the State, premium
sharing requirements in the range of $50 - $300 per year per child should be
established on an income-related sliding scale basis. This premium sharing will not
only reduce the required level of State subsidy, but also will give parents of enrolled
children a sense of involvement and participation in contributing to coverage for their
children.
As illustrated in Table 4-2 on the following page, approximately 14,600
uninsured Alaskan children would be eligible for coverage under this program. The
Task Force estimates that roughly 8,200 children would actually enroll in the program,
with nearly 90 percent of these children having no previous health care coverage.
The remaining enrollees are expected to be children with private insurance that
provides inadequate coverage of primary and preventive care. The annual cost of the
program is estimated to be $6.1 million, of which $4.2 million would be financed by
State subsidies. The remaining $1.9 million would be paid by families in the form of
premium contributions.
It should be noted that the Task Force identified high-risk individuals as another high priority
population and in our interim recommendations we endorsed the establishment of a statewide
high-risk insurance pool for this population. Legislation establishing such a pool was enacted
last year by the Alaska State Legislature.
57
�ESTIMATES O F E N R O L L E E S AND C O S T S UNDER
SUBSIDIZED AMBULATORY CARE PROGRAM FOR LOWER INCOME
ALASKAN CHILDREN NOT ELIGIBI F FOR MEDICAID OR 1HS COVERAGE
Income
Number of
Uninsured
Children
Costs (in millions of $)
Number of
Enrollees
State
Family
TOTAL
Under Poverty
3,900
300
$0.2
$0.0
$0.2
100- 200% Poverty
4,500
2,900
$1.8
$0.4
$2.2
2 0 0 - 300% Poverty
6,200
5,000
$2.2
$1.5
$3.7
14,600
8,200
$4.2
$1.9
$6.1
TOTAL
Source: Health Systems Research, Inc.
�With respect to the coverage of low income pregnant women, the Task Force
recognizes that, while federal laws enable the State of Alaska to extend Medicaid
eligibility to pregnant women and infants in families with incomes up to 185% of
poverty, the State currently has elected to provide coverage only to pregnant women
and infants in families with incomes below 133% of poverty. The Task Force
recommends that the State expand its Medicaid coverage for pregnant women and
infants up to 185% of poverty. The FY 1994 cost of this expansion to the State is
estimated to be $3.8 million, which will be matched by an equal amount from the
federal government. For uninsured women with incomes above this income level but
below 300% of poverty, the Task Force recommends the establishment of a publiclysubsidized private insurance program providing comprehensive services.
The Task Force recommends the enactment of legislation establishing a
Single payer health care financing system to provide universal health care
While the previous recommendations can be expected to result in short-term
improvements in the availability and affordability of health care coverage, even with
their enactment, tens of thousands of Alaskans will remain without health care
coverage. After considerable examination of alternative approaches to provide health
care coverage for all Alaskans, the Task Force concluded that the most appropriate
model for achieving such a goal in Alaska is through the establishment of a single
payer financing system. Our rationale for selecting this model is described below.
Why a Single Payer Svstem?
In considering what financing structure would be the most appropriate for
providing universal health care coverage in Alaska, the Task Force carefully
considered a range of different models for achieving this goal. They included three of
the major approaches that have been considered both in other states and at the
national level:
•
Mandated employment-based health care coverage;
•
"Pay or Play" coverage requirements; and
•
A single payer system.
Each of these approaches is described below.
59
�Mandated employment-based health care coverage.
Under this approach, all Alaska employers would be required to provide
health care benefits for at least their full time workers. This requirement
could also be extended to the dependents of these workers, and to part
time workers, with employer premium contributions for this latter group
adjusted on a sliding scale basis depending on the number of hours that
they work.
To implement such a requirement, the State of Alaska would require a
federal waiver of the Employee Retirement and Income Security Act of
1974, known as ERISA. This federal statute precludes states from
regulating employee benefit programs and would preclude Alaska from
requiring the provision of health care benefits. Only one state in the
nation, Hawaii, has received a waiver of ERISA, because its employer
mandate was established prior to ERISA's passage. Under this
approach, a publicly subsidized health insurance plan also would have to
be created to provide coverage for low income individuals and families
not tied to the work force.
"Pay or Play" approaches.
In an attempt to avoid the need for an ERISA waiver, a number of states
have enacted legislation that does not directly require employers to
provide health care benefits for their workers, but instead exempts
employers that provide such coverage from newly established payroll
taxes. The States of Massachusetts and Oregon have enacted these
"Pay or Play" employer requirement, but have delayed their
implementation to 1995. The State of Florida also has enacted
legislation proposing a "pay or play" requirement if employers do not
voluntarily extend coverage to their workers.
Like the employer mandated coverage approach, a pay or play approach
would require the establishment of state-sponsored coverage for persons
not linked to the work force or workers whose employer elected to pay
the payroll tax rather than provide health benefits.
A single payer system.
By a "single payer" system we mean a system under which all Alaska
residents would be provided constant health care coverage through a
unified funding mechanism. This would be in contrast to our current
system under which whether or not a person has coverage is dependent
upon whether his or her employer provides health benefits, whether or
not their income is below a certain level to qualify for Medicaid, whether
they are old enough to qualify for Medicare, or whether they would
qualify for coverage under the Indian Health Service.
60
�A single payer systems does not mean that all health care providers
would end up being government employees or that all health care
facilities would be government owned. Under a single payer system, the
current mix of private and public health care providers could continue to
provide services and Alaskans would still have the ability to select the
provider of their choice.
After a careful consideration of each of these possible approaches, the Task
Force concluded that the most appropriate approach for providing universal coverage
in Alaska is a single payer system. There are several important reasons why a single
payer system is preferred to either an employer mandate or a "pay or play" approach,
both of which are based upon our current system. They are the following:
1.
The current mix of public, employer, and individual financing inevitably
creates coverage gaps for some people, particularly when their
employment status changes.
Linking health care coverage to employment is particularly difficult in
Alaska. Given the seasonal nature of many of its industries, there are
considerable fluctuations in employment during the course of the year.
For example, an analysis of all but the state's very largest firms
conducted by the Alaska Department of Labor found that employment in
the "average" business fluctuated by 24 percent from the lowest
employment month to the highest. In the very seasonal industries, those
fluctuations were even greater. In seafood processing, for example, the
highest monthly employment averaged over 300 percent higher than in
the lowest month. The lumber and wood products, utilities, and
construction industries were also found to have fluctuations of from 66 to
87 percent.
9
2.
Health care financing approaches that require all businesses to provide
health care benefits or that levy additional taxes on those businesses
that do not may threaten the economic viability of many small businesses
in Alaska.
As discussed in Chapter Two, a significant proportion of uninsured
Alaskans are workers employed by small businesses or the dependents
of these workers. While many of the businesses that employ these
uninsured workers might be able to afford to provide coverage for these
workers, particularly in a system in which effective cost containment
measures are in place, the financial status of some of these businesses
might be jeopardized by the burden that either a health benefit mandate
or a "pay or play" requirement would place upon them. The Task Force
believes that a single payer approach offers greater flexibility to identify
g
Rae, B. 1991. Alaska's 13,476 Other Employers. Alaska Economic Trends (August).
61
�funding sources and develop financing arrangements that will be less of
a threat to the state's small businesses.
3.
Multiple payer systems would not necessarily address the problems of
cost shifting that exist in our current system.
Unless there was a requirement that all payers would pay the same
amount to providers for comparable services, multiple payer approaches
to providing universal coverage would not necessarily solve the problem
of cost shifting, which places an inequitable burden on some payers.
Under such a system, larger payers might be able to negotiate significant
discounts in charges from providers, with losses in revenues being made
up through higher charges to other, smaller payers. To the extent that
public programs reduce their reimbursement levels below costs due to
budgetary constraints, this source of cost shifting can also exist. Under
a single payer system, by definition, a single rate would be paid to a
given provider for a given service, so that no one's cost would be
artificially increased.
4.
Systems that are built upon the existing public-private financing
arrangements can be expected to inherit its inefficiencies.
These inefficiencies exist because there are considerable administrative
costs associated with conducting eligibility determinations for public
program coverage, enrolling individuals in employment-based plans, and
re-enrolling them when they change jobs and are lucky enough to obtain
coverage at their second job. Given the seasonal fluctuations in
employment discussed above, these costs are likely to be particularly
high in Alaska.
There also are significant costs associated with having multiple insurers
provide coverage. These administrative costs include not only insurer
overhead, but also the cost to providers of filling out different forms and
responding to varying requests from different insurers. In its study of the
Canadian health care system, the U.S. General Accounting Office
concluded that nationwide there would have been administrative cost
savings of approximately $67 billion in 1991 if the U.S. had adopted a
Canadian-style single payer system-more than enough to cover the
increased cost associated with covering all currently uninsured
Americans. While the magnitude of GAO's estimates of administrative
cost savings have been questioned by some analysts, most conclude
that the administrative savings would nonetheless be significant.
10
11
10
11
General Accounting Office. 1991. Canadian Health Insurance: Lessons for the United States.
Washington, D.C. (June).
See Gauthier, A. et al. 1992. Administrative Costs in the U.S. Health Care System: The
Problem or the Solution? Inquiry 29 (Fall).
62
�What Would be the Impact of a Single Paver System on Health Care Costs in Alaska?
An analysis of the cost of moving to a single payer health care financing system
that provides coverage to all Alaskans is presented in Table 4-3. This analysis
assumes that a single payer system providing universal access is implemented in
1995, one year after the beginning of the phase-in of the expenditure limits. To the
projections of health care expenditures in Alaska under a system with expenditure
limits (see Table 4-1 in Recommendation #1) are added the following:
•
The marginal costs associated with providing health care coverage to
Alaska's currently uninsured population. These costs are based upon
analyses which indicate that per capita health care costs for insured
individuals are approximately 40 percent higher than for persons without
health care coverage.
12
Anticipated administrative savings associated with a single payer system,
which is based on a low-end estimate of 4 percent savings of total
expenditures.
13
As can be seen from Table 4-3, the administrative savings associated with the
single payer system are estimated to exceed the anticipated marginal cost of covering
Alaska's uninsured population. As a result, cumulative expenditures under this alternative
scenario for the period 1991 to 2003 total $34.9 billion (see column 14). This figure is
significantly less than the cumulative cost of $42.1 billion for maintaining the current
system without expenditure limits or universal
access, which is presented as Alternative A in
The savings in administrative costs
Table 4-3. It is also less than the estimated
that result from a single payer system
$35.55 billion in cumulative health care
would be enoughtoprovide coverage
spending under a system under in which there
to all uninsured Alaskans.
are expenditure limits, but neither universal
access nor a single payer system (see Table
4-1, Alternative B, column 14).
How Could a Single Paver Svstem be Financed?
As the analysis presented above illustrates, the difficulty in restructuring our
current health care financing system to one that is more equitable, efficient, and
rational is not that it will cost more money. Rather, the problems are due to the fact
that the public may have certain misconceptions about a single payer system, it may
not be aware of the savings that could accrue from moving to such a system, and the
12
Needleman, J. et al. 1990. The Health Care Financing System and the Uninsured. Submitted to
the Office of Research, Health Care Financing Administration, DHSS (April 4).
13
For a fuller discussion of alternative estimates of administrative cost savings associated with a
single payer system, see Gauthier et al. 1992.
63
�Table 4 - 3
A COMPARISON O F PROJECTED HEALTH C A R E EXPENDITURES IN ALASKA
UNDER THE CURRENT SYSTEM AND A SINGLE PAYER S Y S T E M WITH EXPENDITURE LIMITS, 1991 - 2003
(In Billions of i> / ' ' '•
(10)
(1)
1991
(2)
(3)
(4)
(5)
(6)
(7)
(14)
1994
1995
1996
1997
1998
2000
(11)
2001
(13)
1993
(9)
1999
(12)
1992
2002
2003
CUMULATIVE
$1,598
$1,983
$2202
$2446
$2,712
$3,008
$3,339
$3,706
$4,117
$4,559
$5,051
$0,064
$0,071
$0,080
$0,090
$0,086
$0,096
$0 108
(8)
ALTERNATIVE A: Current System
Baseline/Prior Year Expenditures
$1,598
$1,787
1. Increase Due to Population Growth
$0,053
$0,043
$0,048
$0,053
$0,057
2. Increase Due to Aging of Population
$0,004
$0,006
$0,008
$0,009
$0,009
$0,010
$0.011
$0,013
$0,015
$0 019
$0,022
$0,025
3. Increase Due to Other Factors @
$0,132
$0 147
$0,163
$0,181
$0,201
$0,223
$0,247
$0,275
$0,305
$0,338
$0,374
$0,415
$1,598
$1,787
$1,983
$2202
$2446
$2712
$3,008
$3,339
$3,706
$4,117
$4,559
$5,051
$5,599
$1,598
$1,598
$1,787
$1,983
$2175
$2352
$2505
$2,666
$2,836
$3,016
$3,207
$3,397
$3,598
1. Increase Due to Population Growth
$0,053
$0,043
$0,048
$0,052
$0,054
$0,059
$0,063
$0,068
$0,073
$0,067
$0,072
$0,077
2. Increase Due to Aging of Population
$0 004
$0,006
$0,008
$0,009
$0,008
$0 009
$0,010
$0,011
$0,012
$0,015
$0,016
$0,018
3. Increase Due to Other Factors under Expenditure Limits
$0,132
$0,147
$0,136
$0,119
$0,097
$0,103
$0,110
$0,117
$0,124
$0,132
$0,139
$0,148
($0,027)
($0,090)
($0,201)
($0,333)
($0490)
($0,674)
($0,891)
($1,139)
($1,427)
($1,759)
$0,094
$0,098
$0,102
$0,106
$0,110
$0,114
$0,119
$0,124
$0,128
($0,098)
($0,104)
($0,111)
($0,118)
($0 126)
($0 134)
($0,142)
($0,150)
($0,159)
$2666
$2,836
$3,016
$3,207
$3,397
$3,598
$3,810
$34,928
($0,343)
($0,502)
($0,690)
($0,910)
($1,162)
($1,453)
($1,789)
($7,178)
8.0%
TOTAL: Projected Net Cost/Current System
$42,107
CD
ALTERNATIVE C: Single Payer System w/Expenditure Limits
Baseline/Prior Year Expenditures
Savings Due to Expenditure Limits
4. Additional Costs of Universal Access
5. Administrative Savings of Single Payer System
TOTAL: Net Cost of Single Payer System
ADDITIONAL COST (SAVINGS) OF SINGLE
PAYER S Y S T E M WITH EXPENDITURE LIMITS
$1,598
$1,787
$1,983
$2,175
$2352
$2505
$0,000
$0,000
$0,000
($0,027)
($0,094)
($0,208)
�fact that there would be major shifts in the distribution of responsibility for the financing
of health care.
For example, with respect to this latter issue, the establishment of a nonemployment-based single payer financing system would relieve both private and public
employers-including private businesses, school districts, municipal governments, e t c of the significant costs that most currently incur in providing employee health benefits.
At the same time, however, it would require the identification of new sources of
revenues to replace these expenditures. In addition, under a single payer system,
other sources of health care dollars currently financing care in Alaska, such as
Medicare, federal Medicaid funds, IHS, VA, etc., would continue to come into the state
on a block grant-like basis but would go into a Statewide Universal Access Fund
rather than be used to support individual facilities or finance care for specific program
recipients.
The Task Force realizes that federal waivers will be required to integrate these
federal health care funding streams into a single payer financing system. We also
recognize that bringing these different programs into a single payer system must be
done carefully and sensitively. For example, the Task Force recommends that the
newly created Alaska Health Care Authority negotiate with Alaska Natives and the
federal government to bring the IHS/tribal health care system within the single payer
system. These negotiations will require changes to federal law and must recognize
and address the following issues:
•
Recommendations for change which affect the IHS/tribal health care
delivery system in Alaska must recognize and support the federal trust
responsibility to provide health care to Alaska Natives.
•
Recommendations for universal coverage must provide the same rights
for Alaska Natives as for all other Alaskans and must support at least the
level of care currently available to Alaska Natives.
Recommendations for cost control should capture and, if possible,
enhance the direct federal appropriations currently going to the Alaska
Area Native Health Service.
•
Other issues regarding copayments and deductibles (prohibited by law in
the IHS system), native preference in employment, etc. must be
addressed.
As discussed above, employment-based and individually purchased health care
coverage would be eliminated under a single payer system. Table 4-4 uses the
estimates of 1991 health care spending in Alaska originally presented in Table 2-1 to
estimate the need for new revenue sources to replace these private health insurance
payments.
65
�SOURCES OF HEALTH CARE SPENDING IN ALASKA, 1991
(In Thousands of $)
^mSyMy
:
ESTIMATED 1991
EXPENDITURES
SOURCES
1. Private Businesses
• Insurance premiums
$121,418
• Self-insured payments
$65,379
2. Local Government
• Insurance premiums
$39,906
• Self-insured payments
$48,774
• Local taxes to support
hospitals/local spending
$29,713
3. State Government
• Premium contributions for
state employees
$47,929
• Self-insured payments
: $9,290
• Medicaid
$99,602
$161,106
• Other health programs
4. Federal Government
• Premium contributions for
civilian employees
$35,402
• Medicare
$90,000
• Medicaid
$114,948
• IHS/AANHS
$206,153
• Veterans' Affairs
$46,476
• CHAMPUS and military
$55,931
$313
• Other
5. Workers' Compensation
$48,089
6. Individual
• Premium contributions for
employment-based coverage
• Individual policies and policies through
fraternal orgs and auto liability insurance
• Service-related cost sharing
(copayments, deductibles), excess
o u t - o f - p o c k e t expenses of uninsured
$255,602
TOTAL, ALL EXPENDITURES:
$1,597,513
TOTAL, EXPENDITURES IN SHADED AREAS:
$537,668
Source: Data originally compiled by ISER, UAA from various sources. Selected entries updated by Health Systems Research, Inc.
66
�If a single payer system had been put in place in 1991, the sources of health
care spending that would not have been available are identified in the shaded boxes in
Table 4-4. Expenditures for employment-based and non-group coverage, including
the premium contributions made by businesses and individuals, are estimated to total
$489.6 million. If workers' compensation health care payments were included under
the single payer system, which would eliminate this cost to employers, the total is
$537.7 million.
While the Task Force is not recommending a specific revenue source to replace
these dollars, it recognizes that funds could come from a number of existing sources.
These include:
•
Payroll taxes;
•
Income taxes;
Sales taxes;
•
Excise taxes; and
•
Permanent Fund earnings.
Table 4-5 provides estimates of the amount of 1991 revenues that theoretically
could have been available from a number of these different sources. As can be seen
from this table, certain of these potential revenue sources, such as sales taxes on
specific items or "sin" taxes on cigarettes and alcohol, would not raise revenues
sufficient to replace group and non-group insurance premiums. However, several of
these revenue sources, such as payroll tax, income tax, or Permanent Fund earnings,
either alone or in combination with other revenue sources, could replace current
premium contributions.
It should again be emphasized that these new revenue sources would not
represent additional spending on health care, but would instead replace existing
expenditures being made by Alaskan employers and individuals. For example,
because employers would no longer have to make health care contributions on behalf
of their workers and their dependents, it is expected that these savings would be
passed on to the Alaskan workers in the form of higher wages, which in turn might be
subject to a new payroll or income tax. It is this understanding of the need to
redistribute, rather than increase, spending under a single payer system that must be
communicated to the public if this model of universal access is to be accepted.
67
�POSSIBLE SOURCES OF REVENUES TO REPLACE
GROUP ANO NON-GROUP HEALTH PREMIUMS/BENEFITS
PAYROLL TAX
(Based upon 1991 Non-agricultural
@
@
@
@
@
Payroll of $7,347 billion)
3%
5%
7%
8%
9%
$
$
$
$
$
220
367
514
588
661
million
million
million
million
million
$
$
$
$
66.5
199
332
664
million
million
million
million
INCOME TAX
(Based upon 1990 Federal Taxable Income)
@
@
@
@
1%
3%
5%
10%
SALES TAX
1. General Tax on Retail Items
@ 1%
@ 6%
$ 34
$ 216
million
million
2. Sales Tax on Hotel and Lodging
@ 1%
@ 5%
@ 10%
$ 1.9 million
$ 9.0 million
$ 18.6 million
EXCISE TAXES
1. Cigarette Tax
Increasing tax per pack by 10$ would raise about $4.5 - $5 million
2. Alcoholic Beverage Tax
Equaling tax rate on alcoholic
beverages: $4.28 million
Increasing tax to highest rate in
other states: $8.26 million
PERMANENT FUND EARNINGS (7/1/90 - 6/30/91)
$ 1.03
billion
Estimates for C. based upon: Alaska Department of Revenue, Revenue Potential of a
General Sales Tax, January, 1989. Revenues from a 6% sales tax estimated by ISER,
Fiscal Policy Paper No. 6, April 1991. Estimates for D. based upon: Alaska Department of
Revenue, Revenue Alternatives, January, 1989.
68
�PUBLIC HEALTH/SERVICE DEUVERY
SYSTEM RECOMMENDATIONS
While the recommendations presented to this point address the problems with
the affordability of health care services and problems with health care coverage faced
by many Alaskans, as described in Chapter Two, the Task Force also identified
significant problems with respect to the availability of needed health care services,
particularly in many rural areas in the state, as well as problems associated with the
lack of adequate public health interventions and the fragmentation of the existing
health care delivery system. To address these problems, the Task Force developed
recommendations concerning:
•
The retention and recruitment of health care personnel;
•
The creation of more flexible licensure standards;
The expansion of the scope of the State's Certificate of Need program;
and
•
The strengthening of public health efforts.
The Task Force's recommendations for each of these areas are presented
below.
The Task Force recommends that the State of Alaska develop Initiatives to
attract and retain qualified health care professionals in medically
underserved areas of the state.
To address the need for qualified health care professionals in many
underserved areas of the state, the Task Force recommends the development and
implementation of a multi-faceted strategy designed to ensure an adequate supply of
appropriately trained health care professionals in the state. Within this overall
strategy, the Task Force specifically recommends that:
•
The Alaska State Legislature should create a state student loan
forgiveness program that provides for forgiveness of a specified loan
amount each year for health practitioner service in an area designated as
underserved by the Department of Health and Social Services.
69
�The State of
development
State should
underserved
Alaska and Alaska State Legislature should support the
of an Alaska-based family practice residency program. The
stipulate a condition requiring rotations in rural and
areas.
The State of Alaska and the Alaska State Legislature should support the
development and maintenance of Alaska-based training and rotations for
mid-level practitioners, nurses, and other health professionals. They
should also provide incentives for the development and maintenance of
continuing education particularly targeted to professionals that practice in
underserved areas. Particular attention should be paid to recruiting local
residents, especially Alaska Natives, into health care professions.
The Task Force supports continued efforts by the State and the Rural
Alaska Health Professions Foundation to analyze the specific recruitment
and retention problems experienced in Alaska.
mjECQMMENp/nTp^M
The Task Force supports the development of more flexible facility licensure
In addition to the development of a statewide strategy for recruiting and
retaining qualified health care professionals, the Task Force also believes that
flexibility must be incorporated into the State's current facility licensure standards if
needed health care resources are to be made available throughout the state in the
most appropriate and cost efficient manner. To this end, the Task Force has
developed the following specific recommendations:
•
The State of Alaska, in conjunction with the provider community, should
explore the creation of more flexible facility licensure standards that allow
communities to choose from a broader range of levels and types of care.
Facility licensure that provides the ability of mid-level clinics to expand
their capabilities without becoming hospitals ought to be explored for
rural communities, along with study of ways to give communities options
to change the role of their existing hospitals or co-located systems. The
Task Force wishes to stress that communities need to be given the
responsibility for deciding levels of care and that communities that
currently have plans for capital improvements to their facilities should not
be impacted by this effort. This effort should be undertaken in the near
future.
70
�The State of Alaska should join in national efforts to ensure that public
programs, such as Medicare and Medicaid, acknowledge that, the cost of
delivering care in rural areas is different from the costs in urban areas
and should be compensated accordingly.
The Task Force supports the development of reimbursement systems
which create incentives for increasing the number of primary care
providers as well as the availability of primary care.
Because Alaska lacks a primary care clinic system which can assist in
meeting the primary health care needs of those who are uninsured or
underinsured, the State of Alaska should continue to promote these
models of care in their long-range planning and funding and should help
communities become aware of federal funding opportunities that promote
the availability of primary care.
RECOMMENDATION # 11:
The Task Force recommends the strengthening and expansion of the
The Task Force supports strengthening the State's Certificate of Need process.
To this end, it recommends that the Department of Health and Social Services be
directed to promulgate in regulation standards establishing "need" and the criteria for
determining when a Certificate of Need will be awarded. The Task Force also
recommends that the requirements for Certificate of Need be extended to all health
facilities, including Pioneers' Homes, Veterans Homes, and to expensive medical
equipment to be located in any setting. The Task Force further recommends that
federal facilities voluntarily comply with Certificate of Need requirements and file
impact statements with the Department of Health and Social Services. It is estimated
that it will take the Department approximately a year to develop standards once given
the authority to do so.
:
:REpOiyiMENMJIpN
The Task Force recommends that adequate resources be devoted to
maintaining a strong public health infrastructure fn Alaska.
In seeking to broaden access and improve the financing of health care in
Alaska, the Task Force is aware that these efforts must be considered in a broader
71
�context that reaffirms the primacy of public health as the cornerstone of community
and personal health. Indeed, the twin goals of universal access to health care and
containment of costs cannot be achieved without reshaping health care into a rational
system based on prevention of disease and violence, promotion of healthful personal
habits, and paying for diagnostic and treatment measures only if they are known to be
effective. Indeed, the Task Force recognized the importance of prevention, the
promotion of healthful lifestyles, and population-based public health services by
integrating all of these into our guiding principles (see Chapter Three).
In addition, the Task Force also recognizes that clean air, clean land, clean
water, and clean food are basic to good health. It is the responsibility of government
to assure these basics exist and to engage as well in other core public health
functions, such as the collection and analysis of vital data, the formulation of public
health policy, and assuring the availability of essential health services to address
problems such as infant mortality, drug and alcohol abuse, suicide, and domestic
violence.
Because adequate public health services are paramount to the costeffectiveness and efficiency of a reformed personal health care system, the Task
Force strongly recommends that sufficient resources be devoted to maintaining a
strong public health infrastructure in Alaska.
MEDICAL LIABILITY RECOMMENDATIONS
The Task Force developed several recommendations in an effort to address the
problems identified in Chapter Two with the existing process for handling medical
liability claims. These recommendations are described below.
TTra Task Forx» recommends red^
related injuries from current law to the eighth birthday of the child.
Under the State of Alaska's current statute of limitations, malpractice cases
involving injury to children can be filed up to two years after the age of nineteen.
However, the Task Force has been informed that virtually all residua from birth or
early-life injury or illness are obvious by the time a child is in school, and that subtle
learning defects appearing after roughly age eight are almost always genetic.
Nonetheless, "tail" insurance to protect against claims filed many years after the fact,
72
�including those involving injuries to infants and children, is very expensive. Given
these findings, the Task Force, in an effort to make obstetrical and pediatric care more
available and affordable in Alaska, supports a change in the statute of limitations for
medical malpractice claims, reducing it for birth-related injuries to the eighth birthday
of the child.
' Wedm
the Task Force recommends that the State's existing pre-trial screening
process for medical malpractice suits be replaced with a court ordered
: non-binding arbitration process.
The Task Force believes that because medical malpractice litigation is so
cumbersome, costly, and unpredictable, alternative ways of resolving claims of injury
by medical care that are quicker, fairer, and less disruptive are needed.
Several types of "alternative dispute resolution" (ADR) systems are currently
being proposed or tested across the nation. Some are "no-fault" systems which, like
workers' compensation laws, require only that the cause of injury be proved, not
whether negligent care occurred. Another approach, called "accelerated
compensation events," would pay awards for pre-selected, ordinarily avoidable poor
outcomes without determination of cause or fault.
Another approach, arbitration, is frequently used to settle contractual disputes
but has been used only infrequently in medical malpractice cases. Recently, however,
its application to this area of litigation has received increased attention.
Arbitration can take various forms. Some states, including Alaska, have
statutes allowing providers and patients to enter into binding arbitration agreements.
However, as in the case of Alaska, overly restrictive statutory provisions-such as
those that preclude providers from requiring patients to enter into agreements to
arbitrate as a condition of care, that allow the unilateral revocation by the patient of
the agreement to arbitrate, or that add the cumbersome requirement of having a panel
of three arbitrators-have limited the use of this ADR process Many proponents of
arbitration propose eliminating such obstacles in order to provide broad flexibility to
voluntary binding arbitration. Others suggest that non-binding arbitration be ordered
by the courts every time a lawsuit is filed as a way to get quicker and more consistent
resolution of medical malpractice lawsuits. It is not known whether mandatory nonbinding arbitration will reduce overall costs associated with malpractice claims.
The Task Force recommends that a mandatory, court-ordered non-binding
arbitration process be enacted in Alaska for all medical malpractice cases. The
73
�process would entail the submission of all disputes to a neutral arbitrator with known
skill in malpractice or other personal injury claims. The arbitrator would be selected
from a panel developed by the courts with input from all parties. The arbitrator would
conduct a hearing after each affected party had been provided reasonable opportunity
(discovery) to investigate the claim. Either party would have the right to reject the
arbitrator's decision and proceed to trial.
It is further recommended that the current three-person expert panel review
system be replaced by having a single court-appointed physician or other provider
serve as a neutral expert as an integral part of the proposed non-binding arbitration
process. This expert should be adequately compensated and should have duties and
responsibilities similar to those currently given to the expert advisory panel under
AS 09.55.536, but should also be asked to render an opinion as to liability and to
answer specific questions posed by the arbitrator.
In addition, the following time limits and requirements should be applied to the
arbitration process:
•
Parties to the suit will be allowed not more than 120 days from the date
upon which the defendant files an answer to the complaint for discovery;
•
The arbitration hearing may last no more than three days;
The arbitrator will produce a decision in writing, admissible at trial, within
thirty days;
•
The entire arbitration process must be completed within 300 days from
the date of filing of the lawsuit.
Lastly, the Task Force recommends that this court-ordered process be installed
for an experimental period of five years, and that a study be conducted to assess: (1)
litigant satisfaction with the process; (2) disposition rates to ensure that the process
leads to timely resolution of claims; and (3) costs to litigants.
::!1EC6MMEyC$
The Task Force recommends that the Legislature adjust the level of prejudgement interest charged in medical malpractice cases from 10.5% to the
"pmyailing^intemsty
As its final recommendation in the area of medical malpractice, the Task Force
suggests that the Alaska State Legislature examine the reasonableness of the current
74
�statutory requirement for the payment of pre-judgement interest in malpractice cases
at the set annual rate of 10.5 percent (see Finding #13). The Task Force believes
that a more reasonable approach to determining the pre-judgement interest rate would
be to follow the federal courts in using the prevailing rate of yield of short-term U.S.
Treasury bills.
C.
IMPLEMENTATION TIMETABLE
The Task Force strongly encourages the Alaska State Legislature's prompt
enactment of all of the recommendations presented in this chapter. The timetable for
actual implementation of these recommendations is presented in Table 4-6 on the
following page. As shown on this table, the Task Force also calls for immediate
implementation of nearly all its recommendations following passage of the required
legislation. The only exceptions to this are the following:
•
Several steps will be involved in the implementation of the statewide
health care expenditure limits. First and foremost will be the
establishment of the Alaska Health Care Authority, which will have
responsibility for implementing these limits. Assuming that legislation is
enacted and the Authority established in the first half of 1993, during its
first year of operation the Authority's activities will be focused on
collecting the necessary data to establish the initial expenditure limits and
obtaining the necessary federal waivers to ensure that payments made
under federal programs to Alaska health care providers are consistent
with those established through the Authority's negotiation process.
Following this initial data collection period, the expenditure limits would
be phased in over a three-year period, beginning in 1994 and ending in
1996. The statewide expenditure limits would be in full effect beginning
in 1997.
•
All but one of the Task Force's interim short term recommendations for
improving access should be implemented immediately. For example, as
indicated in Table 4-6, small group market reform would be implemented
in 1993. However, as discussed earlier, the Task Force calls for the use
of community rating in the small group market to be phased in over a
three to five period. The small group market reforms would provide the
basis for moving to the community ratings, with the rating bands
established as part of this reform gradually tightened from 1994 through
1996 until the desired community rates are achieved.
•
Finally, as discussed earlier, the Task Force strongly believes that a
single payer financing system is the most appropriate model for providing
coverage to all Alaskans. We recognize however, that while it is hoped
that a single payer system will be enacted by the Alaska State
Legislature in 1993, the possibility exists that further public education and
75
�: Timetable for Implementation of task Force Recommendations
RECOMMENDATION
TIMEFRAME
1.
Establish Alaska Health Care Authority
Immediate
2.
Establish Statewide Expenditure Limits
•
••
•
•
Collect/analyze data to establish initial limits
Obtain necessary federal waivers
Phase-in expenditure limits
Expenditure limits in full effect
1993
1993
1994 - 1996
1997
3.
Expand State's authority to approve/disapprove insurer rate filings
Immediate
4.
Small market insurance reform
1993
5.
Phase-in community rating in small group market
1994 - 1996
6.
Establish State-sponsored health insurance pooling arrangements
1993
7.
Establish program to cover low-income uninsured children and
pregnant women
1993
8.
Establish a single payer health care financing system
•
Conduct program of public education/dialogue on issue
1993 - 1994
•
Negotiate and obtain necessary federal waivers to
bring all payers into the system
1993 - 1994
•
Implement single payer financing system
1995
9.
Develop initiatives to attract and retain health professions in
underserved areas
1993
10.
Develop more flexible licensure standards
1993
11.
Strengthen/expand Certificate of Need program
1993
12.
Devote adequate resources to maintain a strong public health
infrastmcture
1993 onward
13.
Reduce the statute of limitations for medical malpractice claims for
birth-related injuries
1993
14.
Replace existing pre-trial screening process with court ordered
non-binding arbitration on a demonstration basis
1993 - 1998
15.
Adjust the level of pre-judgement interest charged to the prevailing
interest rate
1993
76
�community-based dialogue will be required to generate the public support necessary
for passage of this legislation. For this reason, the timetable presented in Table 4-6
calls for the conduct of a broad-based public education program designed to increase
community awareness and discussion about the benefits of the single payer system.
During the same time period, the Alaska Health Care Authority should be charged with
the responsibility for developing detailed specifications for the single payer system,
and engaging in discussions and negotiations with the federal government and
representatives of the Alaska Native population to secure their participation in the
system. Legislation should also be enacted authorizing the AHCA to submit requests
for the federal waivers necessary to implement a single payer system. Based upon
this timeframe, implementation of a single payer financing system in the state would
begin in 1995.
14
With respect to the public education efforts directed at increasing Alaskans'
awareness of the benefits of a single payer system, the Task Force recognizes that
our authorization expires on February 1, 1993. Because we believe these public
education efforts may be critically important to the successful establishment of the
single payer system, we are extremely concerned that there be a single entity
assigned responsibility for coordinating these education and outreach efforts and given
sufficient resources to do so. We therefore strongly recommend that the legislation
establishing the Alaska Health Care Authority also charge the Authority with the
responsibility for coordinating efforts to increase the public's understanding and
awareness of the benefits of a single payer system.
The Task Force recognizes that prior to the establishment ot such a program in Alaska,
legislation designed to provide universal coverage for all Americans may be enacted at the
national level. If the approach to achieving universal coverage embodied in the federal statute
is not a single payer model (i.e., it involves an employer mandate or a "pay or play" approach),
given the Alaska environment and the problems associated with linking health care coverage
and employment, the Task Force further urges that the Legislature authorize the Authority to
request the necessary federal waivers to implement a single payer system in lieu of any other
approaches that might be embodied in the federal statue.
77
�Agency for Health Care Policy Research. 1991. Delivering Essential Health Care
Services in Rural Areas: An Analysis of Alternative Models. Rockville, MD: U.S.
Department of Health and Human Services (May) No. 91-0017.
Alaska Bureau of Vital Statistics. 1992. 1988-1989 Annual Report. Juneau (July).
Alaska Department of Health and Social Services. 1992. Practice Sites: State Primary
Care Development Strategies. Juneau: Division of Public Health, proposal to the
Robert Wood Johnson Foundation (October 5).
Alaska Division of Insurance. 1990. 53rd Annual Report: 1990 Calendar Year.
Alaska Department of Labor. 1991. Alaska Population Projections. Juneau
(November).
Alaska Native Health Board. 1991. Access to Care: Crisis for Alaska Natives.
Anchorage (January).
American College of Obstetricians and Gynecologists. 1992. Professional Liability and
Its Effects: Report of a 1992 Survey of ACOG's Membership. Washington, D.C.
American Medical Association. 1991. Advocacy Briefs: The Impact of Professional
Liability on Access to Health Care. Chicago: American Medical Association, Office of
Policy, Communication, and Advocacy Support. The brief references: Reynolds, R.
1990. The Cost of Medical Professional Liability in the 1980s. Chicago: Center for
Health Policy Research, American Medical Association. The 1989 estimate of the cost
of defensive medicine is based on earlier estimate, see: Reynolds, R.A., Rizzo, J.A.,
and Gonzales, M.S. 1987. "The Cost of Medical Professional Liability" Journal of the
American Medical Association 257:2776-2781.
American Public Health Association. 1992. America's Public Health Care Report: A
State-by-State Report on the Health of the Public. Washington, D.C. (November).
Anchorage Daily News. 1992. Anchorage's Cost of Living Up 3.2 Percent. (August 14).
Bovbjerg, R., Tancredi, L., and Gaylin, D. 1991. Obstetrics and Malpractice: Evidence
on the Performance of a Selective No-Fault System. Journal of the American Medical
Association 265:2836-2843.
Butler, P. et. al. 1991. Access and the Uninsured: A Guide for States. Portland,
Maine: National Academy for State Health Policy (March).
79
�Charles, S.C., et. al. 1985. Sued and Nonsued Physicians' Self-Reported Reactions to
Malpractice Litigation. American Journal of Psychiatry 142:437-440.
Chassin, M. et al. 1987. Does Inappropriate Use Explain Geographic Variations in the
Use of Health Care Services? Journal of the American Medical Association 258:253337.
Congressional Research Service. 1990. Controlling Health Care Costs. Washington,
D.C. (January).
Congressional Research Service. 1988. Health Insurance and the Uninsured:
Background Data and Analysis. Washington, D.C. (June 9).
Congressional Research Service. 1991. National Health Expenditures: Trends from
1960-1989. Washington, D.C. (July 29).
Congressional Research Service. 1990. Private Health Insurance:
Reform. Washington, D.C. (September 20).
Options for
Danzon, P. 1985. Medical Malpractice: Theory, Evidence and Public Policy. Harvard
University Press. Also see: Mills, D.H. 1978. Medical Insurance Feasibility Study: A
Technical Summary. Western Journal of Medicine 128:360-365.
Eckstein, T.E., and Associates, Inc. 1992. The Northwestern National Life State Health
Rankings: 1992 Edition. Minneapolis: Northwestern National Life Insurance
Company.
Families USA Foundation. 1991. Health Spending: the Growing Threat to the Family
Budget. Washington, D.C. (December).
Formisano, R. 1988. The Market for Small Employer Health Insurance: An
Examination of Demand in Wisconsin. Prepared for the Wisconsin Department of
Health and Social Services and the Robert Wood Johnson Foundation (August).
Freeman, et. al. 1987. Americans Report on Their Access to Health Care. Health
Affairs 6(1).
Gauthier, A. et al. 1992. Administrative Costs in the U.S. Health Care System: The
Problem or the Solution? Inquiry 29 (Fall).
Gehshan, S. 1991. Medical Liability and Access to Obstetrical Care: Can Alternatives
to the Tort System Work? Washington, D.C: Southern Regional Project on Infant
Mortality.
General Accounting Office. 1991. Canadian Health Insurance: Lessons for the United
States. Washington, D.C. (June).
80
�General Accounting Office. 1990. Health Insurance: Cost Increases Lead to Coverage
Limitations and Cost Shifting. Washington, D.C. (May).
General Accounting Office. 1987. Medical Malpractice: A Framework for Action.
Washington, D.C.
General Accounting Office. 1987. Medical Malpractice: Characteristics of Claim
Closed in 1984. Washington, D.C. (April).
Hall, C, and Kuder, J. 1990. Small Business and Health Care: Results of a Survey.
Washington, D.C: National Federation of Independent Businesses Foundation.
Harvard Medical Practice Study. 1990. Patients, Doctors, and Lawyers: Medical
Injury, Malpractice Litigation, and Patient Compensation in New York. Cambridge:
Harvard University. The study is described in the following articles: Brennen, T. et.
al. 1991. Incidence of Adverse Events and Negligence in Hospitalized Patients:
Results of the Harvard Medical Practice Study I. The New England Journal of
Medicine 324:370-376.; Leape, L.L. et. al. 1991. The Nature of Adverse Events in
Hospitalized Patients: Results of the Harvard Medical Practice Study II. The New
England Journal of Medicine 324:377-384.; and, Localio, A.R. et. al. 1991. Relation
Between Malpractice Claims and Adverse Events Due to Negligence: Results of the
Harvard Medical Practice Study III. The New England Journal of Medicine 325:245251.
Health Insurance Association of America. 1991. Statement of HIAA on Health Care
Reform and Insurers' Operating Expenses. Presented Before the Subcommittee on
Education and Health, Joint Economic Committee, U.S. Congress. Washington, D.C.
(October 16).
Hensler, D.R. et. al. 1987. Trends in Tort Litigation. The Story Behind the Statistics.
Santa Monica, California: The RAND Corporation. No. R-3583ICJ.
ICF Incorporated. 1987. Health Care Coverage and Costs in Small and Large
Businesses. Washington, D.C: Small Business Administration, Office of Advocacy.
(April 15).
Institute of Medicine. 1989. Medical Professional Liability and The Delivery of
Obstetrical Care, Volume II, An Interdisciplinary Review. Washington, D.C: National
Academy Press.
Lasker, R. et al. 1992. Realizing the Potential of Practice Pattern Profiling. Inquiry 29
(Fall): 287-297.
Lembo, R. 1992. Materials presented at Issues in Medical Liability and Health Care
Quality, A Workshop for State Legislators and Senior Health Officials, August 3-5,
1992. Rockville, MD.: Agency for Health Care Policy and Research. A.M. Best
referenced as source for "cost of medical malpractice direct losses paid". Reference
for "cost of medical malpractice insurance premiums" equal to $5.6 billion is:
81
�Reynolds, R. 1990. The Cost of Medical Professional Liability in the 1980s. Chicago:
Center for Health Policy Research, American Medical Association.
Malhotra, S., and Wills, J. 1981. Alaska Comprehensive Health Care Financing Study:
A Survey of Health Care Resources and Financing in Alaska, Interim Report #1.
Seattle: Battelle Human Affairs Research Centers (March).
Needleman, J. et al. 1990. The Health Care Financing System and the Uninsured.
Submitted to the Office of Research, Health Care Financing Administration, DHSS
(April 4).
Nesbitt, T.S., et. al. 1992. Factors Influencing Family Physicians to Continue Providing
Obstetric Care. Western Journal of Medicine. 157:44-47.
New York Times. 1991. (October 27).
Nocon, J.J. and Coolman, D.A. 1987. Perinatal Malpractice: Risks and Prevention.
The Journal of Reproductive Medicine. 32:83-90.
Rae, B. 1991. Alaska's 13,476 Other Employers. Alaska Economic Trends (August).
Rosenblatt, R.A., et. al. 1990. Why do Physicians Stop Practicing Obstetrics? The
Impact of Malpractice Claims. Obstetrics and Gynecology 76:245-250.
Rosenblatt, R.A., Wright, CL. 1987. Rising Malpractice Premiums and Obstetric
Practice Pattems-The Impact on Family Physicians in Washington State. Western
Journal of Medicine 146:246-248.
Rural Alaska Health Education Center. 1992. Alaska Health Manpower Survey: A
Limited Survey of Hospitals, Nursing Homes and Health Care Organizations in Alaska.
Fairbanks: University of Alaska, Fairbanks (March).
Short, P. 1988. Trends in Employee Health Insurance Benefits. Health Affairs 7(3).
Sonnefeld, S. et al. 1991. Projections of National Health Expenditures through the
Year 2000. Health Care Financing Review 13 (Fall).
The Robert Wood Johnson Foundation. 1987. Access to Health Care in the United
States: Results of a 1986 Survey. Princeton.
U.S. Department of Health and Human Services. 1987. Report of the Task Force on
Medical Liability and Malpractice. Washington, D.C. (August):166.
Weeks, M. 1992. State Approaches to Medical Malpractice Juneau: Legislative
Research Agency. Report 91.222.
Zuckerman, S. 1984. Medical Malpractice: Claims, Legal Costs, and the Practice of
Defensive Medicine. Health Affairs 3:128-133.
82
�LIST OF APPENDICES
(Appendices are published in a separate document.)
Appendix A: Legislative Resolve 45, Establishing a Health Resources and Access Task
Force.
Appendix B: Estimated 1991 Health Spending in Alaska by Source of Funds (and sources
for table).
Appendix C: Report to the Health Resources and Access Task Force, January, 1992 by
Oliver Scott Goldsmith, Institute of Social and Economic Research, University of Alaska.
Appendix D: Memo to Members, Alaska Health Resources and Access Task Force,
Regarding Additional Information, from Larry Bartlett, Health Systems Research, Inc.,
February 11, 1992.
Appendix E: Worksheet: Computations of Actual Costs Which Were Shifted to Other
Payers to Cover Charity Care, Bad Debt, and Hill Burton Free Care at Alaska's Acute Care
Community Hospitals, 1990, by Nancy Cornwell, January 26, 1992. Letter to Nancy
Cornwell, from Garrey Peska, Alaska State Hospital and Nursing Home Association,
January 13, 1992. Letter to Senator Jim Duncan and Representative Johnny Ellis, from
Garrey Peska, January 10, 1992.
Appendix F: Public Health in Health Care Reform, Presentation to the Health Resources
and Access Task Force, by Peter Nakamura, MD, Alaska Division of Public Health, August
25, 1992.
Appendix G: Presentation to the Public Health/Service Delivery Subcommittee of the Health
Resources and Access Task Force on Problems Facing Rural, Under-utilized Hospitals and
Alternatives to Closing, by Karen Perdue, September 25, 1992.
Appendix H: Presentation to the Public Health/Service Delivery Subcommittee of the Health
Resources and Access Task Force on the Alaska Area Native Health Service Delivery
System and Resources/Demographics and Health Status of Alaskan Natives/Future Trends,
by David Mather, Dr.P.H., April 25, 1992.
Appendix I: Memo to the Health Resources and Access Task Force, from Bradley J.
Whistler, Planning Section, Alaska Department of Health and Social Services, October 21,
1991.
Appendix J: Letter from J.S. Johnston, NORCAL to Maureen Weeks, Legislative Research
Agency, March 11, 1992.
Appendix K: Current Rates for Professional Liability Insurance in Alaska, Provided by
Loreen Killian, Medical Indemnity Exchange of California, October 1992, and 1992 Rate
Chart, NORCAL Mutual Insurance Company.
83
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
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William J. Clinton Presidential Library & Museum
Identifier
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2006-0885-F
Text
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Paper
Dublin Core
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Title
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[The State of Alaska Health Resources and Access Task Force] [loose, letter and booklet]
Creator
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White House Health Care Task Force
Health Care Task Force
Jason Solomon
Identifier
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2006-0885-F Segment 3
Is Part Of
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Box 38
<a href="http://clinton.presidentiallibraries.us/items/show/36148" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/12092971" target="_blank">National Archives Catalog Description</a>
Provenance
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Clinton Presidential Records: White House Staff and Office Files
Publisher
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William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
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Reproduction-Reference
Date Created
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3/16/2015
Source
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42-t-12092971-20060885F-Seg3-038-010-2015
12092971