JON KUMIN: Our study group has heard serious concerns, Commissioner, about reimbursements from the government for Medicaid and Medicare service so, Commissioner, if you could go ahead and take this first we'd like to hear your thoughts on that topic.

COMMISSIONER JOEL GILBERTSON: Well, I think that there's been an ongoing struggle among the states and Alaska as well at the federal government on how to maintain adequate reimbursement rates. Ultimately our main charge is to provide health care to the beneficiary population established by statute. And naturally, it's impossible to deliver that health care if your own insurance is not accepted by health care providers. It largely depends on whether or not it's a competitive health insurance product. I think the issue is much more complex and at a very macro level what we really have is declining revenue or slowly growth revenue. is far exceeded by eligibility growth of costs to the program.

Look at Alaska's the Medicaid program. Just 10 years ago it was $138 million of state resources and now it's $288 million of general fund. And over that 10 year period we've gone from total program levels of nearly over $350 million this year, our Medicaid program will exceed a billion dollars. And our eligibility population is growing. I think the health care inflation factors that we talked about for sometime and even with the inflation rate for Alaska we kind of see about a 3 1/2 percent growth and health care went up 5 percent.

And our revenue sources have not kept up with that programmatic growth so at least at the state side in Alaska what we've largely seen is reimbursement rates hold fairly static over these past few years. And then look at other ways to engage in cost containment. Those are rates are threatened to some extent, revenues or program adjustments are made to bring in line with the cost growth of the programs.

What that means for access is what is the most troubling for the older professionals that run these insurance products. We're all well aware of the challenge that seniors faced particularly in our state to find physicians, for example, who would accept Medicare in Alaska, Medicaid. I believe Medicaid is a good payer. We have been able maintain Medicaid rates that exceed Medicare in the main. And we have a fairly good penetration for our insurance product in Alaska. We have about 55 percent of the providers in the state are accepting Medicaid.

We still have tremendous challenges in the access to care in certain specialties, dentistry is a perfect example. We've had tremendous difficulty finding available chairs for our eligibles to sit in. In Alaska right now we've got 128,000 Alaskans who currently are insured through Medicaid. And I know that the Medicare population has grown as well. What we're focusing on right now are ways in which we can lower the cost of care and it makes our reimbursement, obviously, much more attractive to work cooperatively to lower the costs of care. And also then invest your additional resources in those reimbursement challenges rather than investing your resources simply to maintain the status quo.

Right now we put as a state 60, $70 million of additional general fund into the program to maintain things the same, simply inflation in the program, not rate increases. And we need to find ways that we can lower the cost of care so that we can -- and then lower the number of eligibles coming into the programs by finding stable employment, finding private sector insurance so that we can invest our additional resources in increasing reimbursement. And that's where, I think, ultimately we're going to have to look to increasing quality of care and raise the -- and address the chronic disease burden in the state.

MR. KUMIN: Thank you. You mentioned access is of great concern. Of course, access and insurance go hand in hand. We heard from Premara as a speaker at our health care study group, a few days later my business was told our insurance was going to go up 27 percent for the next year. I was wondering if that was a reward for my participation in the study group.

So I was complaining about that to another small business and he commented he got hit with a 53 percent increase and was struggling with how to maintain insurance. And this is obviously a grave concern for all Alaskans, so on our next topic, I guess, I'd like to ask Al Parrish, we have a topic of great concern is the number of uninsured. We know that that's impacting you. What factors do you think contribute to the large number of uninsured and what do you think can be done to reduce that number?

AL PARRISH: Well, let me kind of start off by forming a foundation for everybody to understand what the situation is here in Alaska. Our population based in Alaska, let's just assume that it's roughly 650,000 people. 20 percent of those people are uninsured today, but it really is a little bit higher number when you take out the federal recipients, so there's about 212,000 federal recipients that receive 100 percent of the health care provided by the federal government in some sort of form, whether they be Alaska Native or whether they be VA or military or somebody that's on the federal government side.

So if you take that 212,000 out of the population base of 650 you really have a much higher percentage of uninsured based upon the population that is actually providing the coverage for the uninsured. And so you end up in a situation where you've got 30 or 35 percent, somewhere in that vicinity, of uninsured people against the population that is covering those individuals.

And so as premiums and health care benefits throughout Alaska begin to rise what happens is that employers such as Jon, you just mentioned, are unable to cover the same amount of coverage as you have in the past. So in turn what ends up happening is those people begin to change how they provide that coverage to their employees and, in turn, get less coverage or in some cases no coverage at all which then they go on to the uninsured population base and they end up in emergency rooms and hospitals and they become part of our uninsured population that's covered by hospital and other health care providers.

We literally have seen our uninsured or what we call self-pay in our hospitals rise substantially over the last two and a half, three years. And this last year it was almost double again. So when you are looking at that self-insured or self-paid business at a point where you are literally writing off somewhere in the vicinity of around 20 million to 30 million more each year in supplying health care to people that aren't able to pay that that has to be passed on to somebody, passed on to other people that are still buying health insurance. So that cost shifting is a continuing -- is continuing to take place.

Medicaid and Medicare, in the case of Medicare not Medicaid necessarily, Joe is right Medicaid is a better payer in the state of Alaska than Medicare. Medicare in the past years has not kept up with the inflation in health care costs. In this past year just our system alone in Alaska and all of our facilities have had to, again, take another $30 million just to cover the cost of what Medicare was unable to pay just in the cost side of this. That does not mean anything for overhead or anything else, it's basic cost of health care. So all of that has to be shifted to some some place, and that is insured population in the state of Alaska. And as you can imagine every time you do that your health premiums increase and in turn fewer more people become able to stay insured. And so it's a vicious circle that eventually will end up (indiscernible) catastrophic (indiscernible) of the health care reimbursement here in the state or in the nation, so that's why it's becoming more and more of a major focus in both Congress and the state Legislature.

MR. KUMIN: Thank you. If any of our panelists have a brief comment they'd like to add to these as we go around let me know, otherwise we'll just finish our -- we have one question per panelist and then we'll get into the Q and A.

Well, next, Randall, do you see any opportunities to minimize duplication of services? I know that's been discussed that Alaska is somewhat unique in that we have some parallel health care systems between the federal government with both the Native Health care system and the federal military system and the private systems. Do you have any ideas, do you see any opportunities to minimize duplication of services and equipment to more economicaly deliver health care to Alaskans?

RANDALL BURNS: Thanks, Jon. I actually do not think most of these systems the Native, tribal, military and the private are really duplicating their service too much. I think that we need to look probably more technology, particularly in my business I work with a lot of small rural hospitals inculding some of the Native tribal hospitals and the isolation of those hospitals and communities and what they serve, we can really can avoid some of of the duplication through technology. And I do think that Telehealth, Teleradiology, Telepharmacy that those kinds of things over time will actually have a real benefit in terms of streamlining the process and having a lot to do with potentially reducing costs over time as well.

So I also think though that we need to -- there is an issue that I think is important to the subject which is Alaska has traditionally based its health care system regionally, regional hubs, which the health care system sort of flows into. And I think that we need to make sure that we continue to sort of look at that model; and creep away from that model (indiscernible) not necessarily putting any value on that, but I don't think there is a reason to make sure that we've identified the reasons why we have a regional system and then those are still valid, I think we need to talk about that, because certainly the regionality of the services that the health care system in Alaska provides was an attempt to avoid duplication of service. I think I'll stop there.

MR. KUMIN: Thank you. David, are there any key structural issues in the delivery of health care in Alaska that you think could be and should be improved? Any comment on just the basic structural way we deliver health care?

DR. DAVID SNYDER: Well, my sense is the way we deliver health care very traditional. We we take the care to the patient when we can, but more often enough we have to bring the patient to the care. I think one of the real structural opportunities is through Telehealth technologies particularly given the remote nature of a lot of patients in Alaska. I think a lot of things are moving towards that.

When I trained at the University of Southern California School of Nursing in the early 1970s we had a young (indiscernible) by the name of Larry Wee (ph) come through and tell us about a problem oriented medical records, why didn't we use computers, what's a computer anyway, to better organize how we do medical record and better keep track of the things that are very hard to remember to help us deliver better care. He's been a visionary for many years and I think people are finally starting to fall in line with that.

I know the President just gave a major address yesterday regarding the opportunities with the electronic medical record.

We have a number of very active (indiscernible) already in place in Alaska, not the least of which is Alaska Federal Health Care Access otherwise known as AFHCA, which is a very robust telemedicine system that is serving over 230 sites throughout Alaska and in very remote areas. And what that consists of is a card to provide a physician or a human health aide in remote location to present a case to a consultant located centrally real time with some very advanced imaging and some other very good capabilities. You get advice on what needs to be done for the patient. In many cases we found that we can transport patients more efficiently because we avoid travel for folks who don't need it, that's a major issue particularly given the transportation climate challenges. We can screen out people who do need it and we can get the care to that person earlier than they might have gotten it had they had to travel. It's sort of the concept of moving electrons rather than moving patients.

The other piece is teleradiology, we're pretty well established teleradiology in the state. We have a good infrastructure for that. The network is growing. And we've moving into telepharmacy and sort of coattailing on what Randall said, we have with the Native system right now a pilot which has been very successful where we have drug dispensing machiens in remote clinics. And the advantage of that is that we can inventory and manage the drugs more efficiently. They have a telelink in them where a patient who receives the medication can have essentially face to face visit with the pharmacist to discuss make sure of the medication and things to do and things to avoid. It's almost like a in-person encounter. For a person who otherwise would not have been able to make the trip or otherwise doesn't have the means to do so.

So a lot of it is going to involve change of process. It's not the way that we -- particularly we as physicians have done practice in the past. It's a set of new techniques, a set of new skills and I still type with four fingers and my thumb, you know what I mean, those are the kinds of things that you have to work through, but I think there's extraordinary opportunity through the electronic technology that's being made available. And I might add as one final (indiscernible) finally forthcoming (indiscernible) very expensive. Thanks.

MR. KUMIN: Thank you. We're already getting some great questions from the audience. What I'd like to do is we have really a final question to go down the whole panel and ask each of you to comment on, and then we'll get into the questions from the audience. And that one is simply what can be done within the control of Alaskans? You know, you mentioned that there was a major address by the President yesterday. We're interested in what we can do. Many of these issues are intractable and national issues will have to be address on a national basis, however there must be things that we can do in Alaska to effect what happens in Alaska. And I'd like to hear each of you comment on that. What can be done, what cannot be done in Alaska, what do you recommend be done? Al, could you lead off with this question?

MR. PARRISH: Well, I hate to get really fundamental but we start with education with our kids and our grandkids and also your own health. Just stay healthy. Eat right, exercise. And that's where it starts, folks. I mean I hate to be so fundamental, but that's really where it starts.

The second thing we can do is be supportive of those things that are happening in the State House and Senate this year. One of those things is tort reform. And I know that there might be a liability attorney out here in the audience today or a plaintiff attorney in the audience, but literally, folks, we believe very strongly that that will reduce health care costs. Now it won't help just because the premiums will be reduced a little bit, it'll help because physicians will have confidence that they won't be sued and they won't have to have seven or eight different procedures done in reference to testing for potential outlook of a patient. We'll get that down to two or three instead of just protecting ourselves, so really we believe the long term health care costs can be reduced by tort reform and caps on those kinds of judgments that are out there that have been taking place.

So we can expect that piece of legislation is moving forward and we would -- it was introduced by Ralph Seekins and we believe that everybody in the business community should be standing tall in support of that.

MR. KUMIN: Randall, your turn.

MR. BURNS: I told the president of ASHNHA yesterday that I wanted to bring up the topic, and so I vetted it, but of course he said I had to disclose that this isn't necessarily endorsed by the Hospital Association. But I would like to at least raise the issue of universal health coverage using the permanent fund. I do think that it is, in fact, an area where given the cost to employers, the changes that are occurring as a result of more increases in cost that for the 650,000 people in this state we probably could provide relatively good health coverage if we simply insured ourselves. So I throw that out as a thought.

MR. KUMIN: Thank you. Getting back to Al's first point, I hope everyone enjoyed the bacon and eggs this morning. I did.

MR. PARRISH: Bacon and eggs are probably pretty good for you.

DR. SNYDER: That's right. Eggs got a lot of bad press, but subsequently eggs are okay. It might put you off your potatoes, so.....

I can't agree more with what Al said as his first point, I think that health starts at home. You know, it starts with eating right, exercising, don't smoke or use tobacco. And if you have the opportunity and if you drink, drink in moderation. I mean that's where good health starts. I think there are opportunities, not to, you know, hit upon the points that have already been touched to manage the system better as a system.

We have a very wide system in our Native system particularly, we've got six hospitals in the field that including our medical center in Anchorage.

We have 179 clinics that represent 230 plus tribes throughout the state at different villages. And it's very complex and a lot of it is managed more or less independently whereas it could be managed more in a uniform fashion. We're working right now with a group called the Hospital Systems Services Assessment Team within the Alaska Native Tribal Health Consortium to look at how we can better manage the systems. The system redundancies and hopefully become more efficient.

From the patient side of it I think one of the key things is if you have an appointment and you can't keep the appointment then you'll know 'cause a lot of times folks who don't show got 20 percent of the clinic load and that is a huge, huge loss of opportunity for health care -- for people who do need health care. Thanks

MR. KUMIN: Thank you. And, Commissioner?

COMMISSIONER JOEL GILBERTSON: When you go last, you start to sound like a broken record, I guess. What is overwhelming and the greatest challenge facing this state right now is chronic disease and the chronic disease burden that's placing on the health system. We have a health care system that's structured right now in the way we deliver the care around episodic, acute care interactions with the health care system which means you have a chronic condition but at times it becomes so severe you're going to have to end up in the doctor's office or the emergency room at Providence or some other facility in the state.

And so what we really need to focus on overwhelmingly to lower the cost of care which is by driving down the cost that's how you increase access is focusing on how you get Alaska healthy which I think a few of the panelists have already mentioned. And I think it's the most important thing. We laugh at it at times, but it's a serious issue. We're just not a healthy state overall and healthy behaviors and we need to exercise more and eat less and lead a healthy life style. Asthma, alcoholism, obesity, heart disease,diabetes.

These chronic diseases burdens are overwhelmingly driving our cost increases in the system. And so we have to focus on education and prevent campaigns on how are we going to motivate Alaskans to lead healthier life styles. How are we going to motivate Alaskans to have healthier behaviors. How are we going to work to transition our health care system to be designed around how do we keep people out of operating rooms rather than how do we provide better care in operating rooms. And that's a change for every practice to look at.

Cardiologists right now can practice out of a hospital rather than practicing out of a doctor's office and (indiscernible) an entire practice around how do I keep people out of the hospital. And that's a real system change that is very difficult to to move forward on, but it's something we have to do. We have to find a way to manage chronic disease as a chronic disease burden, to lower the rate of those episodic acute care interactions with the health care system.

And then behind that and most importantly and concurrently with that is to focus on primary prevention. Investing in prevention efforts. And I worked with the Governor this year on a number of proposals this administration has put forward about investing our dollars in prevention, around substance abuse and prevention campaigns and better screening, and a number of other ways that we could try and lower that cost burden of coming into the system.

And, you know, the last thing we have to look on is let's look at the big picture. I mean constantly talk about issues in a vacuum, health care, economic development, various issues, and we have to understand that what we really need to be working towards constructively is community wellness. And community wellness is a very difficult thing to describe in any detail, the concept isn't an easy thing to describe, but how do we look at those interactions between economic development, safety, health care status and opportunity in communities to find ways in which we work constructively with all partners in the sector to increase outcomes and have a healthier and safer Alaska.