 Aloha and welcome to Business in Hawaii with Reg Baker. We're a show that broadcasts every Thursday from 2 to 2.30 from the Think Tech studios in downtown Honolulu. We're a show that focuses on successful stories in Hawaii about business and their owners. Occasionally we talk a little bit about topics that are important in Hawaii and important to the business community but may not be specific about business. So today is going to be one of those shows. We're going to talk a little bit about health care but there's been an awful lot of buzz in the media about how health care is going through a transformation, the repeal and replace process that President Trump is working on. I just came from a luncheon with the Hawaii Business Magazine and with the Chamber of Commerce and we were talking a little bit about the Trump effect. And for the 100 and so people that were in the audience, the overall thoughts were kind of pessimistic. They were uncertain. They were unsure. Two-thirds of the audience was not sure about how this was all going to play out. Now in contrast, NFIB which is the National Federation of Independent Business People, they did a survey on the mainland and we've got the highest level of optimism in the country by small businesses for the last 15 years. So we've got a little bit of a dichotomy here between the feelings here locally and what's going on in the mainland. And I think it's interesting to talk about it and try to alleviate some of the fears and concerns that some folks may be having. Now getting back to the original thought for the show today, which was health care, I've asked a very knowledgeable person that I've known for a long time, Ray Suchiyama, who has been in industry and working in Hawaii and internationally for some very well-recognized companies to come in and maybe have a little dialogue and talk about health care and the Affordable Care Act. And so this is going to be kind of a Q&A for Ray and I to go back and forth and try to discuss some of the concerns that we might be feeling here in Hawaii. Ray, welcome to the show. Thank you very much, Reg. I feel that I've known you forever but it's been about 30 years since I've known you in the banking industry and later in your illustrious career in many businesses. And also you've been part of working in health care. Am I correct? As a matter of fact, I was the COO and CFO for HMAA, which is the Hawaii Medical Associates Association, which was at the time the second largest health care provider, PPO, in the state. And so we were actually, I was there at the time that the Affordable Care Act had actually been rolled out and was going through the process of being approved through the legislative process in D.C. So I've been watching this thing for quite a while and it's, you know, we went through eight years of implementation and now what's really interesting is that now we're entering a phase of, I guess, repealing it and replacing it with something else. And that's where people are concerned because there's an unknown. Nobody knows exactly what this is going to look like. Perhaps you just hit up on that word unknown because people know about ACA and Obamacare and they've been under this package of regulations for two terms, eight years. And we're hardly in 100 days of the new administration and yet within that 100 day period, he had, the president has spoken on changing what was current into something else. But you had a word that, in our previous conversation, that maybe you can kind of reflect a little more, evolving. It's evolving. It's not set in cast in stone. It's not going to take away certain parts of government-sponsored health insurance like Medicaid and Medicare. Are there a lot of, like, I don't want to use the word alternative facts, but are there, even in the business community and especially with people in neighborhoods and so forth, there are concerns out there. But you're saying that it's not a done deal, it's still evolving. It is evolving. I mean, the political process is not cut and dry. You know, we've got, it may be true that Trump's got the White House and there may be a balance shift that took place in the Senate and the House where there's more GOP than there are a Democrat. But that doesn't mean that everything is going to be slam dunked. There's already a lot of discussions taking place about how this is going to look and what's going to be the final outcome. And to everybody's credit, not everybody's falling into step in doing exactly what Trump wants, which is a positive. I mean, the GOP and Democrats are all working together to try to figure out where this middle ground is going to be. So nobody really knows for sure, but there are a couple positive things that we can count on. There's components of this discussion that won't change. And one that keeps coming up is that, you know, the preexisting conditions, you know, and this was a big issue in the past. And for those in the audience that don't quite understand what a preexisting condition is, it's where you have something, some sort of medical condition that exists and you need to go and get insurance. Maybe you changed jobs or you lost, you're unemployed for a while or whatever the circumstances are, you needed to go and get new insurance somewhere. But this preexisting condition prevented you from getting that care. And that's a scary thought. Of course. Anybody, yeah. It is. And so one of the components of the Affordable Care Act that will not be going away is that the insurance companies will not allow or not be allowed to deny coverage for a preexisting condition. You know, and that concerned a lot of people. There has been some rhetoric going around that I think tends to scare people a little bit. And I think it's important to remember that, you know, like any salesperson, they usually are trying to sell something, you know, a certain perspective or a certain course of action. And sometimes people can embellish and talk about things in order to make a point that may not be totally valid, you know, and particularly in an environment of uncertainty where there are nothing, you know, there's nothing set yet. People are receptive and can buy into that. No, you just came from a gathering of top business people in Hawaii. And once you got out of that dialogue or even survey that they have concerns about health care, but that also equals concerns about business in the future under the new administration. Am I correct? Well, it did. You know, and they tried to list what some of the top concerns were. And one of the top concerns was, of course, the Affordable Care Act and how that was going to involve. But other concerns that actually ranked higher were the regulatory environments and what type of rules and regulations are going to change. And then another one was going to be employment. And that was kind of specific, I think, to Hawaii because we have such a low unemployment rate. At this time. At this time. At this time. At this time. It's hard to find good people. Right. And so finding good quality people was the number one concern of this group. And then rules and regulations and then the Obamacare and then taxes and that sort of thing followed. But that's different from the mainland. The mainland has a different set of concerns. I think one of the reasons that drive healthcare differently between here on the mainland is that we've got this Prepaid Health Care Act that has provided very good coverage for people in Hawaii for many years. I think it has been going close to 30 years now. We've had this Prepaid Health Care Act. And we've never had to really worry about health care coverage. And even when the Affordable Care Act or Obamacare had been passed, the implications in Hawaii were fairly minimal compared to the mainland. And now, you know, people are saying we're going to change it. We're going to repeal it and replace it. People don't quite connect the dots all the way on this because we've still got the Prepaid Health Care Act. That's not going away. That is law in Hawaii and nobody can change that. And so regardless of what they do with Obamacare, Prepaid Health Care Act is still going to be here in Hawaii. And it's still going to have mandated coverage, a prevalent plan requirement. And so the coverage will always be there. So in the world that's, as you say, evolving back in D.C., are there anything that you see as drivers underlying the thinking for this new set of regulations? One which is, I think, on people's minds about more competition, a marketplace that you could go outside your state to acquire health care and that you had much more options, what you want to do. Is this something that you see as a kind of a mindset, you know, what's driving the changes in legislation? Yeah, I think, you know, to preface this a little bit, I'm on the National Board of Directors of Small Business Administration. I chair the Ninth Region for regulatory fairness. And this allows me access to D.C. and to the SBA administrator and we have meetings, board meetings, conference calls. And so I'm a little bit tapped into some of the things that are going on. And a big transition that's happening right now, which people joke about, draining the swamp, which is one of the things that he talked about during campaign. Many, many times and a little bit of trivia, D.C. used to be a swamp. That's right, that's right. And so they pumped it all out, made the land, and then all of a sudden all this employment began. But it's still a humid place, a humid summer place. People live there, so part of this dialogue that's taking place, and this may be an oversimplification, but we're going from a socialist type of bias more towards a capitalist. A free market, let's say. More free market, more opportunity to create jobs, to get rid of the overwhelming burden of all these rules and regulations. And a lot of them, unless you've been in business, you don't quite understand. For example, I had a very small office, it was about 700, 800 square foot when I first started my practice, and it had a very, very small kitchen. And I wanted to put a door on that kitchen. Well, that $200 door required me to enlarge the kitchen to be compliant with OSHA and with the Disabilities Act, to upgrade all of the electrical for the entire office, not just the kitchen, to widen the doors on the offices that I had to be compliant with all the new rules, and essentially had to remodel the entire office and bring it up to this code just to put a door on the kitchen. And it would have ended up costing me not $200, but $4,000 or $5,000. It's these types of rules and regulations that become very burdensome and drives costs up, and they're trying to evaluate whether it makes sense to continue to do this or maybe free things up a little bit to be a little bit more competitive. So it's a regulatory concept of less regulation is better. So that's what I'm seeing from Washington. So and that drives health care modifications, I mean, that's a thinking behind the new package of laws. That's one of the thoughts. The Affordable Care Act has tremendous rules and regulations, thousands and thousands of pages. As a matter of fact, Pelosi even said that you can't read it all. Wait until we pass it, then you're going to read it and understand it. I mean, that was one of her quotes. You know, we're going to have to take a short break here and we'll come back and maybe talk a little bit more about the regulatory environment that's within the Affordable Care Act and what might change. But this is business in Hawaii with Reg Baker. My guest today is Ray Suchiyama. We're talking about health care and Affordable Care Act and some of the implications that the Trump administration is going to have going forward. We'll be right back after the 62nd break. Hawaii is the place where you get to watch shrinks and others involved in psychology talk about the joy, the sorrow, the pain and the bliss of being human. I am Steve Katz and I am a practicing marriage and family therapist here in Honolulu. My guests are psychologists, clinical social workers and others who are interested in helping people be fully alive. Please join us into this most human journey in consciousness and loving kindness. Hi, I'm Cheryl Crozier Garcia. I'm the host of Working Together on Think Tech Hawaii. It's a program where we discuss the impact of change on workers, employers and the economy. So join us every other Tuesday from 4 o'clock to 4.30. We're live in the studio on Working Together in Think Tech Hawaii. Take care. See you soon. Bye. Aloha. Welcome back to Business in Hawaii with Reg Baker. My guest today is Ray Suchiyama and we're talking about a smog-ish board of issues kind of centered around regulatory environment in the Affordable Care Act and health care in Hawaii. Ray, we were just getting into the theme of this deregulation that is taking place. This deregulation concept affects the Affordable Care Act but also slips over into deregulating the tax code. They're talking about tax reform, they're talking about the EPA, they're talking about a lot of different types of programs that they want to deregulate and make things simpler and defer to the states to drive that. State rights is part of the deregulatory environment that we've got out of Washington these days. But the Affordable Care Act, if you look at a lot of the specifics within the Act, there's a lot of different things in there. For example, it had a significant increase in taxes. The 3.8% surtax on net investment income, that basically increased roughly 4%, the tax rate for people making more than 200,000 a year. And then the .9% increase on Medicare wages. A lot of these will go away and they're going through the process of trying to find all these different areas where they can unplug that and make things a little bit more fair for everybody across the board. Well, that's the other area that the administration is looking at to save costs. And right now in the industrialized economies of the world, the U.S. has the highest healthcare costs around. And how did that come about? I mean, it didn't come about yesterday and there must be reasons why given all the focus on making healthcare available for everybody, why is it so expensive? You know, I'm really glad you asked that question. Healthcare cost is high for several reasons. Number one, if you're comparing healthcare costs today to what the healthcare cost was 30 years ago, people are living a lot longer today than they lived 30 years ago. I think if you go back 30 years, you go back to the 60s or the 70s, the average age of life expectancy was in the 60s. Now it's the 80s. People are living 10, 15, 20 years longer today than they ever did before. Now, where does most healthcare costs occur? When you age. At the older ages. And so where people used to pass away in their 60s, they're now living into their 80s. That's where a lot of the healthcare cost is going to be triggered. All right, so that's number one. People are living longer and it costs more when they're in that age group. But they're not earning a living at that point. They're not earning income. And the people in their 20s and 30s are the ones earning incomes and have to pay for that. Am I correct? Yes. That's one of the concepts that the Affordable Care Act had. And that is one of the areas where it really failed. And the reason for that is that to your point, yes, the 20-year-olds that don't have a lot of healthcare needs was being forced to pay for healthcare coverage that they didn't really need. So here they are paying, say, five or $600 a month for coverage that they didn't really use. In theory, all of these people were going to build up the reserves to pay for the older people that needed the healthcare. It's almost like Social Security. But you know why it didn't work? The penalty for not having that was $700. So if you had the choice of paying a $700 penalty or $600 a month for 12 months for something you didn't need, which is what a lot of the younger generation did. And so the insurance companies never had the opportunity to collect these premiums, build up the reserves to pay for the older care because all the younger ones were electing to pay the penalties. And who did the penalties go to? The IRS went into the general fund of the IRS. In other areas, there are technological advances that makes healthcare expensive or physicians in the way revenues are counted. What's the other areas? In addition to people living longer and driving up the cost, we've also gotten very good in being able to fix what's broken. Before you had cancer, you died. Now there's a lot of procedures that can be taken place and they're not cheap. But you go through this process and you survive and now you live. And so these are all expensive. There are procedures that can be done microscopically that have a much higher civil fiber rate than cutting and patching up. The technology in healthcare is much higher today than it was ever in the past, but survival rates for trauma is much higher today than ever in the past. So it's a positive thing, but it's expensive. It costs more. Prescription drugs, much more effective today than they were 20 or 30 years ago, but they're expensive. And so all that adds in. Another part, and some of the attorneys in the audience may not like this, but tort reform is a big driver of healthcare costs, malpractice. If there are these procedures, hypothetically, let's just say that there's 10 things over here that can be done to predict a certain outcome. A physician only picks two or three of them. And then the outcome isn't what they expected. The patient dies or gets worse. The attorneys are going to come in there and say, why did you do all of them? Why did you do these other seven? So what do the physicians do to cover themselves? They order more. They order all 10. And of course it raises the cost of physician's insurance in the long term. Insurance rates go up the cost of providing 10 procedures instead of one or two or three. All of this adds up to higher costs. There's a trade-off. We're living longer. We're living healthier. We're surviving more trauma. But it comes at a cost. And so where is the balance in this? And that's a real philosophical question that is a little above my pay grade. You had a very interesting point about what the administration is trying to do is also to take health care and put it back into the responsibility of the states. What does that mean? What does that really mean? This is a Reg Baker opinion. The health care needs in Hawaii are going to be different than Connecticut. Right. I follow you. There are different demographics. There are different family heritage. There's different things going on in Hawaii that's going to be different from other states. And so who knows best what to do in that state other than that state? Right. And so state rights are becoming a forefront, something that is a. And the states are responsible for taking care of their citizens. They are. And that's where the elections take place. They say all politics is local. The health care should be local. I think a lot of the rules and regulations that are being forced at a federal level need to be taken down and at a state level. For example, we have a very high cost of living in Hawaii. So do we need to do some of the rules and regulations that different areas of the mainland have because it's a federal requirement? Can we get exemption from that? Can we recognize the fact that maybe things are different here? We don't have to have rooftops that are reinforced to cover three feet of snow. It's not necessary. We don't need it. So there should be exemptions for some of these rules and regulations that come down. And if you had a Regbaker opinion for the state to follow for the future, seeing what's involved with current administration, are there anything that the state could be doing that could be beneficial in this new political climate? And this would be true for any state. But in Hawaii, if we could just start focusing on what's best for our state and not try to win brownie points, I think back when Neil Abercrombie was governor and Obama had just got elected and Obama was trying to pass the Affordable Care Act legislation, who was the first state to jump on board and support that and say, I'm going to have a medical exchange or health exchange? It was Neil. They didn't even know what was in the legislation yet. But they just wanted to show support and help for something that was needed on the mainland. They needed health care reform on the mainland. But with our Pre-Peak Health Care Act here in Hawaii, it was not necessary. In the first six months, eight months of the exchange was terrible. The computers and so forth. A fiasco. Yeah, they didn't work. I think we lost over $100 million on that deal. And we ended up pulling out of it anyways. I mean, it was just we need to look a little bit more internally, focus on what the issues are in Hawaii, forget about the federal implications, and just do with microbiology. Are there anything that's unique about Hawaii, though? We're a population of 1.2 million people. We're heavily Asian with a particular genetic or some diseases. But I mean, are there any, and it's an aging population also when you look at it. And there's a lack of hospices and long-term care. And really, like you say, we're facing a physician shortage looking at the very near future. So we have a set of circumstances that does not look good for Hawaii. Well, exactly my point. We need to be looking at that. And this may be unique to Hawaii in some regards. And so who cares what the mainland does? Let's fix our problems here. There are certain pockets of people that need special attention. I mean, the Asian, the Pacific Island nations that are here have certain ailments that need to be addressed. And maybe we have a higher percentage of... Of tuberculosis, for example, higher. Diabetes is another. Yeah, and so we need to focus on that. There's things that we can do to try and bring some health care to them. So there are local solutions to local problems and to be aware of them and execute programs that will help health care in general for the state. That's what you're saying. I think so. And we've got to figure out a way to build up our physicians. And we can do that either by having more physicians or we can have it by some of the paraclinical type people, the nurse practitioners and the physician assistants. Now, unfortunately, we have pretty much run out of time. Oh, no, so so so. So you went kind of quick. But that's a whole different subject. You know, the next crisis that we're facing here in Hawaii, and we're already seeing some of it now, is access to care. And that's something that we need to really get on top of and get ahead of. But this is Reg Baker, who had business in Hawaii. My guest today was Ray Tsuchiyama. We covered a lot of ground and a lot of different areas. Of course, we only got to a part of what we wanted to talk about, but it was very informative and I hope you agree. We broadcast live every Thursday from 2 to 2.30. Looking forward to seeing you next week. Until then, Allah.