 Aloha. Welcome to Think Tech Hawai'i's Movers, Shakers and Reformers. I'm your host Carl Kampanya. This is our Politics in Hawai'i series. And I'm thrilled today to have you join us. We want to talk more. We've been talking a bit about politics of health care. And we're going to continue that conversation today with Dr. Stephen Kemble, who does a number of things for the state, actually. He was a member of the Hawai'i Health Authority. He's a past president of the Hawai'i Medical Association and is currently a member there as well. He is one of the people that has worked on the policy side, I'll say policy side, certainly the path forward to what we can do or what we could have done in this state and now trying to figure out, help us figure out what we need to do now and what we need to do to move forward. So with that in mind, thank you, Dr. Kemble, for joining the show. You're welcome. So, okay, let's start at the beginning. HHA, the Hawai'i Health Association? Authority. Hawai'i Health Authority. How did that get it started? Where did that come from? Okay, you really need to go back to the 70s and Aqwan Makorath, who was in many ways the brains behind our Prepaid Health Care Act. That's here in Hawai'i. Which is here in Hawai'i, passed in 1974. It includes an employer mandate and you all know that anyone who's employed 20 hours a week or more has to get health insurance from their employer here. That's the Prepaid Health Care Act. It required a full benefit package. It required no deductibles and no more than 20 to 30 percent co-pays and it ensured that a broad percentage of the population was covered by health insurance. And that was in 1974? 74. In 2008, which is before the Affordable Care Act, we had the best benefit package in the country and among the lowest health insurance premiums in the country by having that kind of broadly based system. What was our percentage of insured or percentage of uninsured? We were running in the low nineties. In the low nineties of insured? Including Prepaid for Employer-Based Insurance, Medicare, Medicaid, VA, all of those. It was in the low nineties. So we were in the low 90 percentage of total insured for the state using our prepaid health care system that we had. Okay, Aqwan really wanted single-payer universal health care system with one payment source, consolidate the financing, simplify it, but leave the delivery of care private and independent. And she and another group, Health Care for All Hawaii, pushed for creation of the Hawaii Health Authority. She died in 2008 and the legislature passed the bill to create the Hawaii Health Authority in her honor right after her death. And it includes a mandate to be in charge of overall health planning for the state and to design and guide a universal health care system covering all residents of Hawaii. And that got passed, lingo vetoed it, and the legislature overrode her veto. So it became Hawaii Law, HRS 322H. So that's an important thing. So first of all, 2008, the legislature of 2008, Hawaii State Legislature passed the bill. It got put to Governor Lingo at that time's desk. She vetoed it. Now this doesn't happen very often, but she vetoed it and then the Congress overrode the veto so that it became law. So now, so that means that the Hawaii Health Authority was legally, according to Hawaii Revised Statutes, HRS, a law and it was to be empowered. Yes. And Lingo refused to appoint anyone to it. When Abercrombie got elected, he did appoint Hawaii Health Authority. There are supposed to be nine members all appointed by the governor, three directly by the governor, three from a list submitted by the Senate President, and three from a list submitted by the Speaker of the House. Abercrombie, one of the initial ones he appointed dropped out. So we ended up with only eight, but we functioned as a board laying out basically a roadmap for how to get from where we are to a universal health care system that would be as cost effective as possible. We submitted three reports to the legislature at the end of each of the years that we are functioning. The second year, the legislature gave us $100,000 and Abercrombie took it away and gave it to a separate group, which he convened to implement the Affordable Care Act called the Hawaii Health Initiative. Okay. Or Transformation Initiative. Chronology. 2009 is when it, wait, back up. 2008 is when it went through. 2009 is when it became law, but no one was appointed. 2010, Governor Abercrombie came in, made the appointments in 2011. In 2011. Yeah. So then from 2011, 12 and 13 is when you had eight members. Yes. And it was, each year you gave a report. Yes. Now, 2011 is when you initially got the 100,000? No, 2012. So the first year you got nothing. Right. First year, thank you. It was all volunteer. All volunteer. Yeah. Second year you got $100,000 and what was that money for? It was supposed to be for administrative support. Administrative support. To hire an administrative assistant, somebody who could help with research and lobbying, things like that. We had somebody who was willing to do it for a salary that was be doable within that budget. But the Affordable Care Act passed in 2010 and Abercrombie convened the Health Transformation Initiative and he didn't have any money in his budget for it. So he went to the health insurance companies for funding and they ran the Health Transformation Initiative and it was following the expectations of the federal law in Washington. Now, everyone is familiar with things about the Affordable Care Act like expansion of Medicaid and no preexisting condition exclusions and required benefits and those kind of things, which are good. But the other side of the law is payment and delivery reforms. And this is what the transformation initiative was focused on. And it has, it's based on the theory that healthcare is so expensive because there's too much care being delivered because there's an incentive under fee for service payment to deliver more and more unnecessary care. This assumption has never been true in Hawaii. We had, as I said, in 2008- Has it been true in other places? In pockets here and there. Places like Miami, maybe New York, but they're, most of the country is not true. It's certainly not true in Hawaii. Are there provisions that could be put into? Yes, there are other ways to deal with those pockets than what they did. So they are trying to move the entire healthcare system away from fee for service towards systems that pay doctors in hospitals in ways that give them an incentive to deliver less care or to deny care. And this is the system we're in now, the managed care system that's being implemented now. HMSA has jumped on board this, Medicare has jumped on board this. So they're both trying to push doctors into changing the way they get paid so that they're paid upfront for an episode of care or for a population and they make more money by delivering less care than that and they make less money if they deliver more care or they have to owe money back if they deliver too much care. So it's trying to put it in the center of on doctors to deliver less care. Does that that feels to me like the doctors are working for the insurance company then? Yes, they are in the insurance company has taken the insurance risk that they are responsible for and put it on the doctors. Oh, so it's the definition of insanity. You have all the responsibility but none of the authority. These models, because there is an incentive to skimp on necessary care and there's also an incentive to avoid taking care of sick people. If you're paid upfront you may as well avoid anyone who's going to be too complicated because the cost is going to be on you. So to counteract those they have pay for performance where they're going to measure every detail of what you do. You have to document in much more detail than before, report it to Medicare or HMSA. They're going to develop quality measures which are not really very valid because healthcare is too complex for that kind of thing. There's too many exceptions, too much individualization required. There's no box. Yes, but they're going to develop measures anyway and if you do well on those measures you get paid more and if you don't do so well that you get paid less. Those measures depend much more on the patient than the doctor. If you're dealing with poor people, sicker people, more complex people, you're going to get poor ratings on those measures. So you have an incentive to only treat rich people and avoid poor people. So then they have risk adjustment where they're going to use all that detailed data to give you more if you're taking care of sicker people or poor people to compensate for that. But those risk adjustment formulas are very flawed also. What this means is a huge administrative burden is being put on doctors. There's a study recently that found that they looked at internal medicine, family practice, orthopedics and cardiology and they found that each practice was putting in over 16 hours a day of physician and staff time trying to deal with quality measures. They were spending 40,000 per year per doctor to deal with quality measures and the doctors are spending twice as much time focused on their computers. The majority of the time focus on their computers as they do focusing on the patient. This is not a recipe for quality care. It's so bogged down it's becoming impossible to practice medicine. We're losing doctors hand over fist. Everyone over 65 wants to get out. Is this one of the complaints that people have about our health care system today in general? Yes. And is this something that for when people are complaining about it and they look to the Affordable Care Act or Obamacare is they're still complaining even with the Affordable Care Act? Yes. Because the Affordable Care Act did not do anything to accommodate or to change or modify the managed care system that we're currently under. It reinforced it. It reinforced it. Reinforced it. Okay. And there's a separate law, the macro law, Medicare access and chip reauthorization act that was passed two years ago that sets this in concrete that really pushes these new payment models to get away from fee for service and pay doctors by capitation. Capitation. Explain capitation. Capitation means you're paid a certain amount of money per capita per individual and you have to deliver care within that budget. Okay. Okay. But if you can control which patients you take, you have an incentive to avoid sick people if you're being paid by capitation. Whereas the Affordable Care Act doesn't really allow anyone or the insurance companies to exclude sick people. Insurance companies can't. But they can't stop the doctor from saying, you know, you're too difficult. I'm not going to take you because I'm not going to sacrifice my income to take care of a sick person. So then if I have a pre-existing condition, I have to go through, okay, my insurance company is required to cover. Great. But now I have to find a doctor willing to take me out. That's right. And that could be a problem. There is a an organization called Crown Care in Hawaii. That's a physician finder service. And they did a survey a few months ago and found that 31% of our primary care practices are closed to all new referrals. And to me that means they're looking to get out of practice. And another 16% are closed to Medicare because of these macro law changes. And administrative burdens that they impose on practices. That's interesting. If you're over 65 years old and you're faced with having to spend 40,000 a year in higher staff in order to comply with all these things, you're going to say, I'm close to retirement on. I'm not going to do that. I'm getting out. And that's what's happening to our doctors. Is that do we have a doctor shortage then? Or do we have one pending? We have a 20% shortage as of a year ago projected to increase to 25 to 30% by 2020. And it seems to be getting rapidly worse. So would changing the system, changing Obamacare, the Affordable Care Act, changing us away from the managed care back to a well for Hawaii? Well, before I go there, what's the difference between the prepaid system that we had and the Affordable Care Act? What's the difference there? The prepaid Health Care Act had some of the features of the Affordable Care Act, like the employer mandate, broad coverage, required minimum benefits. All those things are good. It functioned under a fee-for-service environment. So our doctors were paid all fee-for-service before the Affordable Care Act. Yet we had among the lowest health insurance premiums in the country the best benefit package in spite of a high cost of living. So we were doing very well under fee-for-service before the Affordable Care Act. So we were not, so Hawaii was not under a managed care system then? There were some attempts to impose managed care in the 90s that came in and then they backed off on that. And we had some respite for a while and then came back in with a vengeance for the Affordable Care Act. So Hawaii, up until the Affordable Care Act, was fee-for-service, was not, was prepaid fee-for-service, had nothing to do with managed care. So therefore, and we had in a low 90% of coverage of number of people insured and so forth. So that was excellent. And then the Affordable Care Act comes in and that changed things. We had to take a break and we're going to come back and talk about that from that point on. So thank you for joining us and thank you for Dr. Kemble for joining us and helping us learn more about this. We'll be back in one minute. Thank you. I've got the Beagle Sisters here with a healthy tip. We encourage you to enjoy the food you eat this holiday season and keep it local and healthy. Yeah. Eat the rainbow. Eat the rainbow. And if you need any produce, come to the red barn on the north shore. Hi, I'm Chris Leetham with The Economy in You and I'd like to invite you each week to come watch my show each Wednesday at 3 p.m. Aloha. My name is Danelia, D-A-N-E-L-I-A. And I'm the other half of the duo, John Newman. We are the co-hosts of Keys to Success, which is live on Think Tech Live Streaming Network series weekly on Thursdays at 11 a.m. Aloha. Aloha. Aloha, Kako. I'm Marcia Joyner and I'm inviting you to navigate the journey. We are discussing the end of life options and we would really love to have you every Wednesday morning at 11 a.m. Right here. Aloha. Welcome back to Think Tech Hawaii's Movers, Shakers, and Reformers, Politics and Hawaii Series. I'm your host Carl Kempanya and welcome again our guest, Dr. David Kimball. Stephen Kimball. Dr. Stephen Kimball. Sorry. I have a brother named David. Okay. We were just talking about healthcare here in Hawaii and how Affordable Care Act came in and actually changed what was a very good system. Let's start by saying, okay, so what changed? What changed when Affordable Care Act got implemented here? Well, there is a push to change the way doctors are paid from fee for service to new payment models such as capitation and bundle payments that try to put the insurance risk on to the doctor. So they're paid a set amount per patient or for episode of care, and they make more money if they deliver less care and can keep the difference. That's capitation. That's capitation. Okay. So that has been... That's being pushed on us by CMS and by HMSA right now. CMS is Medicare. Okay. Federal Medicare program. Okay. So that's one of the changes. The other part was forcing us to transition to this overall managed care system. Well, because capitation gives an incentive to avoid sick people and to skimp on care, there are counter incentives that are included in the law, which is pay for performance and risk adjustment that requires all this detailed data collection and the administrative burdens that go with it. Okay. As a result, okay, let me ask this question then. Before the Affordable Care Act, we were in the low 90s of people insured. Where are we today? In the same range. In the same range. So the Affordable Care Act didn't increase in Hawaii the number of people insured. Not much. With our Medicaid program, we used to cover 200% of federal poverty level. The Affordable Care Act only requires 136%. So we actually dropped the level, but it expands it. It's based on income only, not assets. So those who had maybe they owned a house, but had limited income became eligible for Medicaid if their income was low enough. So it was a mixed bag with Medicaid. Got it. Okay. But we ended up roughly in the same range. So then in that regard, wouldn't we say, and this is the beginning of a question, a line of questions here, in that regard, wouldn't we then say that Hawaii is better off repealing Obamacare? Well, we were for the small business, the business, the commercial employer-based insurance model. We were better off before Obamacare. Medicaid is a mixed bag. The individual market, we're better off with Obamacare. So those who are working- The individual market is better. Yeah. Who are sole proprietor or don't have insurance through their job. They're working less than 20 hours a week. Those people had a hard time before. You could not get decent coverage. Now you can get- What was the cost to have that kind of coverage, though, for yourself? Well, before- And did Obamacare impact what that was? I mean, first of all, you had the opportunity, now you didn't have the force. For Obamacare, you could only get insurance that had very skimpy benefits and make it affordable. So it's almost useless if you got sick. With Obamacare, the benefits are better, but now you have very high deductibles and copays. As an anecdote, and we'll jump into a couple of things after this, as an anecdote, I heard someone tell me the other day that one of the changes that needs to happen with Obamacare is they need to change simple things that would make a lot of sense, such as males do not need to have insurance to cover birth, but the Affordable Care Act currently provides- I don't know what they were suggesting, but I don't know if you have any information on that and what they're thinking about in that regard. If you follow that to its logical conclusion, that means healthy people could buy very cheap policies because they have a few health problems and sick people would have to pay through the notes. And the extreme of that is the whole insurance system falls apart. Everybody's on a self-pay basis. If you have no health problems, you have no expense. If you're sick, you can't possibly afford it. And that's where that leads. That's not what we want to achieve. The way you get cost-effective healthcare system is maximize risk pooling. You get everybody included, spread it across the whole population. It keeps the cost reasonable. Which is what we thought the Affordable Care Act was supposed to be doing, because it's the rule of big numbers. You have more people involved, so therefore, you're spreading it out. That's what we thought the additional 20 million people was going to be able to keep those numbers down. It did some of that, but didn't go nearly far enough. Yeah, well, and that's where it needs to be tweaked and fixed. Right. We're in the middle right now of having that happen, having the Affordable Care Act repealed, whether it is piece by piece or in wholesale. So the state of Hawaii has to figure out what that means for us. And thankfully, this morning, Senator Jill Takuta, the chair of Ways and Means, said that she believes that healthcare is a very, somewhere in the top priority list to be addressed this year. That's excellent news. I don't know what that means yet. We need to see what that means. So my question to you is, with the pending repeal, knowing where we were and where we were pretty happy, and knowing what the Hawaii Health Authority was supposed to be doing back then, or what it should be doing now, what do we need to do? How do we, as a state, need to address it, and how does HHA help us address that? Okay. There are too many questions at once. The current focus of trying to control healthcare costs is trying to control utilization, which is what managed care is. Okay. Or you say, okay, it's too expensive. We need to find ways to restrict care. The problem is that it's restricting benefits or how much you're going to pay for care, whatever. It doesn't restrict the burden of disease and health problems that are in the community. So you're just crippling the ability of the care delivery system to deal cost effectively with those diseases by putting all these restrictions in place. It actually is cheaper to let everyone be covered for whatever is medically necessary and keep the administrative costs down instead of trying to restrict utilization. But both managed care and the reforms in the Affordable Care Act and MACA are focused on trying to control utilization. And the result is rapidly increasing administrative bloat. There's supposed to be a feature in the Affordable Character limit how much insurance companies spend on administration. But the insurance industry negotiated with the Obama administration to count medical management as healthcare, not administration, so they can spend all they want on obstructing care and they can call it healthcare. Well, what if we tweak that? What if we go back and tweak that? So what I would do is to focus on administrative simplification as a way to save money in healthcare, not trying to control utilization. And to do that, you start by trying to make pay for both doctors and hospitals as incentive neutral as possible. So if the doctors say, just pay for their time. And if they have achieved a certain level of expertise, they get a certain hourly rate. Now, if you've had eight years of training, you get a certain hourly rate. But whether you're talking to a patient, doing a physical exam or doing a procedure, you're paid the same flat rate for your level of expertise. Your incentive then is to do what's right for the patient. As you are trained, coordinator of the Hippocratic Oath, all of that. If pay is incentive neutral, you do not need all these layers of incentives and counter incentives and micromanagement and all that stuff. Just makes it complicated. Just get rid of it. So you make the pay neutral and then you get rid of all the micromanagement and the second guessing by third parties and all that stuff. We could save 20 to 30 percent of our healthcare costs by doing that. That's huge. That's huge. Healthcare is 20 percent of the Hawaii state budget. Okay. So we could save 20 to 30 percent of our medical costs of 20 to 30 percent of our total budget. Total budget. Yes. By focusing on administrative simplification and incentive neutral pay. Okay. So that is, okay. So that's what your answer to the first question is, what can we do? That's something you're saying. That's what we can do. The next question is, what could or should HHA be doing? So this is the HHA three reports outlined essentially the game plan I said. Let's get rid of the micromanagement, make pay neutral incentive neutral, simplify the system, streamline it and get the administrative waste out of it. That is the proposal that HHA has put forward three years in a row. What we need. Waiting for someone to listen. We need, yeah, we're waiting for someone to listen. We need the governor to agree that this is a necessary thing that we need to do this. We need to get the legislature to support a bill to reactivate the Hawaii Authority fund it, give us some administrative support, let us do our job and we need people appointed to it who are concerned for the cost effectiveness of the whole system and aren't being put into sabotage. Let me add some to that though. We don't need a bill. The bill's already there. Yeah. But we don't need a bill. No, we need a bill to fund it. No, we don't. We need a line item in the budget. Okay. Because it's an HRS because it's already a law. The budget, so Jill Takuta, Senator Jill Takuta, Representative Sylvia Luke, we need to ask them and everyone from the finance and ways and means committees to say, hey, let's put some money in a line item for the budget for this law that's already on the books. So we don't actually need a bill for that. There are a couple of tweaks to the original bill, which is the HRS 322H. One is it says that the members will elect one of themselves to be executive director. They should elect a chair, but we should be able to hire an executive director to do the administrative functions because it's a volunteer board. So I would like to have that tweak. And there's also a requirement in the original bill to deliver a report to the legislature by December 2012. That needs to be extended and we need a budget. Okay. So it's HRS 322H. 322H is what's on the books right now. We want to tweak it. We're asking that we tweak it so that we're able to elect a chair, but then hire an executive director. So there's a budget amount that needs to be given for that. So that's the bill is requesting that that hire be in place. Okay. Got that. Understand that. Okay. It's a mandatory, but the mission of the HHA should stay exactly as it is. Which is to create, I'll say this and then you correct it, to create or provide the pathway towards single payer, universal health care? It doesn't have to be single payer, it has to be universal. You can have an integrated delivery system where you have all the doctors and hospitals are included. They all get paid the same regardless of the source of funding for a given patient. The same benefits, the same, you know, formulary, the same prior authorization policy. So the delivery system is unified, but you can have multiple funding streams. So you can have the current insurance companies feeding into that budget. You can have Medicare and Medicaid feeding into that budget. And so you could have insurance companies in what's called a multi payer or an all payer system where there are several payers, but they use the same delivery system. You have to unify the delivery system to get the administrative savings. Okay. Okay. So already that, so we need to empower the Hawaii health authority with some funding. We need to get an executive director. We need to get that bill in. We need to be talking with our legislators. We need to be getting the governor, with the governor's opinion is on this and try to have a conversation with the governor in order to get us moving in the direction, to get us back to, to begin with back to where we were with Obamacare, perhaps maybe we didn't need it here anyway, but to get back on track so that more people are covered with better coverage. So, okay. I unfortunately have to say that our show has come to an end really quick. Thank you so much. Very welcome. A lot of information. I hope it was beneficial to anyone who couldn't listen and watch this. And certainly helped me. I appreciate that. So thank you for joining us. Thank you for joining us. Think Tech Hawaii's movers, takers and reformers politics in Hawaii series. Thank you to the staff, the crew, everyone here helped make these shows happen. So we'll see you next week. Take care.