 Aloha, welcome to Health Care in Hawaii. I'm your host, Josh Green, Senator from the Big Island ER physician. Today I'm joined by one of my good friends, Reg Baker, who is an accountant, an extraordinary advisor, a leader in the small business community, a veteran. He runs committees for the chamber. He said to me, though it's a mouthful, he's the Chair of the Chamber Small Business and Entrepreneurial Committee, so he's a very well regarded gentleman, but today we're going to speak about health care. Over the last two years we've embarked on quite an interesting adventure together. We've talked about the health care system here in Hawaii, we've talked about the implications of the Affordable Care Act, so from Washington's perspective we've talked about our health care shortage, we've spoken about homelessness, we've talked about mental illness and we've talked about what the insurers do in our state. We spend a lot of time on a lot of important subjects and as we wrap up this series and I move on to special programs, mostly still in health and human services, I wanted to bring back a friend, which is Reg Baker. He has a great perspective, his business perspective, his human perspective on these issues. I've always felt he's very well informed. So Reg, thanks for coming. Oh, my pleasure. Thank you for having me back. Great to see you. You run your own show, you bring up incredible breadth of issues, but today we're talking about health care. We are. Talk to me, Reg. Give me your opinion. We've got quite an interesting change now. We have a new administration coming in with President-elect Trump, the Affordable Care Act. Obama passed a big act with the Democratic votes that he had. Now let's talk about a repeal and replace. What's your perspective? Well, to put it in context a little bit, for about three years I was the executive vice president and COO and CFO for HMAA and that was during the period of time where they were actually implementing the Affordable Care Act. And so it was a very interesting time and there was a lot of concern at that time and a lot of people were worried about how it would impact us here in Hawaii. And my message at that time was don't worry about it. It's not going to be that big an issue. It's not going to change the Prepaid Health Care Act at all that we have here. It's really going to be, in a lot of ways, a non-event. And it did help some of the uninsured and I think we recognize that. But the impact wasn't that significant. Now we're talking about what Trump is saying a repeal and a replace. It's not exactly what he's meaning by this. What I've heard is that he's wanting to keep some of the key elements and some of the key elements is going to be allowing the dependents to stay on the policy of the parents until about age 27. Their pre-existing conditions are still going to be not an issue. They're going to ignore those to get coverage. And they're going to, I think, start allowing the states to come back in and get more involved in the regulatory environment. He's a big advocate of letting states regulate, you know, the insurance. And so I think, again, we're in a situation here in Hawaii where I don't think we're going to see a whole lot of change in what's been going on. I think you're right. I think that you make very good points because we came into this with the Prepaid Health Care Act, as you mentioned, from 1974, which already had us at a 9% or so uninsured rate, very small compared to the rest of the country. Yes, we had another 40 or 50,000 people find a way to coverage through Obamacare. But even with that, it came with, you know, trade-offs. We already, though, were doing what you said, which was we already had initiatives over many years set up in Hawaii to, you know, to look at our system to find the best ways to cover individuals. So I think we probably are better off than any other state if they do go forward, if the guys go forward and repeal parts of the Affordable Care Act or really kick it back to the states altogether. One interesting question I'd have for you maybe is, do you think other states might look to Hawaii to see what our state initiative has been and what our successes and challenges have been if they do say, hey, states, you're on your own. You guys regulate it. You know, I think if they don't, they should, you know, we've got a very good example that I think the rest of the country can follow as far as our prepaid health care act. It's been a real godsend for a lot of the people in Hawaii to provide that basic health care needs that they really need to have. I think one of maybe the consequences of some of these tweaks that the Trump administration is talking about trying to get past could actually result in maybe either a flattening out of the increases or maybe a little decrease in some of the costs. And the reason why I say that is that under the prepaid health care act, we have what they call a prevalent plan, you know, which sets the bar at, say, a certain level. Quite high. Yes, but Obamacare, with all the additional requirements that they layered on there actually set that bar a lot higher, hence increased costs. Right. And they were hoping to cover those costs by having everybody in role and get on the plans and pay their premiums. Unfortunately, that hasn't happened. Yeah. Matter of fact, they're very surprised that a lot of the younger generation, the millennials, have decided to pay the penalties instead of buying the insurance. I have a younger brother who's in that boat. He's been healthy, you know, knock on wood, stays healthy. And even he can rely on me, of course, as his older brother is docked to take care of some of the basic stuff. But he's been very reluctant to make that investment. You mentioned something. I think it would be a good, it'd be an apropos moment to say just yesterday we found out that once again, Hawaii was ranked number one of the 50 states for healthiest states. And I think that it's in some large degree a result of having everybody covered one way or another, having them get access to primary health care, preventive health care. Like, we're not perfect in Hawaii. We could talk about some of our weaknesses, and we probably will. But because we've had all of these years to make sure most people are insured, most people can find a physician quickly or certainly go to the hospital and be seen that we have a leg up on people. You know, and one of the, I think, maybe unintended consequence, which is a positive thing, is that when we implemented this 30 years ago, it got everybody thinking more along the lines of preventative care. I mean, we've got the coverage. We've got the primary care physicians. We're taking advantage of this. This allowed us to get ahead of the curve a little bit and get more into preventative care instead of medicating the consequences or the results. And it was a shift that I think has really helped us get that number one spot for a number of years now. Yeah. And I think we'll probably keep it irrespective of what happens with the Affordable Care Act. I guess the final message is we're going to be likely okay and somewhat insulated from big impacts. I think so. I think for Hawaii, the event is going to be a non-event, and I think there could be some positive things occurring from it. Okay. Well, we'll kind of stay tuned and maybe we'll do a special program together about the impacts of the new administration and their decision on the Affordable Care Act for Hawaii. That'd be great. We'll pick a couple other things, Reg. You're actually a wealth of information. You work in the business world. You advise a lot of people. From a healthcare perspective, I read just yesterday and was informed that our unemployment rate is very low. It's, I think, 3% now. What does that mean to people for their jobs, for healthcare, for our health system? Having a 3% unemployment rate, and I'm not an economist, and so there may be people out there that would have maybe a little different opinion or be able to clarify things a little bit. But what concerns me about a 3% unemployment is that it's hard to find good people. And I've got a number of clients that I'm working with that are constantly looking for individuals that have the skill sets that they need to do the jobs. They can't find them. And I think we've talked about the brain drain. And I think this is part of the consequences of that. People with the skills that we're needing are going to the mainland, and they're not staying here. And that's causing the jobs to be filled and unemployment to drop. I'm just concerned that if we're going to have a productive company, productive economy, we need to do something about keeping our skilled, cakey here to work in the economy and help to grow the way. You brought something up to me not so long ago quite eloquently, and that was maybe there's an untapped resource that we have here in Hawaii. We have incredible respect for our veterans. Our young men and women who have served, many of them don't spend 20 or 30 years in the military. They spend six or eight years in the military. They develop some exceptional skills. Some of them are teachers. Some of them are medics. We don't seem to keep them here like we should, you told me. As a matter of fact, I've been working with a group of veterans trying to figure out how best to increase the retainage. How many of these veterans we can retain here in Hawaii? We've actually got one of the lowest percentage of retainage in the country, which is unusual because we have such a high concentration of military here. Now, there's factors that cause that. One is across the living, and a lot of them come in and want to go back to their home states and that sort of thing. Despite all of that, we have a huge resource of not only the active duty men and women, but also their spouses and their children. The children, of course, could go to the schools, go to the universities. The spouses, many of them are used to traveling around to different locations during the career, and they've got certificates they can teach. They've got health care experience. Those are two areas that we've got critical shortages in, and if there was a way that we could tap into that, it may not solve it, but it could take a big chunk of the problem away. I think you're totally right. I'm glad you mentioned those two disciplines because every year, when I get Senate briefings, they tell me they have very large numbers of vacant positions still at the public school system. We have one Department of Education, which is a challenge unto itself, and constantly that's kicked around as a political idea, whether we need to change that probably for a whole nother program. From what I understand, we're the only state in the country that has one statewide. Which is, you know, my big island guys sometimes get a little salty about that because we all have differences culturally. The different islands are quite different, but setting that aside for now, and I think we probably agree on that there should be a little bit of, I guess, more autonomy separate from a centralized school district. But we have all these vacancies. And we've got young men and women who are here that already have teaching certificates. Why are we not, you know, encouraging them to not just be great soldiers for us, but they're spouses and others to come and be teachers? I would be so great, I would think. Well, and, you know, just using maybe just one example, I mean, a spouse that has a degree in mathematics that has probably taught at other school systems around the country. Right. To talk, teach that because they don't have the required certificate to do that. Yeah. And, you know, I'm sure there are ways of getting around that, to have an exemption for it. But, you know, it doesn't seem to be getting communicated to, you know, those groups of people to help solve the problem. We need people to listen. And I think the same thing probably would apply to medics. I mean, frankly, if you're a paramedic in New York or Missouri or Nebraska or California and then you're here, and you have medics skills, especially if you've been in the field, I mean, you've seen active combat duty in your day, that's a very extreme skill. Even though our medics are great here, but to bring those kind of people in as kind of the brain trust instead of the brain drain would be just great. We need to make it easier for them to be able to use those skills to, you know, not only give them a feeling of self-wealth, but self-worth, but also to help the community. And they love Hawaii too. That's the other thing. I mean, a lot of people come here and they do their tours, but more often than not, at least the people I've met, they would just plain love to set up a life here and not have to do a gigantic relocation. Their children have now been here for three, five, seven years, you know, there. Yeah, and that's another interesting point. When I was at the Bank of Hawaii, I was running international operations and we used to bring people in from the mainland and get them set up here. And the person that worked in the bank seemed to be able to fit in and be comfortable pretty quick. Right. The folks, the spouses and the children that had to stay at home, they had a little bit harder time with it because it was so different from what they were used to. Yes. The military guys, they've been here already. They've already gotten used to it. They've already got settled in. Right. You're not going to have that type of issue with them. Sure. Yeah, just to get past that kind of hump, a lot of people here I said this to you the other day, but I might as well say it on our show. I've noticed that you get through about 18 months in Hawaii and if it suits you, I've seen people stay long periods of time. If you can't make it through that, okay, it's probably better to go back, be near your family or back in a part of the country that you're comfortable with. But once you get past four or six seasons or cycles here, then you know whether or not you can fit in and it takes a lot of resource to train people, to bring them from the mainland, to train them to be teachers, to train them to be medics or doctors and all businesses know that it's a really large upfront cost if you, if it's unpredictable to bring them over or if you just have to bring someone over cold. And that's hard. Well, and how many teachers do we bring over every year and how many of them stay for more than just a few years? I think there's a high percentage of people that come and go pretty quick. It's an incredible turnover. Our medical community, I'll say this right before we take our first break, we've noticed that if people train or have roots here, we have an 85% retention rate. If they come, they've never had medical school or residency or they don't have a relative here, really 15% retention rate. And I would say you probably have to invest about $200,000 for each new healthcare provider that you try to integrate into the system. If you lose them after just two years, they did not pencil out for your investment. It's not all about investment, but they need to learn the people and the culture and you got to get them over here, of course. So great first 15 minutes. We're going to take a brief break. I'm Josh Green, host of healthcare in Hawaii, joined today by Reg Baker. Good friend. Hello. And Aloha. My name is Raya Salter and I am the host of Power of Hawaii, where Hawaii comes together to figure out how we're going to work towards a clean and renewable energy future. We have exciting conversations with all kinds of stakeholders, everyone who needs to come together to talk about renewable energy, be they engineers, advocates, lawyers, utility executives, musicians or artists, to see how we can come together to make a renewable future, Tuesdays at 1 p.m. Hi. Aloha. My name is Chris Letham and I have a host of show called The Economy and You. The show plays every Wednesday at noon. And on my show, I bring on guests who are interested or working in the technology space. And so I'd like you to come and watch the show and learn with me about all the sort of exciting things that we're doing in Hawaii to build and grow our economy ecosystem. So I'd like to say Aloha and I look forward to seeing you on the show. Thank you. Aloha. Welcome back to healthcare in Hawaii. I'm your host, Josh Green, senator from the Big Island ER doc. Today I'm joined by Reg Baker, who is an expert in small business matters. He's an excellent accountant and advisor. He's worked on many levels here in the insurance industry. He was CEO of his company, I believe, running a health insurance company in our market. So he really has a great breath of information. He's a good guy. We were first talking, Reg, a little bit about the Affordable Care Act. We were talking about also the impact of having a low unemployment rate. You spoke nicely about keeping some of our soldiers here perhaps as workforce. Let's riff a little bit on some of the other kind of more perhaps eccentric issues in Hawaii but are nonetheless on people's minds. Medical marijuana. This became a big issue over the last two years. We passed legislation to allow people to open dispensaries in the state of Hawaii. What are you hearing? Well, you know, I was given the opportunity to present to the alliance of a lot of different groups that are supporting the medical marijuana industry. And we talked a little bit about the regulatory issues and some of the challenges, some of which we don't have any control over because there's a lot of federal issues that still need to be resolved. But one of the comments that I have heard repeatedly over the last few months is that for some reason things seem to be going a little bit slower than they had hoped. And I guess they're not getting some of their labs inspected in some of the other facilities that have to be up to a certain level with certain regulatory hurdles. They're just not getting them inspected and things aren't moving as quickly as they had hoped. So it seems to be slowing down the process of getting these things up and running. I hear you. You know, I was part of that process early on and my recommendation, which wasn't followed, was to embed the rules from day one, which could have been amended, changed by the Department of Health and Public Safety to their satisfaction, but they were pretty much boilerplate rules I think we took from Minnesota. And I just said, get them in there. They've been vetted. They have, we took the safest system. I was trying to take a very conservative tack and say, we're going to be very mindful of law enforcement and their concerns. Start slow, but get it going right away. The process that they ultimately chose, not my recommendation, was to go very diligently but extremely slowly through the rulemaking process. And regulations always there, especially starting a program, we probably could have cut a year and a half off the process to be frank. But look, I guess people wanted to really crawl slowly before they jogged. And I'm guessing we're going to see in the new year early in 2017, some of these dispensaries open. Well, and that's good. I'm glad to hear that. I think that, you know, this is an industry that clearly needs to have some real strong oversight. Yeah. And there need, and it is a medical and it is prescription type of, you know, product. So there needs to be controls and there needs to be standards. And I don't think you'll find anybody that's aren't going to argue against that. Right. But we're not the first kids on the block here. This has been done around the country a number of times. And there are, as you mentioned, templates. And there are some guidelines that we can follow that's already been accepted and are working. And so we don't have to reinvent everything. You know, what we do need to tweak things to fit what works here as opposed to somewhere else. Right. Yeah, we have to do it. The truth is, at my perspective, but marijuana is not particularly harmful. And as a doctor, it helps a lot of patients. Are there moments where people go and try to get their medical marijuana cards or they might not need it as badly as they think? Sure. But I really prefer seeing people consider medical marijuana to taking too many narcotic pain pills. Alcohol, frankly, causes much more mayhem and damage than marijuana ever did. No one overdoses from marijuana, basically, unless something really bad happens and they mix drugs and someone spikes their drug. Over time, I think it's going to become mainstream. I think it will be a part of the culture. And as long as children aren't smoking, while their minds are developing, I'm all for moving forward. So I hope it happens. And there's a misconception, I think, that's out there that people have to just get comfortable with, is that we're not talking about a Cheech and Chong type of process here. We're talking about extracts of the plant that's going to be in a pill form or a liquid form that can be done in different ways. And a lot of these extracts, a lot of these drugs that are coming from this, don't result in that natural high. It relieves pain. It drops anxiety. But there's not a, what you expect, a buzz that come from this. And so there's a lot of misconceptions out there, exactly what this is. Well, we're going to, at least I for one, going to keep putting a little bit of, you know, little gentle support of pressure on Department of Health. Because I want to see this available to patients. And so it should be good. You will bounce back and forth a little bit. You've been interested in the SMB segment of our economy. You want to unpack that for me? Sure. Well, SMB is one of those acronyms that stand for small and mid-sized businesses. And that's an area that I've probably spent at least 25, 30 years, you know. And I'm on the National Board of Directors for the Small Business Administration on the Chair of the Ninth Region for regulatory fairness. And so there's some insight that I have into the small, mid-sized business market. Now, what's important to note is that the SMB market is defined by one of the definitions from the Small Business Administration is 500 employees a less. In Hawaii, what that means is about 97% of all the businesses in Hawaii are small, mid-sized businesses. It's a huge part of our economy. Our economy could not function without that SMB niche in place. And so I think you could look at it in one extreme. And if you pull the SMB market out of the Hawaii economy, there's not going to be a whole lot left. This is going to be government and I don't know what else. And this is industry and some military spending. And over 50% of the economy, the gross domestic product, is coming from that small, mid-sized business market. You pull that out, it's going to decimate a lot of different things. So we've got to support that. And this is also, for a perspective on today's show, Health Care in Hawaii, these are the very businesses that are providing work which provides the health care coverage for individuals. Absolutely. You work more than 20 hours. You're going to get that offered to you. And insurance is going to be part of your package that you get when you go to work. And over half of the employment in Hawaii, on the private sector, is from the SMB markets. What would you say the biggest challenges to the SMB market is? Regulation is always the rallying point. There's always big issues. When people decide to start a business, there are multiple places you have to go to get your permits, your licenses, your GET number, your federal ID number. All these things you have to do in order to get things set up and running. And so that's a challenge. The other challenge that's always coming up is the access to capital. And a lot of these SMBs, they don't need a lot of capital. I mean, we're not talking millions. We're talking about tens of thousands, 10,000, 20,000, $30,000, could make a huge difference in the success rate of a business. And if they can get some help with that, then that gives them a running start to get going and to become profitable. And that's going to, again, help that SMB market become stronger and stronger and hire more people, which is going to be the challenge that we started talking about early in the show, is where do we find these people? Yeah, so I assume a fan of incubators and bringing some resource investment in there, maybe giving people some tax positions that are safe so that they can, in turn, thrive as a business and put a lot of tax money into the coffers of the state. Startups are critical. Very important. But we've got to also remember that there are other companies out there that have been around for 10 or 15 years that are trying to expand and grow and need a little help with that. If they had a $50,000 loan that was infused into the company, they might be able to hire 10 or 20 people, which might even be better than having a startup. Yeah, amazingly important for our state. We have so little time left and so easy to talk to you, Reg, because you really do have a breath of experience. Issues like, let's do a rapid fire segment, obesity, diabetes, homelessness. Where do you see us going? We've got to change. Some things got to change, because we've been dealing with these issues for a long time. I saw a map that was dated back in the early 1800s south in Kakaako. And you know where John Dominus is, and now they've got that other restaurant out there in that park. That area was designated as the homeless area for Hawaii back in the early 1800s. We've been dealing with this issue for a very long time. I think there's some of the Pacific Island people who have been moving over here has created a little bit of, I think, an acute situation when it comes to obesity and diabetes. And I think there are other groups of people in Hawaii that have a bias to that. And we need to address that. We need to work at that and see what we can do to turn that around. Yeah, I'll tell you. I'm so pleased that you bring some of these issues up, because to tell you from the 30,000 foot level, the issues have been worsening. Homelessness has really been a great challenge. I see it as a health care condition. I've been saying that a little bit lately. The reason I say that is because the very large majority of those who have homelessness issues are also suffering from mental illness or drug addiction. We invest very little in our population on those issues. We spend a lot of money on health care. Hawaii spends about $9 billion a year on health care one way or another. But the state only commits about $32 to $35 million for drug and alcohol treatment. Now the state's not always a solution. But I think we start characterizing homelessness as a real health condition. We might be able to make some gigantic inroads on the problem. One thing that I've learned in the last few days is running task forces and whatnot is if you put people into housing one way or another, their health care costs come down 44%. We have data that's hard Hawaii data. These are in some cases individuals that are spending $1,000 to $200,000 a year on their own health care because they're in and out of the hospital every 12 hours, every 36 hours. And that's, and I'm sorry to interrupt, but a point I wanted to make sure everybody understands is that sometimes it's those health issues that create the homelessness. That's right. It is definitely a really dangerous cycle that happens. And I think we have better solutions on the horizon. I'll certainly be working on them with you. And I just can't tell you, it's so nice to address these larger issues. So Affordable Care Act, we will see what the Trump administration decides to take up with their many partners across the country. Unemployment issues are gonna continue to be here. We're a closed community in many ways. Maybe we can get the military here working, gonna work on medical marijuana, help small businesses, work on homelessness, work on diabetes. These solutions, we do better than many states, but we could still do better. Always. Okay, well, hey, great to have you. My pleasure. I'm so glad. This has been Josh Green, Health Care in Hawaii. In the future, we'll be doing additional shows, but mostly special programming on very large challenges that Hawaii faces. I tend to take up homelessness as the, I tend to take up homelessness as my next priority as a legislator. And I will be back to share those developments to get your ideas and to have experts come and join us in this big dialogue. Thanks for caring.