Really tough, but ultimately more effective, reforms in the system lie ahead. If we don't do those, health costs are likely to bankrupt the economy, panelists said.

Commonwealth North, an Anchorage-based business and public policy nonprofit, sponsored the meeting.

"We spend $4,631 per capita on health care in the U.S. Germany spends $2,748 and New Zealand $1,623," and both countries have healthier populations, said Dr. Tom Nighswander of the Alaska Native Tribal Health Consortium. "This will bury us. We can't sustain it."

The intense debate on health and insurance reform in Congress is long overdue, but the changes being proposed, like universal health coverage and insurance reform, are the easiest problems to tackle and won't do much to bring costs down or make the nation's health care system more efficient, Nighswander said.

What's really needed is a major restructuring of the way health care is delivered in the U.S. What's now proposed now doesn't do that, he said.

"Our current fee-for-service system doesn't encourage efficiency," because the more procedures that are done brings more revenues, Nighswander said. "The system is piecemeal, uncoordinated and inefficient, but it is very big business 18 percent of our gross national product and a lot of people make big money out of this inefficient system" and are fiercely defending it.

The expanded health coverage and insurance changes proposed in Congress are good ideas, Nighswander said. Getting the estimated 50 million uninsured Americans covered is necessary, but Nighswander said he worries there won't be enough doctors, nurses and other health professionals to handle the added load. So far there isn't much in the House and Senate health reform bills that address the looming shortage of medical practitioners, he said.

Another inconvenient truth: increasing levels of chronic diseases like diabetes, which can be prevented or controlled with lifestyle changes, are really driving up health care costs.

"Seventy-five perce nt of the health care spent, and two-thirds of the increase, can be tied to chronic diseases, many of them preventable," he said.

A major factor in increasing diabetes is soaring obesity. About 25 percent of Americans are now considered obese, Nighswander said, a level twice as high as Germany, which is in the number two position. Overweight Americans now accounts for 30 percent of the nation's health care cost increases.

There are some things in the bills to promote healthier living, such as a requirement in the House bill for fast-food restaurants to post nutrition information on meals. Sen. Mark Begich, D-Alaska, will also propose that certain expenses for sports and other healthy recreation activities for children be tax-deductable. But basically lifestyle changes can't be legislated.

Nighswander believes healthier living will require major shifts in public attitudes, but achieving that will take years, perhaps decades.

"The first report on the health dangers of smoking was in 1958," and it has been only in recent years that this has been really accepted and behavior changed, Nighswander said. "It will take the same amount of time with obesity."

Restructuring how health care is delivered is another tough task ahead, no matter what Congress does.

The incentives in the system are the opposite of what is needed.

"The more services provided, the more tests, procedures and drugs that are prescribed, the more providers get paid," Nighswander said.

Hospital groups, such as Utah's Intermountain Healthcare, are leaders in improving outcomes and reducing costs, but are sustaining financial losses because it, Nighswander said.

"The physicians and patients love it, but the chief financial officers hate it," he said.

Intermountain Healthcare, along with the Mayo Clinic and Cleveland Clinic, are showing the way forward, however. These institutions share certain things like staff physicians who are on salary rather on a fee-for-service basis; electronic information systems that improve accuracy of information provided to physicians; and coordinated care once a patient enters the hospital.

In its push to get something passed this year, Congress hasn't had time to consider these deeper issues, Nighswander said.

Bruce Lamoureux, chief operating officer at Providence Health Services in Alaska, agreed there may be unrealistic expectations for the current reform proposals. Hospital groups like Providence will likely be affected negatively as the distribution of revenue changes.

Lamoureux agreed the current system contains perverse incentives. For example, efforts to seek alternatives to acute care will wind up costing hospitals, he said.

Having more people covered will help Providence's bottom line, however. The Anchorage hospital alone carried more than $23 million in losses due to uncompensated care 2008, much of it due to people without insurance coming to Providence's emergency room.

The Providence system nationally has a number of initiatives underway internally, including the development of best practices for a number of procedures within the 27 hospitals in the Providence system, Lamoureux said. In Alaska, there is improved electronic monitoring of patients in intensive care and the development of electronic health records.

Lamoureux cautioned that electronic information is not a panacea, although eliminating the cost and the potential for errors and lost information found in the current paper-based systems is a plus.

"Anything that puts better data in the hands of physicians helps," he said.

Alaska has its unique problems that drive up costs. Lamoureux cited a study by Premera Blue Cross that found medical costs for a large group of its Alaska policy-holders is 55 percent higher than an equal number of Washington state policy-holders.

Higher levels of physician-reimbursement in Alaska were one major cause of this, Lamoureux told Commonwealth North.

Physician payments are higher partly because there is a shortage of doctors in the state, which means doctors can charge more. Alaska also has no managed care, the practice being banned by the Legislature.

"Managed care is not really the answer to these problems," Lamoureux said. "The term implies tactics that impede, deny and delay, and that is the antithesis of how many health providers feel medical care should be done."

Pat Luby, director of the AARP Alaska chapter and also on the Commonwealth North panel, said there is a lobbying frenzy underway in Washington by interest groups seeking to preserve their stake in the current system.

"There are 2.3 health care lobbyists in Washington for every member of Congress," Luby said.

There's a lot of good that passage of some version of health and insurance reform could accomplish, however. Extending coverage to the uninsured would be big improvement, Luby said.

An estimated 21 percent of Alaskans have no health coverage, and when these people get sick, they have no alternative but to go to hospital emergency rooms, which cannot legally turn people away, Luby said.

This has led to huge amounts of uncompensated care for hospitals, which must be recouped from patients which do have coverage. Estimates are that this costs the average Alaska family with insurance about $1,900 per year in higher premiums. Nationally, uncompensated care results in an average of $1,300 added to family insurance premiums, Luby said.

The problem, perversely, feeds on itself. About 85 percent of people without insurance are working, Luby said. Some of these are young people who believe they will never have health problems and don't want to pay for insurance, but many uninsured work for companies, mainly small businesses, that can't afford to offer coverage to employees.

As costs increase, more firms drop coverage, adding to the uninsured and hospitals' uncompensated care, which then continues the cycle, adding further to costs.

There is general agreement on several aspects of insurance reform, Luby said, including an end to excluding coverage based on preexisting conditions and limits to lifetime benefits.

One particularly vexing practice is the classification, allowed by state regulators in eight states and the District of Columbia, of domestic violence as a "preexisting condition," Luby said. Insurers argue that if abuse occurs once, it could reoccur, and that is a basis to deny coverage for treatment of abuse.

Nighswander isn't optimistic about fundamental improvements anytime soon. Alaska's more highly paid physicians will resist major changes, he said. The state already faces shortages of medical professionals, and doctors will lobby hospitals to maintain the status quo, "or threaten they won't practice," he said. Younger doctors may be more open-minded, however.

Lamoureux is not optimistic either that structural changes can come soon, or be easy.

"There are big structural and cultural barriers to change, and this is likely to continue until there is sufficient chaos in the system," to force change, Lamoureux said.

Meanwhile, the health reform debate is consuming Congress, leaving little energy for other pressing issues. "It's eating up all the oxygen in the room," said Luby.

Tim Bradner can be reached at

tim.bradner@alaskajournal.com.