Mayor Navarre to Homer: It’s too early to form opinion on health care review

Speaking like a doctor advising a patient with high blood pressure to lose weight and exercise, in a talk in Homer last week Kenai Peninsula Borough Mayor Mike Navarre gave a frank diagnosis. But like a good doctor, he also offered a bit of hope and some good news. 

“I’ve heard concerns, that Homer will lose jobs, that South Peninsula Hospital will just be an ambulatory center,” Navarre said. “My answer to that is unequivocally no.”

Navarre spoke Dec. 3 to the Homer-Kachemak Bay Rotary Club to provide an update on the borough Health Care Task Force and why the borough needs to address escalating health care costs at its publicly owned hospitals. The task force also is looking at other challenges to the peninsula’s health care system, including an aging population, recruiting health care professionals and regulatory overload.

“One of the concerns I have heard is Homer will lose services,” Navarre said. “This is not what this effort is about. It’s about preserving services and even expanding services.”

His talk boiled down to several points:

• With $800 million spent in the borough this year on health care in general and costs expected to keep rising, that’s not sustainable.

“Can we continue escalating the cost of our health care?” Navarre asked. “I think the simple answer is ‘no.’”

• Change will be difficult.

“It is about preparing for the future. We can prepare for the future or we can react to it,” Navarre said.

• As the Health Care Task Force continues with its work, Navarre said he will listen.

“And you’ll be heard. The success of this endeavor is dependent on this community, the central peninsula and all the residents of the Kenai Peninsula,” he said.

The problem with health care in Alaska and on the peninsula is the increasing cost. In 2005, it cost Alaskans about $5 billion. In 2010, that was $7.5 billion. In 2015, it’s estimated Alaskans will spend about $10 billion. By 2015, the estimate is to be $15 billion. With the peninsula about 8 percent of Alaska’s population, Navarre said he estimated local costs are $800 million.

The United States has the highest health care costs in the world, and Alaska has the highest health care costs in the nation, Navarre said.

“The reality is the growth is exponential and in my opinion is not sustainable,” he said.

Rural hospitals like South Peninsula Hospital in Homer also face struggles. The borough Healthcare Task Force is looking at hospitals in particular because they’re major economic drivers in communities, but also because Central Peninsula Hospital and South Peninsula Hospital are publicly owned. 

On Tuesday, the borough assembly approved $117,000 for Stroudwater consulting firm to analyze current models of health care on the peninsula. That report could come out as early as next spring, Navarre said.

Navarre also had proposed exploring the idea of merging local hospital service areas into a borough-wide service area. That won’t happen in time for the question of merging service areas to be on the October ballot, said District 8, Homer, borough assembly member Kelly Cooper. Cooper also is on the Healthcare Task Force. 

“We’re going to do it right and not going to worry about when it happens,” she said. 

Because of national health care reform and changes in how health care insurance companies reimburse for services, small, independent rural hospitals struggle the most. Since 2010, 58 rural hospitals have closed nationally, Navarre said.

“Unless you affiliate with another entity, rural hospitals are going to struggle,” Navarre said.

Health care providers also face a changing payment model, Navarre said. The current system is a treatment-based model, where patients pay a fee for each service. That’s shifting to an episode-based pay model, called capitation, where payment is for a person’s care through an episode or event.

Another payment model is based on population, where a medical clinic is responsible for the health of a community and paid per-patient rather than per-service or per-episode.

“And then the goal is to keep everybody healthy. You get money for keeping everybody healthy,” Cooper said. “We at some point have to quit chasing dollars and start chasing health.”

At the same time, insurers like Medicare are pushing for payment based on performance. That has led to some push back against government asking for accountability on performance.

“We’ve heard ‘no one should get between the patient and the provider,’” Navarre said.

But when 65 percent of health care is paid for by government at one level or the other — through Medicare, Medicaid, the Veterans Administration and public employee health care benefits — the government should have some input, he said.

“As long as the government is paying most of the costs, government is going to have some say,” Navarre said.

Navarre compared the issue of health care reform to that of Alaska’s fiscal problem. In shaping public policy and looking ahead to see trends, policy makers have to address issues that won’t be apparent for many years in the future. 

“The reason we have a fiscal problem now is we haven’t properly addressed it for the past 20 years,” Navarre said.

Long-term plans run into short-term election cycles, he said.

“People who play too far ahead often don’t get elected,” Navarre said.

After his talk, Navarre took questions. In response to the ongoing issue of shifting costs from those without insurance to those with insurance, Navarre said that’s not sustainable.

“One of the things we’re going to move to at some point is a single-payer system,” he said. “The reality is it makes sense.”

A single-payer system is like Medicare or the VA for everyone, with one insurer or payer. It would be like fire and emergency medical services, Navarre said, where taxpayers pay a set fee in a service area.

Navarre’s comment led to some fierce debate from the audience about why single-payer is better and even why the government should pay for health care at all. In a bit of verbal jujitsu, Navarre turned the discussion to what went wrong with the debate over the Affordable Care Act — commonly called Obamacare — and what the Healthcare Task Force discussion should avoid.

“What did we get out of the Affordable Care Act?” Navarre asked. “We got a polarized system where vested interests protected one side … Instead of everybody working together, we ended up polarizing. We ended up with a system that needs improvement.”

That shouldn’t happen with the borough, he said. That was the point he wanted to leave Homer with.

“People opposing the Affordable Care Act did not provide any solutions. They just vilified it,” he said. “I don’t have the magic solution. What we’re looking for is the community and the residents of the Kenai Peninsula to help build the structure. Help us, and try also to help us keep down some of the criticism and the fears that will underlie it from the outset.”

Michael Armstrong can be reached at