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Will Alaska opt out of health-care law's Medicaid expansion?

Amanda Coyne
Aaron Jansen illustration

Compared with declamations that were going on in the rest of the country, the mood in the room at Alaska's Mental Health Trust Authority in Anchorage was decidedly subdued Thursday morning, where a group from Alaska’s Commonwealth North, a public policy forum , huddled at 7 a.m. Alaska time to discuss the U.S. Supreme Court’s healthcare decision.

Despite what some news organizations led with Thursday, the divided court upheld the Patient Protection and Affordable Care Act, and the glue that holds it together, the individual mandate. In a 5-4 decision, the mandate survived because the majority found it to be a constitutional means of taxation.

Private doctors, hospital and insurance industry representatives, state workers and special interests from across the healthcare spectrum sat in the room, trying to get a handle on what this meant for Alaskans.

The verdict of the relatively silent majority? Too soon to tell.

The verdict from the not-so-silent minority? Either one of the best things that has happened to the country, or the worst.

IIoan Farr, family practice doctor in Anchorage, has been an outspoken critic of the bill. She said that “government mandates,” of which there will be more under the act, simply don’t work.  The law, she said, will “force those of us in private practice out of business.”

“This is one of the most depressing days of my life,” she told the bleary-eyed group.  

Others in the room thought it was, at the very least, a step forward in Alaska’s seemingly intractable healthcare debate, a debate of which there has been much talk -- particularly by those who get great, publicly-funded benefits -- but very little action.

Emily Nenon, from the Alaska Cancer Network, thought it was a great step for Alaska. Sen. Bette Davis, D-Anchorage, said it was a great day for the state. Pat Luby, from the American Association for Retired Persons, said that because of the decision, it’s a “great day for all of us.”

In a statement after the meeting, David T. D'Amato, director of government affairs for Alaska’s Primary Care Association, pointed out that APCA’s members are on health care’s front line. “Regardless of any of our individual disagreements about the Supreme Court’s decision today, it is clear that the discussion and study of the American healthcare system has been a positive one for the Community Health Center model, as the focus has been on increased access and affordable healthcare for all Americans,” he wrote for the organization.

Governor reacts

Gov. Sean Parnell has been dead-set against federal healthcare reform. At a press conference Thursday, he said the Supreme Court decision will “galvanize support for congressional change,” and that his job as the “people’s representative as governor of the state” was to work to shift back to the federal government the costs that will be imposed on the states in order to implement the law.

At his bequest, Alaska joined 25 other states suing over constitutionality of the Affordable Care Act; as the case wound its way through the U.S. legal system, the governor dug in his heels about implementing a state health insurance exchange, one of the new law's fundamentals.

Health insurance exchanges are expected to provide consumers an easy-to-navigate, online "marketplace" to shop for health care. Exchanges were designed to encourage more consumer choice and insurance transparency. Alaska is far behind the rest of the country on developing a health insurance exchange. Why? Parnell turned down $1 million the Feds offered every state as seed money to create exchanges, citing a lower court ruling in Florida that found federal health reform unconstitutional as his basis to sidestep the law's implementation in Alaska.

Parnell said that he might allow the Feds to take over that part for Alaska. “That’s one way we may elect to shift the costs back to the federal government,” Parnell said. Parnell also said that he’s reviewing his options to opt out of the expanding Medicaid enrollment. The court ruled states can do so without losing current federal funding for the program.

Parnell, who himself gets some of the best insurance available because he’s a state employee, declined to answer questions about how he might have gone about providing his constituents with better healthcare and greater access to healthcare.”That’s a question for another day,” he said. “This federal healthcare legislation will be implemented. I do not intend saddling the state’s residents to cover the costs if I can allow the federal government to cover the costs for our citizens.”

Alaska’s health care problem

  • 125,000 of Alaska’s state residents are uninsured, or about 18 percent. Many of them are uninsured because they can’t afford insurance because…
  • Alaska has the highest insurance premium costs in the country. Which partially explains why…
  • Alaska has the highest healthcare costs for services in the country. A 2010 study found rates in Alaska were up to 192 percent of what they are for the same services in Washington state. In Alaska, doctors get reimbursed $1,141.23 for cataract surgery, to name just one procedure. In Washington, it's $394.44. Also…
  • Alaska has the most expensive workers' compensation premiums and is number one in medical costs for workers, too. It pays surgeons 482 percent of the Medicare rate. For instance, worker's comp will pay a doctor $4,181 for knee surgery in Alaska (nearly four times what it reimburses under Medicaid). In Washington, it's $869, and in Hawaii it's $693. It'll pay $2,339 for an MRI in Alaska. In Washington it pays $769, and in Hawaii $634.
  • For all the endless talk about letting the market dictate healthcare economics, Alaska health insurance is dominated by Premera Blue Cross, which commands 70 percent of the market.

Why is Alaska's medical care so costly? Some say it's because we're unhealthy compared to other states. Others believe it's because the pool -- the number of people we insure -- is so small. Still others claim the state provides little oversight of the medical industry, leading to high prices. Doctors continue to charge more, and the two insurance companies that dominate Alaska's health insurance market -- Premera Blue Cross and Aetna -- have an interest in keeping doctors happy; therefore, they reimburse what the doctor charges. And those costs get passed down to the consumers. Specialist charges are particularly high. One highly trained Alaska surgeon is fond of saying that he moved to Alaska because he makes five times what he could make elsewhere. 

Doctors charges are only part of the problem and it’s something that Premera has worked on for awhile. Eric Earling, spokesman for Premera in Washington state said that while it will “significantly” expand access to coverage in 2014, which is a good thing, he said, it does not address costs.

Congressional delegation reacts

Below are reactions from Alaska’s congressional delegation, which went as predicted. The two Republicans, Rep. Don Young and Sen. Lisa Murkowski, who receive tax-funded health benefits, focused on the tax implications.

Comment from Young:

Today's decision by the Supreme Court does not change the fact that ObamaCare sticks the American people with new taxes, new regulations and devastating cuts to Medicare. When it comes to the individual mandate, this ruling leaves the American people with two very bad choices – either pay a higher insurance premium or face a massive tax hike. The unfortunate irony today is that ObamaCare was saved because it is a new tax on the American people – which is something this President promised would not happen. We must repeal and replace this law with a bill that increases accessibility, portability and affordability for the American people – and that’s what I intend on fighting for.

Comment from Murkowski:

Today’s news from the Supreme Court is troubling to me in that it sets a new precedent for governmental overreach into our healthcare choices, and a wide majority of Alaskans and Americans feel the same way. Moving forward, we must repeal this bill and responsibly address health care in a timely fashion.  There are many reasons why Alaskans did not like this bill – whether it is because of the new federal tax forcing every American to purchase a service, over $500 billion in cuts to the already anemic Medicare program which would have further restricted access to doctors and hospitals for disabled and elderly Alaskans, the higher taxes on individuals, families and small businesses throughout America or the onerous new IRS reporting requirements for millions of Americans. We need healthcare reform that will help Alaskans – helping them improve access to care; and reduce costs by allowing individuals to purchase health insurance across state lines, reform medical liability so we can limit the practice of defensive medicine, and restructure the delivery system of health care to make it more affordable and accessible. The nation’s economic path is currently unsustainable, and the rising cost of health care is a major reason for this. America’s healthcare system is entirely too expensive and entirely too inefficient.  I stand ready to work with anyone who wants to replace this law with something smarter, leaner and more responsive to Alaskans.

Sen. Mark Begich, Alaska's only Democrat in Congress, went a step further than the others and highlighted the benefits of the healthcare act, which are listed following his over-all remarks:

I’m pleased Alaskans will continue to receive important benefits such as coverage for young adults through their parents’ insurance, access to care for individuals with pre-existing conditions, tax credits for small businesses, increased services for our seniors, improved coverage for Alaska Natives, and even cash rebates if insurers don’t spend your premiums on health care. While the law is not perfect, the status quo was not an option.  Healthcare costs were skyrocketing and insurance companies were in charge of escalating those costs. There is still plenty of work to do, and I look forward to the State of Alaska moving forward on implementation. The court’s ruling on the Medicaid section of the law may raise questions for the states, but I believe the answer is not that difficult. The court says states now have the option of expanding health coverage – in Alaska, more than 30,000 people are newly eligible. Because the states will never pay more than 10 cents on the dollar for this coverage, it is a very good deal. It is time to move past the politics and come together to make the law work for Alaskans.

  • 9,000 young adults  keep their newly gained medical coverage through their parents’ insurance plans, and more will become eligible;
  • 40,000 seniors keep their access to free screenings like mammograms, colonoscopies or wellness exams;
  • An additional 121,000 Alaskans with private health insurance also will retain access to free screenings;
  • An estimated 3,000 seniors in the ‘donut hole’ will keep getting financial help to afford prescription drugs – hundreds of dollars each;
  • 11,500 businesses will maintain their eligibility to receive tax credits to help them afford health insurance for their workers;
  • An estimated 3,000 Alaskans this year will receive cash rebates of over $600 because their insurance companies spent too much on their own administrative costs and not enough on actual health care for their customers;
  • Alaska Natives and American Indians will have permanent protections under the Indian Health Care Improvement Act;
  • An estimated 40,000 Alaska families will receive tax credits – totaling thousands of dollars each – to help afford health insurance bought in the exchange. 

Contact Amanda Coyne at amanda@alaskadispatch.com