Patty Boily has had a ringside view of health care challenges for patients in Alaska, where industry observers conservatively estimate costs run 20 percent higher than the rest of the nation.

Boily, a medical coder who spent 21 years working in a small Homer clinic, watched patients deal with the high prices, struggling to decide between buying milk or medicine.

Then in May, she experienced her own flaw in Alaska's system. She found out her seemingly healthy 27-year-old son needed surgery to repair a heart valve.

He worked in a small restaurant. Like many small Alaska businesses, the restaurant could not afford to offer employer-based health insurance.

A cardiologist told the young man he likely faced a $200,000 bill.

"It was like, what are we going to do?" she said.

High costs of care and insurance are just two of the problems for Alaskans with health problems.

For the elderly, private doctors routinely reject Medicare patients because federal reimbursement does not cover their expenses.

There's a chronic problem recruiting doctors and nurses to many parts of the isolated state, and it's a challenge persuading residents to lay off tobacco and junk food, which contribute to serious rates of cancer, diabetes and heart disease.

Health care has been marginally addressed by Gov. Sarah Palin during her two years in office. A spokesman says she will unveil health care proposals Thursday.

"It wasn't something she put a great deal of effort in, from what I could tell," said Rep. Sharon Cissna, an Anchorage Democrat who champions health care in the Alaska Legislature.

Palin's not the first Alaska governor to emphasize other issues, Cissna said.

"Then and now, the state of Alaska has ignored health in a way that is creating enormous problems," Cissna said.

Boily lost her own insurance a year ago when her employer's carrier went out of business. At 58 years old, she was rejected by a private carrier.

She found help for her son by filling out a mound of paperwork that led to him being declared presumptively disabled, and therefore eligible for Medicaid. She doubts that people with less familiarity with the system would know about that option.

She finds that lack of action by state leaders frustrating. More than 25 percent of employed Alaskans work for local, state or federal government, jobs that come with insurance.

"When you start talking about insurance, their eyes glaze over," she said. "For the rest of us, it's a big issue."

Alaska's high medical costs start with its location and small population. The cost of living in the north is already higher and the population is so small, it has attracted no HMOs or other significant managed health care that hold down prices in other states.

Costs are driven higher by the 100,000 Alaskans -- about 15 percent of the population -- who do not have insurance. About 60,000 of them have jobs. Medical providers who provide uncompensated care shift the expense to people who do have the means to pay.

Palin's health care initiatives in nearly two years in office can be boiled down to budget and proposed laws.

Palin in 2007 created a health care strategies council that set lofty goals -- health care costs below the national average, quality health care accessible to all Alaskans, increasing the number who are insured. The goals have been minimally addressed and none have been realized.

Palin in 2008 used the state budget, flush with surplus cash tied to an oil tax change and crude oil prices over $100 per barrel, to address the shortage of health care workers. She supported money for recruiting and training doctors, nurses, dental hygienists and EMTs at the University of Alaska.

Palin approved $3.85 million for 26 federal community health centers so they could expand services to medically underserved areas.

Outside the budget, Palin's main health care effort in the 2008 legislative session was a three-prong bill.

It would have set up a medical information clearinghouse, allowing patients to comparison shop for doctors and prescription drugs.

The measure would have set up a health care commission, a measure Cissna said was crucial for planning and setting up a comprehensive approach to health care problems.

Both measures were well-received, but Palin insisted they be tied to a measure that fit in with her "less government is better" philosophy: elimination of Alaska's Certificate of Need requirement, a regulatory tool that prohibits duplicate medical services in communities.

"Eliminating the CON program, with certain exceptions, will allow free-market competition and reduce onerous government regulation," Palin said in a newspaper opinion piece.

"She thought it was a no-brainer, that people needed increased access, provided by competition," said Anna Kim, a health issues aide in the governor's office.

The measure was strongly opposed by Alaska hospitals, especially outside Anchorage. They said it would jeopardize their few profitable services, such as surgery and imaging, which help pay for emergency rooms and other money losers.

Princeton University economics Professor Uwe E. Reinhardt, who researches health economics, said costs have not dropped in other states that have dropped Certificate of Need. What it has done in some cases, he said, is set off a medical arms race, which he and other economists say does not lower costs or improve mortality rates.

Hospitals have a legitimate argument that competition with specialty offices is not fair if the federal regulation component requires them to subsidize the uninsured, he said.

"Competition isn't fair when someone has a ball and chain around their leg," Reinhardt said.

Elliott Fisher, professor of medicine at Dartmouth Medical School, said overbuilding may lead to slightly lower prices for procedures. But the system is flawed because both institutions must stay full to maintain their revenues, creating "supplier-induced demand."

Kim, Palin's aide on health issues, acknowledged that Palin's focus has been resource development. But less than two years into her term as governor, Kim said, it's premature to give Palin a final grade on health issues.

"I'm hoping we're going to gain some speed on the topic in the remainder of her term now that the resource development part has passed through the legislature," she said.

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