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Obamacare is coming -- and some Alaskans may face higher costs

401(K)2013 / cc via flickr

A legislative committee Tuesday heard concerns from two top insurance officials and a doctor about the implementation of Obamacare in Alaska, the federal health care reform that Alaska has resisted. A state insurance regulator warned that it would likely raise individual insurance rates after it takes effect Jan. 1, and a top insurance official agreed.

Alaska has some of the nation's highest health care costs, but few Alaskans buy their insurance as individual policies. Most are covered under group plans provided by employers or the government. A mandate that everyone have health coverage is part of the federal Patient Protection and Affordable Care Act (ACA), commonly known as Obamacare – perhaps its most controversial aspect. The measure, upheld by the U.S. Supreme Court, was supposed to drive down costs by bringing greater transparency to hospital billing and competition to the market through online exchanges. Perhaps most controversially, Obamacare requires every American purchase and maintain health coverage or pay a fine.

Brett Kolb, director of the state's Division of Insurance, warned that the Affordable Care Act may eventually result in higher individual insurance rates for some people.

"The research seems to be indicating that the cost of individual insurance is going to go up," Kolb told the Alaska Legislature's Administrative Regulation Review Committee, meeting in Anchorage.

A goal of Obamacare was to lower overall health care costs by ensuring most everyone has insurance. That should mean fewer uninsured patients who can’t pay their bills showing up in hospitals, costs now passed on to paying customers.

Kolb said people facing steep health insurance costs today or who cannot buy insurance -- such as those with pre-existing conditions -- may see their bills go down. But rates for healthy young males, who typically cost less to care for, will likely rise. Many of them currently go without insurance, he said.

Despite the mandate, some people will go without insurance because the tax penalties won't be steep enough to compel those people to buy in, the committee was told.

Others may practice what's known now as "jumping and dumping," said Jeff Davis, president of Premera Blue Cross/Blue Shield of Alaska.

That's what insurance company actuaries call it when someone waits until they have a medical need for insurance to actually purchase insurance. After they get their operation, he said, they dump their coverage.

He provided an example of a woman who enrolled in the Alaska Comprehensive Health Insurance Association, a state insurance pool for high-risk customers who cannot otherwise obtain coverage. She enrolled when she needed a knee replacement costing $250,000 and canceled her coverage after the operation -- having paid only $3,000 in premiums.

Davis said he didn't blame the woman for using the system that way. And an identical surgery can cost far less out of state, something that has prompted a number of Alaskan to schedule medical procedures in the Lower 48 – and sometimes overseas

"She was responding to the economic incentives that were in front of her," he said.

Davis said Obamacare's enrollment requirements, which don't include waiting periods or pre-existing condition limitations, may drive up costs for insurers. If that happens, many expect those costs to be passed on to consumers.

“That's like pulling your car into your driveway, discovering your house is on fire, and then calling Allstate to get a homeowner's insurance policy," he said.

"There's some problems with that as an economic model," he said, allowing that future regulations could change it.

The implementation of Obamacare's individual mandate is rapidly approaching, with enrollment scheduled to begin October 1, and coverage taking effect January 1.

Because so little is known about how Obamacare will be implemented, Director Kolb said its impact on Alaskans is unclear. "A lot of the basic questions haven't been answered," he said.

The division will review policies offered under Obamacare and won't "allow premiums to run rampant," he said.

Alaska was one of the states that unsuccessfully challenged the constitutionality of Obamacare's individual mandates, and it has resisted other aspects as well.

The Supreme Court ruled that states could not be compelled to expand their Medicaid programs for low-income residents, and Gov. Sean Parnell has tentatively decided to not go forward with the expansion, despite federal incentives to do so.

According to the Daily Briefing and American Health Line, here’s how the states stood on June 14 regarding the Medicaid expansion:  26 participating, 1 leaning toward participating, 13 not participating, 6 leaning towards not participating and 4 pursuing an alternative model.

Parnell has also chosen not to create Alaska’s own health insurance exchange, the online portal through which residents would be able to buy the new policies. "The decision has already been made that it was in the best interest of the state to go with a federally facilitated exchange, or as they're now being termed, 'marketplace,'" Kolb said.

Obamacare contains subsidies for low-income insurance buyers that will bring down some costs, as well as new requirements aimed at limiting waste and fraud.

Davis said that given the size of the national health care industry, there is plenty of waste.

But Dr. Ilona Farr of the Alaska Family Medical Center said that the act's additional paperwork and audits would take time away from patients.

"Most of us that are in private practice are not committing fraud on the scale they are talking about at the national level," she said.

An outspoken critic of Obamacare, Farr said new regulations would hurt patient care.

"The more paperwork -- the more pre-authorizations that we have to do -- it takes us away from patients,” she said.

Committee Chair Rep. Lora Reinbold, R-Eagle River, said the committee's goal was to find out what impact Obamacare would have on Alaksans.

"Right now the answer is: We don't know," she said.

Contact Pat Forgey at pat(at)alaskadispatch.com