Alaska is the only state that has not started setting up a health insurance exchange, according to state Sen. Johnny Ellis, Democrat of Anchorage, who implored the governor Thursday to accept $1 million from the U.S. government toward establishment of the health reform-mandated "insurance free market."
Parnell announced late in the afternoon that Alaska would not apply for the federal health insurance exchange grant. The applications are due Friday. A release from the governor's office announced that Parnell instead would stay the course he charted last month, citing a ruling from Florida that found the Affordable Care Act unconstitutional.
Parnell is virtually alone in this interpretation of the ruling; his office's press release failed to mention that three other federal district judges have ruled ACA law of the land. Many legal experts agree the law's constitutionality will not be decided in district or appellate court, but ultimately by the U.S. Supreme Court -- and that Parnell finds himself on "shaky legal ground."
The U.S. government will establish an exchange in Alaska if the state does not have one in place by 2013 that meets the parameters set forth in ACA. Parnell said the state is pursuing other health care initiatives.
Alaska's Division of Insurance, Parnell said, is "reviewing the potential for developing a health insurance exchange without federal dollars ... evaluating data and software applications that could be used to create an Internet portal to provide better insurance information and more health care access."
Survey: Health insurance fears stifle Alaska job growth
A study of Alaska small businesses and commercial fishermen conducted by the nonprofit national group Small Business Majority less than a year and a half ago found that of the 400 respondents, 79 percent did not provide insurance to their employees "because they could not afford it."
The group, which claims to be nonpartisan, interviewed 100 fishermen and 300 mom-and-pop Alaska businesses that employ fewer than 100 workers. The business owners viewed "lack of access to high-quality, affordable health insurance as a significant barrier to entrepreneurship," supported reform, according to the survey's results, and "supported a role for the federal government."
That was in October 2009 (PDF). Earlier this week, the group held a press conference to describe what it said would happen to Alaska fishermen, summer tour guides, beauticians, restaurateurs and other entrepreneurs and small business owners if the state neglected to establish a health insurance exchange -- or if the U.S. House of Representatives defunded health care reform, which between 55 percent and 65 percent of Americans disapprove of, according to a poll released Wednesday.
The Small Business Majority, which was unequivocal in its support of the reforms, also detailed what the law specifically provides for small business owners, why big business continues to oppose it and how defunding would impact economic growth and employment.
Health care access is about economics of scale, said Karen Mills, the administrator of the federal Small Business Administration. Mom-and-pops that employ eight or nine people don't get access to the affordable health plans offered big businesses, so they opt out.
"Currently, small businesses pay 18 percent more for coverage because they have less purchasing power" than those with more than 100 employees, she said. "It keeps prospective entrepreneurs (locked into jobs) they might otherwise leave because they can't. Currently, they're afraid to move to start a business because of health insurance."
What about the small business tax credits?
Small Business Majority CEO John Arensmeyer said failing to fully implement health care reform would cripple many business owners who have already moved to begin providing insurance to employees on the basis of a 35 percent tax cut available to those splitting costs with their workers.
In 2014, eligible businesses that pay at least half of employees' health insurance costs may qualify for 50 percent tax cuts, Mills said.
Eight out of 10 small businesses that employ fewer than 25 workers are eligible for the tax credits, provided they cover half the insurance, Arensmeyer said. One-third of small businesses that responded to a recent survey by his nonprofit indicated they'd already started providing insurance for employees based upon that tax relief.
"Work is going on in many states to implement the law. Insurance companies and corporations are using the law to sell more insurance. People are moving forward," he said. "By working toward getting everyone in the system, it removes a hidden health care tax on those who are not in the system" and are using emergency care as insurance.
The impact would be significant in rural states, he said. His group's study noted that fewer businesses in rural Alaska offered health coverage than their counterparts in Anchorage, Fairbanks or Juneau: only 1 out of 10 small businesses in Alaska with revenues under $250,000 offered health insurance.
Mills said tax credits potentially worth up to $4 million per qualifying small business were at stake.
Sen. Hollis French, Democrat of Anchorage, responded to Parnell's announcement Thursday by saying the governor was hurting these constituencies.
The governor's decision "is harmful to at least 115,000 Alaskans that don't have health care insurance and it's harmful to the ones that do that would have benefited from the Affordable Care Act," French said.
Seven Democrats that participate in the Alaska Senate's Bipartisan Working Group, which manages legislation in the Legislature's upper chamber, signed a letter to Parnell (PDF) beseeching him to join the rest of the nation's governors accepting the money.
Study finds two-thirds of Alaska small businesses support reform
The senators told Parnell that failing to create Alaska's own insurance exchange would mean "we won't design how (the exchange) will be administered. We won't have a say over how it treats our residents. ... Even Florida -- the lead party in the lawsuit to stop health reform -- has accepted a health exchange planning grant. They are utilizing the funds to better understand the uninsured population in the state and to create an advisory work group that will consider how to structure a competitive, consumer focused marketplace that connects individuals with health benefits. We should do the same."
Even Parnell's transition team recommended that Alaska accept the exchange planning grant, according to the senators' letter. But the governor dismissed the letter and the senators who wrote it -- calling them "lawyers who know better" -- and instead announced his intent to stay the course with a go-it-alone strategy, claiming the Florida judge had issued an injunction against implementation of the health care law.
"The court barred implementation of the federal health care law. It's pretty much that simple and Alaska is bound by the decision ... " Parnell said. "Alaska now swims freer of federal entanglement than other states" that accepted the money. "These other states are now trying to figure out what to do with the oppressive constraints of money taken under an unconstitutional regime."
About two thirds of small businesses and fishermen say the government "should take action to increase the number of doctors and other providers in rural areas, including rural Alaska, to ensure that everyone has access to affordable, high-quality healthcare," the survey found.
The Anchorage Chamber of Commerce was contacted twice to comment on whether it supports or opposes health reform but Alaska Dispatch had not yet received a response.
The Small Business Majority, meanwhile, was not sure whether or how Alaska's businesses will be impacted by Parnell's decision. If Parnell continues to oppose implementation of the health reform law in Alaska -- which he says he is constitutionally bound to do by the Florida ruling -- does that mean Alaska businesses should "swim free" of the tax credits the health reform law offers them?
Failing to implement the health care law at this point would amount to a tax hike for small businesses, Administrator Mills said on Tuesday.
"It would raise taxes on small businesses, and frankly, that's the last thing anyone needs right now. Preventing the state exchanges from being created would keep entrepreneurs in 'job lock.' Small businesses understand the law and support it."
Contact Eric Christopher Adams at eric(at)alaskadispatch.com