Alaska's economic future is looking ever more dire by the day. With the budget shortfall, threatened cuts to services, the health care system sliding into oblivion, and the economic uncertainty of relying upon a single industry as a sole source of income, we desperately need real leadership to step in and make a course correction. Last week, the current majority caucus released a list of prefiled legislation to set the opening tone of the 2016 session. Let's take a look at what their vision for the future of Alaska is.
So far, two bills filed by Rep. Mike Hawker seek to undermine and dismantle Medicaid. No attempts to provide meaningful reforms are being made, no attempts to fix the many problems which the Alaska Legislature itself has identified. This is particularly disturbing coming from Hawker because very recently he boasted about how he himself is fully vested with health entitlements, and he claimed that health care reform is a top priority of his.
Actions speak louder than words. It is clear the current regime in our Legislature has no intentions to confront our exploding health care costs. One of the most recent Department of Health and Social Services studies available from 2011 put our total health care costs statewide in 2010 at $7.5 billion. To put that in context, total wages earned by all Alaskan employees was $15.4 billion in that same year, and at current trends our health care costs were predicted to more than double by 2020.
Only two private health insurers remain in Alaska. Alaskans who pay out of pocket for coverage are set to get slammed with nearly a 40 percent average rate hike in 2016, and this is after they experienced a 31 percent average rate hike in 2015. The cost of our state's average benchmark insurance exchange plan is dramatically higher than the rest of the country.
In Alaska, commercial health insurance premiums are also extraordinarily high. Even as far back as 2011, according to a report on health care costs for the Alaska Health Care Commission, our businesses were being charged 130 percent the average other Northwest states were paying. Not only are these costs passed on to Alaskan consumers, driving up prices and stifling our economy, they are also forcing job-creating industries and businesses out of our state because we simply cannot compete. How can we possibly expect to create new jobs, expand our economy, and generate new wealth in such a hostile business environment?
What became most shocking to me while I researched this issue was not the complete lack of progress on this crisis, it was the fact that our current legislative regime appears to be actively sabotaging our health care system. While Rep. Lynn Gattis was making the case to eliminate Alaska's only medical school option last spring, the Seattle Times quoted her last March as saying, "We charge a heck of a lot more than you do, and we pay a lot more (to doctors)." This was apparently the reason why the majority wanted to cut Alaska's participation in WWAMI, a five-state medical school program run by the University of Washington. They seem to believe we don't need a med school when we can just charge Alaskans so much money that out-of-state doctors cannot resist such enormous profit margins.
Gattis is absolutely correct about one thing, our health care system is primarily a free market system, which is heavily influenced by supply and demand. Because Alaska has a critical shortage of providers, we have fewer options and providers are able to charge much higher rates than they could in other states. By 2011 relative physician reimbursement in Alaska was 160 percent the rate in comparable Northwest states. By calling for cuts to the only medical school option available to Alaskan students in order to save an estimated $3 million, the majority was aggravating one of the key factors that inflates our health care costs hundreds of millions of dollars.
We cannot afford to waste any more time. We need real leadership on this issue. The failure of this legislative regime to act to relieve our health care crisis costs every single family in Alaska hundreds or thousands of dollars per year. These failures are also putting proud Alaskan business owners out of business and keeping new job-creating industries out of our state. Everyone in Alaska is concerned right now about what new taxes the Legislature will be imposing on us this year, but people also need to start talking about the failed leadership taxes we are already paying through massively inflated health care premiums. As the session begins, my advice to the majority caucus is simple: Lead, follow, or get out of the way.
Forrest McDonald is a South Anchorage candidate for Alaska Senate. He is a lifelong Alaskan and a veteran of the U.S. Army's 173rd Airborne Brigade.
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