Alaska's health care system creates classes of haves and have-nots. One reason the cost of the system has exploded is because the haves are making the decisions.
The haves are those with health care paid for by large employers, especially the government. The 60 percent of Alaskans who get health insurance through their jobs pay only 10 percent to 15 percent of the true cost.
That includes workers like our state legislators and governor.
The have-nots are individuals and small businesses whose lives are being turned upside-down by the cost of a platinum-plated medical industry. So far, their voices haven't been heard by the haves who hold power — or not heard as clearly as the voices of doctors and hospital administrators, who are among Alaska's wealthiest and most powerful people.
It's astonishing that a problem of this magnitude has gone this far without any meaningful action from state government.
With the highest and fastest-rising costs in the nation, Alaska's health care industry is threatening to take over the economy. And kill it.
Alaska's health industry increased in size by an average of 8.8 percent a year during a 13-year period ending in 2009, according to statistics provided by Mouhcine Guettabi, an economist with the University of Alaska Anchorage Institute of Social and Economic Research.
During that same period, the total Alaska economy (our gross state product) grew at an average rate of 5 percent.
Even with the economy growing at that fast rate, health care grew so much faster that if the trends continue it would become 50 percent of our economy by 2048. Which is impossible. Other industries would collapse before every other dollar spent in Alaska was for health care.
But consider that our economy now isn't growing anywhere near as fast as 5 percent. And yet, the health care industry continues to add jobs and facilities. If we assume our economy grows at a reasonable 2 percent a year while health care keeps up its past pace, we would reach the 50 percent point not in 2048 but just 15 years from now.
These economic projections are very rough and leave out many factors. The point isn't in the details but in the big picture: Alaska is headed for an economic catastrophe if health care costs aren't controlled.
For many small businesses and individuals, serious consequences have already arrived. I hear from folks every time I write one of these columns:
A successful artist who abandoned her business because she couldn't afford health care for herself and her children and now works an administrative job with a state agency.
A primary care doctor whose own group health insurance became unaffordable and who relies on much better insurance through her husband's federal retirement.
A business person who cut her staff to 50 people to avoid the employer health insurance mandate for larger firms. Her husband quit working in the business and got a job that offered insurance so they could be covered themselves.
A woman who had affordable subsidized coverage under Obamacare but lost it because her husband's income increased, with the net impact that the new money went to the increased insurance premiums.
And I heard from log home builder Bill Kisken. He and his wife, a furrier, get affordable insurance through Obamacare only so long as they don't do too well in their businesses. Bill received a quote of $52,368 a year for an unsubsidized silver-level plan.
He wrote in his email: "Friends of ours who worked with the state pay literally nothing for a Cadillac plan. The anger and the jealousy between the two classes (that's what it is) would be a good article. Like one friend puts it, they drink out of a golden goblet, we drink out of a sewer pipe."
What has the state done to address the cost crisis so far? It deposited billions in teacher and public employee retirement plans based on the assumption that health care costs will always rise at 7 percent a year.
I don't begrudge government employees their quality coverage and I know the retirees earned their benefits, which are guaranteed under the Alaska Constitution. But the situation insulates them from a problem causing great injustice and economic damage for others.
"Regular people can't afford it," Guettabi said. "But it's considerably less so for legislators and others who work for government."
The impact on large employers and labor unions is beginning to amplify the message.
"The high differential for care in Alaska is killing the economic viability of even the largest companies," said Doug Smith, CEO of ASRC Energy Services, in an email. "The cost of health care benefits is several times our annual remaining net profit for companies in Alaska."
Firefighters covered by a Northwest region health trust feel the problem too, said Thomas Wescott, president of Alaska Professional Firefighters, in a message: "We are constantly looking for ways to reduce medical costs because we cannot expect the trust to cover these high prices we experience in Alaska."
Employees of companies pay part of their excessive health care costs when employers increase co-pays, deductibles and premiums. Workers also pay, but don't know it, when their employers put compensation money toward health care increases rather than giving raises and bonuses.
Alaska businesses are losing competitiveness or are never starting because health care is too expensive. That's what it looks like when health care eats the economy.
Our economy ran for many years as a machine for spending money that came from Prudhoe Bay and the federal government. Any way you divide up free money coming from outside the state, it provides economic activity and jobs.
In Alaska, medical specialists used their share for Hillside mansions and granite counter tops in their clinics, employing contractors. Health care was a way of serving up the gravy train.
But now that competitiveness matters, those old habits are leading us off a cliff. And the people at the wheel seem to be least aware of the peril.
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