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Health care changes would make Alaska's recession deeper

  • Author: Charles Wohlforth
    | Opinion
  • Updated: December 2
  • Published March 13

As Republicans rework the nation's health care system, my sinking feeling for Alaska is as bad as during an oil-price crash.

Alaska already faces a terrible health care crisis, with rapidly rising, stratospheric costs eating up an unsustainable part of our economy and forcing decisions that cripple our productivity and competitiveness. "Trumpcare," if it passes as currently envisioned, would make the situation much worse.

As a human being seeing this unfold, I care most about the suffering of poor, helpless people. "Obamacare" was slowly creating a more humane system for the homeless, mentally ill, drug addicts and people needing primary and preventive health who could not afford it.

The details will surely evolve, but the current bill advanced by House Speaker Paul Ryan would gut those efforts. We would let addicts keep stealing and overdosing and let paranoid and delusional mental patients wander and freeze in the greenbelt parks.

But in this column I want to focus on the economic damage that would come from the bill. It would withdraw a huge amount of money from the Alaska economy.

Many details are not yet available but Ryan's tax credit formula would reduce funding for the average Alaskan in the individual health insurance market by more than $10,000 a year.

The "Obamacare" individual market already was unaffordable for people making around $80,000 a year, above the cutoff for subsidies. But many people with lower incomes got the subsidies and could afford their premiums.

When I wrote about these issues last year, I heard from couples who had decided not to marry so they could keep their separate income low enough to be able to afford insurance. That won't be an issue under Ryan's plan, because almost no one will be able to afford insurance on the individual market.

Without some additional intervention, Alaska's individual market would disappear. That failure would greatly increase the number of uninsured people and, along with the reductions in Medicaid, would suck a huge amount of money out of the system.

Alaska's health care industry has been growing rapidly with the money injected by "Obamacare." Economists have suggested that expansion looked like a bubble, liable to pop as the economy loses its ability to support extravagant costs. "Trumpcare" would be a pin in the bubble.

That couldn't happen at a worse time.

Alaska's economy continues to sink into an extended recession. Many economists and business leaders believe the bottom could be three years away.

How far down the bottom lies will depend, first, on the Alaska Legislature's solution to its budget crisis. The money currently being spent from state savings represents a significant chunk of our total economic activity.

If Congress pops our health care bubble, we will fall that much farther.

An even more important issue comes after that. What matters long-term — deciding, for example, whether our children can live here — is where we go after we get to the bottom.

Will we build the conditions for a competitive private-sector economy that can grow with less oil money and federal spending?

We have two examples to look at. The played-out resource and industrial regions in the middle of the United States show what it looks like when you ride the economy of the past down into the pit of nostalgia.

The cities on the coasts, on the other hand, have been booming for years. On a recent trip to New York and Philadelphia, I was astonished by the signs of exploding wealth. The news was full of talk of shortages of workers and space for all the innovative new companies.

On our current path, the future looks more like a played-out resource and industrial state. Even with recent new oil discoveries, prices would need to enter a long-term trading range well above $60 a barrel to bring back our heyday.

Health care could be the biggest factor within Alaskans' control in deciding our fate.

Under our current, broken system, entrepreneurs can't start businesses in Alaska unless they are married to someone with insurance or they are willing to risk economic ruin in case of illness or injury. Health care premiums are too high.

Large companies in Alaska face crippling disadvantages because of health care costs too. A company here pays much more for the same employee at the same wage. We can't compete for the bright people powering the coasts' economic boom.

And our ability to produce more bright people through the school system is also crippled by health care costs. A 2013 study showed that the new money spent on education over a 20-year period went to teacher benefits and retirement, not increased pay or improved programs.

Competition in the health care market won't solve the problem. Alaska's market is too small for competition to deliver reasonable prices.

In large health care markets outside Alaska, insurers hold down fees to providers by contracting for discounts. We don't have enough hospitals and specialist practices to create robust competition for those contracts.

Without competition, our prices for private health care have risen — but much less for programs for the poor, who use Medicaid, or the elderly, who have Medicare. Those government-controlled payments are much lower.

In the short range, Alaskans should let our congressional delegation know our economic survival depends on defeating the Ryan plan. Our two senators have swing votes, allowing them to force this plan to be remade.

In the longer range (but not too long), we Alaskans need our own unique system to deal with these problems. Whatever the federal government comes up with will not address our odd little corner of the nation.

The views expressed here are the writer's and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com or click here to submit via any web browser.

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