Alaska is in recession and is unable to reconcile its huge deficits, despite a 40 percent cut in government services. Thirty-five percent of the total state budget is now devoted to health care. Alaska employers struggle to keep pace with wages while the cost of providing employee health care benefits skyrockets and are the highest in the world. Many Alaskans remain uninsured or pay small fortunes for private insurance with prohibitively high copays and deductibles. The only reasonable solution to this crippling problem is to adopt a state or national single-payer government health care program.
Alaska health care prices do not simply reflect increased labor, shipping and travel costs — at most only 30 percent more than the same services in other states. Alaska doctors often charge and collect 500 percent or more, than the costs for obtaining the same service outside the state. Alaska utilizes the "80th percentile rule," which mandates insurance companies pay at least 80 percent of what its providers bill, thereby encouraging medical fee increases with virtually no restraint. Every six months, insurance companies must reevaluate average regional fees to keep pace with this rule.
Cutting the 80th percentile rule to a lower percentage is not the answer. This would only motivate providers to raise their respective rates faster. Also, most specialty medical groups in Alaska lack real competition and have joined to form regional monopolies and set prices at will, leading to upwardly spiraling prices across virtually every aspect of health care delivery.
Doctors, pharmaceutical companies, medical suppliers and ancillary service owners (e.g., labs, imaging, physical and massage therapy) are usually well-meaning, great people trying to do good work. They are not crooks. But, money is very much on the table thanks to our broken system, and health care providers have taken full advantage of this amazing flow of Alaska dollars from the state of Alaska and from the individuals and employers who are paying for incredibly high insurance premiums, into the hands of the health care industry and its providers.
No realistic solution is currently being considered, on either a state or federal level, to adequately control health care costs. Both political parties kick this expensive and politically explosive can down the road, offering us Obamacare, health savings accounts, tax breaks, government subsidies, state reinsurance and other incentives, but these are insufficient and minor adjustments to a terminally broken system. Milton Friedman, a renowned conservative economist, admitted he had "no idea" how to control costs with our current health care system. Don't blame health care providers, insurance companies, or the health care attorneys. The problem is the design of our system and it needs to change.
The only solution to Alaska's health care fiscal crisis is to create a single-payer health care system. A single-payer system will successfully cover every Alaskan, without compromising provider choice or quality of care. This has been successfully implemented in most other first world nations with high satisfaction rates. Moreover, our federal government already offers Medicare to all citizens over the age of 65. It has proven itself successful and efficient in controlling health care costs and pricing with overall high satisfaction. Our current administration in Washington is leaning toward giving individual states more autonomy related to federal Medicaid dollars. This presents a tremendous opportunity for the state of Alaska to work with our federal government to pioneer our own state-run universal health care system.
There is no free market in Alaska health care. There never will be with our current third-party payer system. It does not make us all socialists for our government to fix a broken system. Health care prices are devastating the state's economy and the state could save hundreds of millions of dollars a year if it self-insures its citizens.
Furthermore, workers will see marked increases in wages once benefit packages become less expensive for employers to provide. No other mechanism can control the prices for health care in Alaska or for the rest of the United States.
Winston Churchill once said, "Americans always get it right in the end, after they've exhausted all other options." It is time for Alaska to get it right.
Alan Gross is a lifelong Alaskan and an orthopedic surgeon who has practiced since 1994. He also holds a masters degree in public health and is a commercial fisherman. He lives in Petersburg.
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