An Alaska government takeover of healthcare is in the works. This plan will increase state spending, grow healthcare costs, and result in less flexible, less effective care.
We’ve seen this story before. This time, it is called the Alaska Health Care Authority, or HCA, which creates a structure that expands the size of Alaska’s bureaucracy at a time when Alaska’s government is struggling to fund public education and infrastructure, and is cutting your Permanent Fund dividend.
The current administration and several legislators support the idea, and have allocated hundreds of thousands of state dollars to study the concept.
While the concept may be well-intended, it is a misguided effort to address Alaska’s very complex, high cost healthcare system. We all recognize a need to cut healthcare costs. And I appreciate the administrative and legislative efforts to find cost savings. But an HCA is a bad idea for many reasons.
Under the proposed HCA, the State of Alaska would force every state agency, state corporation, University of Alaska and school district employee and retiree and, potentially, every political subdivision employee and retiree, to get their health care coverage through a new government bureaucracy. In other words, establishing an HCA would force more than 50,000 Alaskans to change their health plans.
The proposed state-run HCA would take over privately-managed health plans, requiring Alaskans to abandon their well-managed healthcare plans with adequate reserves for emergencies, to state plans that are struggling to stay solvent.
How would you react if you had an innovative, effective health plan that worked for your family, and you were informed that this coverage would now be to the supervision of the State of Alaska? Under a Health Care Authority, your coverage would become part of Alaska’s fiscal struggles.
Despite the idealism of those who would like to create and implement an HCA, this concept serves no one well.
Last year the State of Alaska conducted three studies on the topic. They all speculated that an HCA could save healthcare costs for the State of Alaska, but only if all publicly-funded entities are required to participate in the program. They highlight health authorities in Washington and Oregon and mention Hawaii as model examples. These studies overlook glaring concerns that Alaskans deserve to know:
Washington’s HCA miscalculated and underfunded its budget by $463 million in 2016.
An Oregon State audit found approximately 41 percent of the Medicaid enrollees in the Oregon HCA were ineligible, resulting in $88 million in avoidable costs during a six-month period in 2017.
Oregon school districts that rejected participation in the Oregon HCA offer better benefits at lower administrative costs, thereby saving the school districts funds to offer superior pay and hire more teachers.
Hawaii has had no functioning Health Authority since 2015, yet the State of Alaska continues to publish that Hawaii has a model that Alaskans could emulate.
Other issues include the fact these reports reflect a biased, predetermined outcome, as the only private sector assistance in developing or completing the studies were paid consultants and advocates of the HCA.
At present, there is no funding mechanism associated with the proposed HCA. While we lack details around implementation, it is fair to say this change would require hiring new employees, new software programs, and significant onboarding work.
HCA is reminiscent of Senate Bill 91, the crime reform bill that legislators scrambled to fix; it lacked effective analysis, and now many people are demanding its repeal.
These are just some of the holes in state-funded studies that advocate for the HCA. Rather than addressing these deficiencies, the State of Alaska simply cites the reports as justification for moving forward with the HCA concept. In fact, the state scheduled two public meetings, on Aug. 9 and 30, 2018, to discuss the governance structure of a proposed HCA. This is premature.
Rather than proceeding to discuss the HCA governance structure, the state should first restore the credibility of the process. Unless we are confident that an HCA can institute competitive and common-sense private sector practices, the Alaska HCA concept should be scrapped, and we should look seriously at other means of reducing healthcare costs for all Alaskans. The HCA story is a fictional narrative in need of a replacement.
Fred Brown is the executive director of the Pacific Health Coalition. PHC is comprised of over 45 member health benefit plans in Alaska and the Pacific Northwest. These member funds represent over 100,000 employees and their dependents in Alaska. He can be reached at [email protected]