When it comes to healthcare costs in Alaska, it is all about dollars and cents. Continuing to study and discuss a government-run Health Care Authority (HCA) or State of Alaska managed pooling for Alaska school districts, as proposed in Rep. Sarah Vance’s HB 156, will cost Alaskans more dollars and doesn’t make much sense.
While I agree there is urgency in cutting health care costs, the government does not have the capacity or capability to lower health care prices in the way that private sector experts do. An example of what can happen is 1,500 miles south in Washington state, where mandatory pooling of all public school district employees will cost $800 million more than was initially expected. That’s more than a 35% increase from what was budgeted and hundreds of millions of dollars being spent on health care costs that could be used to lower class sizes or provide other opportunities for students. Another example is in Oregon, where those school districts that do not participate in its state-run pooling program offer better wages and benefits than those participating in the state-run pool.
Lawmakers like Rep. Vance and Gov. Mike Dunleavy deserve credit for wanting to find ways to save money on health care spending in order to invest in areas like public safety, economic innovation, and education. While a state-run HCA or pooling is a well-intentioned idea, every prior attempt at something similar has failed to achieve intended goals, ending up with higher overall costs and more cumbersome government oversight.
The state does not have the expertise, staff, or political independence to successfully onboard more people into its health plans. How many new employees will be required to serve the new plan-holders? How will the designated agency withstand the political pressures of powerful interest groups looking to benefit from these additional covered individuals? Adding more bureaucracy will lead to cost increases at a time when there is a concerted need to cut state spending.
However, there are positive efforts taking place in the private sector that are driving costs down. One nonprofit example is the Pacific Health Coalition (PHC), which represents more than 45 health plans across Alaska and the Pacific Northwest. Members represent a variety of Alaskans, including firefighters, health care workers, teachers, and engineers. It is open to almost all of Alaska’s small businesses. PHC covers 250,000 people, with 110,000 in Alaska alone. Its members aggregate spending power to save a combined $500 million a year in health care costs compared to typical hospital and provider fees. Since PHC is a nonprofit organization, the savings are repaid to PHC’s member plans, protecting them from sudden increases to their premiums and co-pays.
PHC is run by a small staff of industry experts, who are strong negotiators able to keep politics out of the process. This structure creates innovation and opportunity, including a new partnership between PHC and Aetna that allows businesses as small as two people to participate in and take advantage of PHC’s considerable purchasing power and expertise. This new option will provide cost savings for Alaska’s private employers.
In addition to this partnership, PHC has also adapted to offer in-house services to its members in order to provide convenient care and keep costs low. PHC hosts and manages health fairs throughout Alaska each fall. In 2018, 19 health fairs were held in 11 cities (five cities in Alaska), providing flu shots and preventive screenings to over 7,000 people.
Best of all, it’s not just PHC. There are several other organizations like it, health care trusts and associations that innovate and protect their members while creatively lowering prices.
Private sector organizations, like PHC and its peers, have the flexibility needed to make an impact on Alaska’s health care costs. Unlike a state-run organization, they can adapt and work on innovative solutions and partnerships that make a difference in Alaska. With help from private sector organizations and the state, we can foster a better healthcare system in Alaska together.
Greg Loudon is the health plan consultant for the Pacific Health Coalition. A lifelong Alaskan and Alaska Native, Greg has 23 years of industry experience with insured and self-insured health plans, collectively bargained groups, multiemployer groups, flexible benefit plans and complex insurance issues including alternative risk financing and direct contracting for health networks. He is a member of the International Foundation of Employee Benefit Plans and the National Association of Health Underwriters (NAHU).
Greg Loudon is the health plan consultant for the Pacific Health Coalition. A lifelong Alaskan and Alaska Native, Greg has 23 years of industry experience with insured and self-insured health plans, collectively bargained groups, multiemployer groups, flexible benefit plans and complex insurance issues including alternative risk financing and direct contracting for health networks. He is a member of the International Foundation of Employee Benefit Plans and the National Association of Health Underwriters (NAHU).
