Here’s a tweet from state Sen. Hollis French that caught my eye:
Parnell administration does nothing to reduce health insurance costs for Alaskans, then complains about the results. http://t.co/IvRpbM5K7N
— Sen. Hollis French (@SenHollisFrench) September 8, 2014
French is responding to the recent politicized announcement that rates for those covered under individual plans through Premera Blue Cross are going to increase next year by as much as 37 percent. As Dermot Cole pointed out in his ADN column, there doesn’t appear to be public information available to justify the rates. Nor does it appear that the state has any intention of negotiating the rates. And they could. In Washington State, insurers, including Premera, asked for an average of an 8.6 percent increase for next year. The Washington Commissioner of Insurance, who is consistently consumer friendly, found that the increases weren’t justified and instead only allowed a 1.9 percent increase on average.
I asked French what Gov. Sean Parnell’s adminstration could do to reduce costs. Here’s what he wrote back:
- Alaska currently does not go beyond the minimum federal standards in terms of rate review process and transparency of rate review data.
- Alaska does not have public hearings on rates.
- Alaska posts minimal information, in a form inaccessible to consumers. The Kaiser Family Foundation noted in a 2010 rate review report that Alaska is one of the least transparent States in terms of making rate review data available.
- Alaska has not taken advantage of opportunities to invest additional resources into its rate review program. The Affordable Care Act provided States with up to $250 million in grants to strengthen their rate review programs and bolster State authorities. Alaska has not accepted or applied for any grants for rate review.
Why is this important? The state remains the primary insurance regulator and rate reviewer, and with a real rate review program, the state could offer Alaskans more affordable options to shop from on the market. For example, Maryland cut the increase of its dominant insurer in half, while in Connecticut, a major insurer requesting a 12.5% increase ultimately was approved for a rate decrease. Other states around the country – including rural states like New Mexico, Arkansas, and Montana – have seen their rates increase by less than 2% or even decrease on average.
Alaska continues to refuse Medicaid expansion for working Alaskans. This means that (a) some of those people are buying into small individual pools because they need the insurance (and therefore are likely to be higher users of medical care) and (b) because the increase of no-pays at emergency rooms and hospitals causes rates to go up for insured Alaskans to offset the losses.
All of which, is, if nothing else, a reminder of what we lost when French dropped out of first his Senate race, then the governor’s race, then the lt. governor’s race.
Contact Amanda Coyne at amandamcoyne@yahoo.com
Health care costs are falling? Are yours? Mine sure aren’t. Neither are my aging parents’ (who don’t live in AK).
And I am reading things like this:
http://thehill.com/blogs/congress-blog/healthcare/216963-ouch-the-bill-for-obamacare-coming-due
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/09/03/the-end-of-health-cares-historic-spending-slowdown-is-near/
With insurance premiums rising, subsidies to cover them still an legal issue to be decided, and ACA structured in a few years to remove the crutches of federal funds that are currently softening the blow somewhat, I find it hard to believe that there’s a lot of positives on the horizon.
It’s called regulation Dan, and most times it does it’s job in helping out consumers, especially consumers that know little to nothing about the health insurance racket. Or energy markets. Or the financial sector, the automobile industry, housing markets, and the food economy. I get your point that red tape is bad and we can go too far…but with health care, something like “oversight” is long, long overdue. $19 aspirin, anyone??
And there is nothing free about a free market. You have a glaring blind spot if you still believe that after all these years. The ALEC brainwashings may state otherwise, but since the creation of this country the government has played a role in our market economy. Oftentimes a big role. (Yes, even The Founders were involved!!!)
“They are required to sell more stuff, and therefore, they can raise prices because their actual cost goes up. And when they start to go broke, the feds will bail them out with our money.”
If they can raise prices, and they just received millions more customers, how exactly are they going broke? The rate review process would tell us whether those increases were justifiable. A rate review would also give us this useful tool called “information” which can enlighten us to be able to lower costs in other ways.
The governor most likely does not want this rate review process because the information received would show that since we didn’t expand Medicaid, those of us with insurance are having to pick up the tab for no-pays that go to the emergency room.
If you live in Kaktovik you pay higher premiums than if you live in Anchorage. Not everyone in the state has the same premiums for the same plans. It varies depending on where you live.
Here’s what you are missing: health care costs are falling according to the CBO, which in turn is saving tens of billions. We don’t know why exactly, but clearly this law hasn’t resulted in costs rising faster than they did prior to 2012 or so.
Premuims in many places, other than Alaska, are either falling (!!) or increasing at a small and manageable pace according to Kaiser.
A problem for Alaska is that our market is too small and without more people on exchanges, we won’t see the advantages that larger states are currently experiencing.
Finally, and perhaps most importantly, the rate of Americans without health insurance has plummeted. Combining the exchanges with the Medicaid expansions has led to about 12 million Americans getting health insurance. Those that want to repeal the law need to explain what happens to these people’s health insurance.
Sean Parnell and his contemptuous clatch of perpetrators are morally bankrupt, his handling of the National Guard scandal is proof of that.
Send them packing in November.
Well said about the rate review program.
Amanda – didn’t see your reply before my last post. I didn’t mean to say that tort reform is the only fix; it is just one example of a solution that did not seem to factor into the deliberation of ACA. In my view, the more we can remove insurance companies from the decision making process and move medical care back toward market solutions, the better our solutions will be. ACA did the opposite.
If you live in Kaktovik and have to buy insurance that covers all of ACA demands, and your insurance company has to pay your actual costs, of course it is going to cost more than if you live in Anchorage. And our relatively small pool does not allow for spreading those costs out to an mostly unnoticeable level like many other states’ do.
I go to my current doctor in part because she is willing to do common sense things like consult with me over the phone instead of requiring me to come into the office to be billed for a visit. My previous doctor did not, so I switched. This is a customer-driven market solution that is no business of the government’s, and should make my insurance company happy, because I am costing them less, but in reality probably does not, because I am earning them less. And she is now leaving the state to go practice in a location that is more appealing to her for a number of reasons. This will be a loss for my town and my state. I would be willing to bet that Alaska’s unique circumstances and other similar situations have as much to do with our shortage of doctors as anything. If those pushing tort reform in AK claimed it would solve our doctor shortage back then, that was likely shortsighted and overselling (I was not yet engaged in Alaska politics at that point). But it certainly couldn’t have hurt us.
Thanks for the post and the info.
No, a simple rate review is not what I meant. Let me illustrate:
When my wife was pregnant with our first child, we lived in a small town in Southeast. Upon going to the local clinic for prenatal care, we were informed by the doctor that he could not plan to deliver our baby. Not because he wasn’t qualified and hadn’t delivered lots of babies, but because the hospital would no longer carry the insurance needed to deliver babies because it cost so much it wasn’t worth their while to pay it for the small number of babies delivered each year (roughly $5 to $10K per birth), and if they did so, they would have had to pass the cost along to us anyway, in addition to all the actual medical costs.
So the sum total of prenatal care in that particular town was to determine with as much accuracy as possible when the baby would be due so they knew when to send us out of town to Juneau or Anchorage or another larger town where the insurance cost can be spread to a larger pool of people in order to make it less expensive. Again, this had nothing to do with the doctor’s ability or willingness, but was a lawyer/insurance driven decision. When we pressed the issue , the doctor was willing to tell us “unofficially” that the main reason he couldn’t deliver our baby was the fact that lawyers would not let him do so because the facility didn’t have the insurance in place. He also explained it was a relatively recent development in his career, and was directly attributable to the market of malpractice insurance that sprang up because people have become so apt to sue doctors and hospitals whether they had good reason or not. More lawsuits = more costs = hospitals and doctors willing to pay insurance that will mitigate legal costs. Which eventually leads to the insurance companies dictating what care can and should be given. And mind you, this was not individual insurance for my wife and I (were were covered by Denali KidCare, thankfully), but was the insurance the facility would have had to have. I honestly don’t know if it was required for delivering kids, or if it was just a calculated risk, but the end result was the same for us.
So your doctor’s insurance company charges him a rate that has to figure into costs you get charged. Your insurance company (assuming you’re insured) pays your costs, some of which goes to the other insurance company. If an insurance company has enough clients to have leverage over the doctors, they can dictate what they will and won’t pay for, which shapes the care you can and will get. Tell me how a “rate review” fixes that. A “rate review” only works if insurance companies are gouging customers. If costs are legitimately high for other reasons (like small markets or forced sale of services), a rate review does nothing to mitigate that.
All the ACA did was give the insurance companies more power, because now we must all buy a certain level of insurance from them. They are required to sell more stuff, and therefore, they can raise prices because their actual cost goes up. And when they start to go broke, the feds will bail them out with our money (built in part of the law). And Begich and French want you to believe that taking more “free” federal money (our taxes and money they don’t actually have) and throwing it into the system via subsidies or Medicaid will fix the problem they created. It’s laughable.
Taking away people’s ability to sue without a legitimate medical reason, and lawyers and insurance companies lose some of their leverage because a market for them disappears. I have read that Texas instituted tort reform that requires that a panel of medical professionals review a malpractice case before it can go forward. Cuts down on frivolous cases, and they have plenty of doctors relocating there from other states. I would imagine it probably reduces medical costs to some degree as well.
@Straitlaced. Amanda here: Already, most states have enacted some form of tort reform. In 1997, the Alaska State Legislature passed a tort reform law that limited the amount of non-economic damages that can be recovered in a wrongful death action to $400,000, or $8,000 times the person’s life expectancy, whichever is greater. It was tough to get it through, but proponents promised that such reform would open up Alaska’s insurance market to its citizens, lower malpractice insurance rates for doctors and entice them to come to the state. Neither happened. According to the American Medical Association, Alaska was one of five states where, between 1998 and 2007, an increase in population did not lead to a proportional increase in the number of doctors.
“and generally doing what can be done to stop letting insurance companies and lawyers have all the leverage with patients and doctors when it comes to costs”
You mean like a rate review program?
How is it any different than the RCA telling Enstar whether a rate increase is justified? If you have actually looked at the ACA you would know that they are already profit limited, much like a state-sanctioned monopoly (Enstar), and can at most only make a 20% profit off of premiums.
We get to regulate insurance companies because we upped their market saturation to 100% by requiring everyone to have insurance.
If you have learned economics in the past 80 years you would know that monopolies or oligopolies like utilities are not and should not be “free markets.”
So let me get this straight: we are going to give Obama, Begich, and the rest of the Congressional Democrats a total pass on the screwed up system they created and shoved down everyone’s throats, and try to hold Parnell’s feet to the fire for not doing more to mitigate the mess they made? Give me a break.
You cannot force companies to sell a certain set of services, increase the scope of those services, force the American people to buy them whether they want to or not, and expect costs to go down. The Astronomical Costs Act is working just as anyone with economic sense said it would. Did it accomplish anything good? Maybe, but at far too high a price.
Has anyone asked Parnell why he didn’t take federal grants for rate review? If that occurred at a time when it was being litigated and a lot of folks (including me) figured the Supreme Court was going to restore some sanity and declare it the unconstitutional law that it is, that decision makes sense. Regardless, as has already been said, further reviewing rates doesn’t guarantee they go down. Doesn’t change the requirements for what the insurance companies have to sell and what their costs are going to be.
Allowing interstate markets for insurance, putting in place some tort reform, and generally doing what can be done to stop letting insurance companies and lawyers have all the leverage with patients and doctors when it comes to costs would have gone a lot farther to fixing the problems we had before ACA became a reality.
OOPS….. double post, computer glitch
Walker/Mallot – 2014 Fusion Power for Alaska
I agree with Hollis French 100% and then a whole lot more……..
Alaska always seems to be last in just about everything,
except blowing tornadoes filled with golden moose-nuggets.
After 40 years of enjoying the benefits oil wealth, our health system still sucks.
10% money and 90% creativity can work wonders in Alaska.
Alaska could have the best health care system in the world, why not ??
Waving a checkbook over the problem while drunk on power hardly solves the issue..
Telemedicine is great,
but it can be boosted with free online conferencing and medical education,
and rapid delivery of mini hospital tents for those patients who don’t really need to be medevac’d out to Anchorage.
Delivering medicines and lightweight medical equipment is a good use for drones…
…but don’t let any yahoo set the cost/price on these because they will cost 100times more than necessary.
The old Fairbanks hospital was great for keeping medical costs down…
the place was so filthy you’d either die quick or run like hell.
Starting a bogus boondoggle $65billion gasline mega-circus without having twice the current medical capacity statewide is like driving without a seatbelt, while drunk even.
Walker/Mallot – 2014 Fusion Power for Alaska
Jon,
I agree…
Walker/Mallot – 2014 Fusion Power for Alaska
I agree with Hollis French 100% and then a whole lot more……..
Alaska always seems to be last in just about everything,
except blowing tornadoes filled with golden moose-nuggets.
After 40 years of enjoying the benefits oil wealth, our health system still sucks.
10% money and 90% creativity can work wonders in Alaska.
Alaska could have the best health care system in the world, why not ??
Waving a checkbook over the problem while drunk on power hardly solves the issue..
Telemedicine is great,
but it can be boosted with free online conferencing and medical education,
and rapid delivery of mini hospital tents for those patients who don’t really need to be medevac’d out to Anchorage.
Delivering medicines and lightweight medical equipment is a good use for drones…
…but don’t let anybody in Parnell’s little inflated world set the cost/price on these because they will cost 100times more than necessary.
Starting a bogus boondoggle $65billion gasline mega-circus without having twice the current medical capacity statewide is like driving without a seatbelt, while drunk even.
Walker/Mallot – 2014 Fusion Power for Alaska
This is where the anti-free market left has a glaring blind spot. The government can’t just tell companies what to charge. Insurance companies have expenses and overhead. When you tell them what to charge who pays the difference? Someone right?
I’m not making the connection. How can Alaska offer more affordable options simply by having a “real rate review” program? Senator French’s points imply that the rate review process drives the market. I guess I need a lot more information about how that would work before I can evaluate that assessment.
I like and respect Hollis French very much. But I strongly believe he first owes Alaskans an explanation of recent election events, and until then he has no business criticizing anyone or even speaking in the public arena!
People voted for a Mallott – French ticket. Those fellows resigned as soon as they were elected. There is now no Democratic Party ticket for governor and lt. governor. Good faith voters have been disenfranchised – tossed out of the boat and told they vote for someone named Walker, who won no primary and could not have done. The Democratic Party is playing hide the peanut with voters, and even if this is legal it is entirely dishonest. We have yet to hear from Hollis French. And as I said in an earlier message, people in Homer need to hide their sheep until this blows over.
My other thought is that I have seen no federal, state or municipal official in Alaska do anything to actually reduce public health care costs EXCEPT erstwhile DOA commissioner Becky Hultberg (as part of the Parnell administration). Saying that insurance companies make too much profit is not a solution. Demanding the state seek more federal subsidy (money borrowed from China) is not a solution. If Hollis French has the facts that will clear his name of the election debacle explained above then his voice would be welcome in reducing health care costs in Alaska. But saying the Parnell administration is not reducing health care costs or working to do so while this election cloud hangs over Hollis’s head is a tragic end to a long career in public life.
This is an issue that Parnell needs to meaningfully address.
Wish there was someone running for governor that had the knowledge and sense to step forward with an analysis half as good as what Senator French supplied us with here. This Democrat is goiing to write Hollis French’s name in for governor in November. Please join me. It’s time to tell the Democratic party bosses that they can’t throw our votes in the trash.