Eric Engman / Fairbanks Daily News-Miner / Zumapress

5 days in Alaska: Voters chilled by soaring health care costs

Specialty care in the Last Frontier can cost four times the US average and primary care up to 30 percent more

This is the first in a five-part series, “Fed up in Alaska,” exploring issues that voters will take to the polls this November.  

ANCHORAGE, Alaska Stan Selman is a man of principle. As the owner of the oldest steak house in Anchorage, he is dedicated to paying for his employees’ health care. It’s what his Club Paris restaurant, founded in the 1950s, has always done.

But in the face of soaring health care costs in Alaska, he said he’s nearing a breaking point. Each month he pays more than $16,000 for health insurance for his 25 employees, which adds up to over $200,000 per year.

“I hate to be a gloom and doom guy, but you know, shoot, we’re a small family-owned business that doesn’t have deep pockets,” Selman said, “and, boy, I feel like you can only sell a piece of meat for so much money.”

As in much of the country, health care in Alaska is a key election issue as the November midterms loom. Fairbanks, Juneau, Kodiak and Anchorage have the four highest coverage costs in the nation, according to the nationally collected cost of living index

Stan Selman, owner of Club Paris restaurant in Anchorage, provides insurance for all his employees, but he said payments are bringing him close to a breaking point.
Al Jazeera America

Specialty care in Alaska can cost four times the U.S. average, and primary care can cost up to 30 percent more. A day in the hospital can cost up to 50 percent more, according to a 2011 study by the Institute of Social and Economic Research.

In Alaska, premiums for individual coverage rose nearly 60 percent from 2001 to 2012, according to data from the Federal Medical Expenditure Panel Survey.

As the costs continue to rise, some are pinning the blame on the Affordable Care Act (ACA), or “Obamacare.”

Democratic Senate incumbent Mark Begich voted for the Affordable Care Act. Now campaign advertisements for Republican challenger Dan Sullivan link Begich to “Obamacare” whenever possible, using it as a way to align him with President Barack Obama, whose approval rating in Alaska is one of the lowest in the country.

Begich, for his part, has highlighted his disagreements with the administration, saying that he has problems with the way the ACA was rolled out and even calling himself a “total thorn” in Obama’s behind. More recently, he has begun embracing the law while saying that it could use some improvements, such as allowing insurance companies to offer cheaper plans than currently permitted. Alaska is one of 19 states in the country that chose to let the federal government manage the health insurance market under the ACA.

For Selman, the ACA is just another factor that contributes to the soaring cost of insurance in the Last Frontier.

Sheila Hestes, a server at Club Paris, discovered this when she had to undergo major surgery. “You get that itemized bill, and it’s $25 for aspirin. They rent you a blanket for $12 a day,” she said. “You know, it adds up, and it adds up, and it adds up.”

Health care’s high costs in Alaska are due to a combinations of factors, according to Mouhcine Guettabi, an assistant professor and a co-author of a report about employer-sponsored health insurance in Alaska at the Institute of Social and Economic Research at the University of Alaska at Anchorage. “The simplest one of them being that Alaska is isolated,” he said. “It has thin markets, less providers and isolated communities that are hard to get to.”

High insurance premiums are caused by a different although related set of factors, he said. The price of insurance premiums is negotiated by firms and depends on, for example, the profile of the employees and the size of the firm.

‘I hate to be a gloom and doom guy, but you know, shoot, we’re a small family-owned business that doesn’t have deep pockets, and, boy, I feel like you can only sell a piece of meat for so much money.’

Stan Selman

owner, Club Paris restaurant

In Alaska, over 90 percent of large firms with more than 100 employees offer health insurance to their employees. But 70 percent of firms in Alaska have fewer than 10 employees, and they face “completely different market conditions,” Guettabi said.

While federal and state employees are covered by their employers, 80 percent of Alaska’s workers are employed by private businesses, local governments and school districts. Only a third of those employers provide health insurance. For most, it’s simply too expensive.

As an owner of a business with fewer than 50 employees, Selman isn’t required to provide insurance. But he does it anyway because that’s what his father wanted. But Club Paris is one of a declining number of Alaska businesses that provide insurance for employees, and the coverage he provides must continue to meet ACA standards.

“We’re known for a really good meal and a nice stiff cocktail — getting your money’s worth,” said Selman, who is at a loss for options as to how to deal with the rising health insurance costs.

“There is only one way, and that is to pass it on to the consumer,” he said.

The tight and contentious Alaska Senate race could be a decisive in defining the majority in the Senate. In this watershed election, health insurance is a watershed issue.

At Club Paris, Sheila Hestes said she will make ballot decisions based on what’s best for her family and count her blessings that she has coverage through her employer.

“There’s a lot of people that are a lot worse off than I am, and I don’t know how they do it,” she said. “I don’t know how they pay for it.”

At least for now, her employer remains committed to covering his employees.

“I just keep putting one foot in front of the other and keep paying bills,” Selman said. “At some point in time, the prices are gonna get to a point where people are gonna go, ‘You know what? I’d rather go buy a steak at the store and cook it at home.’”

To view the “Fed up in Alaska” series, tune in to “Al Jazeera America News” with John Seigenthaler this Mon. to Fri. at 8 p.m. Eastern time.

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