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There is little scarier than the phrase “I am from the government, and I am here to help,” except perhaps a new version we’ve been hearing lately: “I am an out-of-state insurance salesman, and I am here to help, too.”
Premera Blue Cross Blue Shield, the Seattle-based insurance company with a near-monopoly on Alaska’s health insurance market, boasts more lobbyists (three) than employees in its Anchorage office, but that hasn’t stopped them from working hard to repeal a rule that has protected Alaskans for nearly 20 years. The 80th percentile rule, a longstanding consumer protection that required insurers to pay the going rate in the community for your medical bills rather than an arbitrarily low amount that left you saddled with the rest, was recently repealed following extensive lobbying and marketing by Premera.
In a recent opinion piece full of misleading statements and omitted details, Premera’s Seattle-based market manager, Jim Grazko, indicated Premera has been providing this “help” not to further their bottom line but rather to protect Alaskans from overpaid nurses and overpriced mammograms. In one example, Premera made the case that health care costs are the same in Anchorage as they are in San Francisco. Even if that were true for health care, it is not the case for health insurance. According to the independent health policy organization KFF, a silver plan costs 41% more in Alaska than it does in San Francisco for a family of four. That’s $9,360 more a year for insurance to cover the same-sized medical bills.
The 80th percentile rule is important for every Alaskan, even those covered by Medicare and Medicaid. Adopted in 2004, the 80th percentile rule makes insurers pay their fair share of your health care bills and helps balance Premera’s monopoly power in Alaska’s health insurance marketplace. Without it, Premera gets to pick the winners and losers in our health care system, reducing the number of providers and facilities “in network” and shifting the costs to us, the consumers, through higher ‘out of network’ copays, deductibles and balance bills.
Meanwhile, health care providers are increasingly the losers in this game of new rules, being forced to retire or leave the state; reducing the number of providers to care for Alaskans. Premera claims that repealing the 80th percentile rule will reduce what providers and hospitals charge. That simply isn’t true; it just means that the patient will have to pay an even bigger balance of the bill, just like in the ‘bad old days’ before 2004 when the rule was introduced to stop exactly this type of predatory behavior by insurers.
Competition reduces prices, and this is just as true for health insurance as it is for pencils. While no recent reputable study has blamed the 80th percentile rule for rising insurance prices, Premera hasn’t missed an opportunity to gaslight the health care community for being the cause of high insurance prices in Alaska.
An April 2022 study of insurance prices by the Urban Institute and Robert Wood Johnson Foundation revealed that “the number of competing insurers was important; the presence of one insurer meant premiums would be $189.50 per month higher, on average, relative to a market with five or more insurers” and, interestingly, that “the presence of Blue Cross Blue Shield insurers… was associated with greater than average benchmark premiums.”
In Alaska, we only have two insurers on the individual market, Moda and Premera. Worse still, Premera — a Blue Cross Blue Shield insurer — controls the vast majority of Alaska’s market.
Moda is trying to compete in the Alaska insurance market by, among other means, offering lower insurance premiums. Unfortunately for Alaskans, these lower prices have been rejected by Alaska’s Division of Insurance each of the past two years, with Moda required to charge Alaskans more for insurance than they wanted to.
In recent testimony before the Alaska State Senate, Division of Insurance Director Lori Wing-Heier said, “The most important thing that we do at the Division is to make sure insurance companies are solvent.” Not to make insurance affordable or even useful, not to increase competition or stability by recruiting more insurers to our very narrow market, but to protect the bottom line of insurance companies. Let that sink in.
Perhaps this explains why the Division of Insurance has artificially raised health insurance prices for Alaskans for the past two years. They’re concerned that Moda, a big company with more than $1.3 billion per year in business across several states, might go broke if they sell insurance to Alaskans at the price Moda’s actuaries calculate they can.
Premera and its predecessors have sold insurance in Alaska since 1952. Coined “regulatory capture,” over time, government regulators can become too familiar with a corporation they regulate, accepting their statements as fact without audit or research, and making decisions that are on their face both arbitrary and unreasonable.
We would like to invite Grazko to come visit Alaska and have a public conversation with us, perhaps joined by the Division of Insurance, about the 80th percentile rule, Premera’s misleading claims, and see if there might be some way that we could work together to make life better and healthier for Alaskans. For example, we could reform the 80th percentile rule to further reduce costs and incentivize providers to accept Medicare, Medicaid, and VA benefits, so that our seniors and veterans can see the provider of their choice here in Alaska. In the meantime, Premera, please help us less.
John Morris of Anchorage is a board-certified pediatric anesthesiologist and chair of the Coalition for Reliable Medical Access. Ric Davidge of Anchorage is the founder and chairman of Alaska Roundtable. David Morgan of Anchorage is a fellow of the Healthcare Financial Management Association. Dr. Steven Compton of Anchorage is the president of the Alaska State Medical Association.
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