Alaska Senate advances bill to establish subscription-based health care

The Alaska Senate on Wednesday passed a bill that would legalize subscription-based access to medical providers in an effort to address rising health insurance costs.

Direct health care agreements are a method adopted by several states that lets patients pay a monthly subscription fee to access specified medical care, such as primary care providers or dental care, rather than for a per-service rate. It has been described as both an alternative to traditional health insurance and as a service that can improve health care access for people with high-deductible insurance plans or difficulty accessing certain medical services through their insurance.

Supporters of the policy — including the conservative advocacy groups Alaska Policy Forum and Americans for Prosperity — say it can help lower the cost of health care by eliminating the need for bureaucratic insurance companies.

“They do not protect a patient from high, dramatic costs of care, but these agreements can fill the gap between a high-deductible health care insurance plan and practical routine care,” said Sen. David Wilson, a Wasilla Republican who sponsored the bill.

Skeptics say the plans are often unaffordable, leading to improved health care access for people who can pay for the service while doing nothing to solve — and potentially exacerbating — the challenges that hinder access for lower-income people and those who depend on Medicaid or Medicare.

Sen. Scott Kawasaki, a Fairbanks Democrat who voted against the bill, said he has “grave concerns” that health care providers could discriminate against patients who suffer from serious medical conditions by making the service affordable only to those who are relatively healthy.

The bill explicitly says that patients can’t be removed from a plan for pre-existing conditions. But Kawasaki said providers could raise their rates for sicker patients “so high that a patient wouldn’t be able to pay,” thereby “choosing which patients are the healthiest but also able to pay into the system.”

“I can see it working both ways. One way is like the sponsor of the bill says. The other way is that it would prevent folks from getting access to care because you have to pay an extra fee on top of maybe what insurance you already have,” Kawasaki said.

The bill was passed out of the Senate in a 18-2 vote, with only two Democrats opposed. But several lawmakers who voted for the measure raised concerns about how the new health care option would affect low-income Alaskans who already struggle to find providers who accept public insurance options.

“I do question whether this bill will increase any access to care or will decrease the cost of care at all, because there truly is nothing in this that would guarantee that,” said Senate Majority Leader Cathy Giessel, an Anchorage Republican, before voting in favor of the bill.

The measure heads next to the House, where companion legislation is sponsored by Rep. Kevin McCabe, a Big Lake Republican. With quick action on their part, the legislation could pass before the expected end of the legislative session on Wednesday.

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Under existing state law, direct health care agreements are not allowed. Yet some providers are already offering such agreements and have been doing so for several years. If the state doesn’t legalize them, Division of Insurance Director Lori Wing-Heier said, the state could begin taking action against those providers for acting outside the law.

“Right now they would be considered insurance and we would take every available recourse we have as an insurance product against them,” said Wing-Heier. “We don’t want to do that, but that would be our recourse.”

Without the bill, direct care agreements are considered insurance plans, despite the fact that those medical offices are not licensed to offer insurance. Under the bill, the agreements would explicitly be defined as “not insurance,” meaning the division would not be responsible for auditing or reviewing them.

Wing-Heier said once direct care agreements are legal, families with high-deductible insurance plans could rely on them to complement their insurance coverage.

“So many times people — unless it’s a catastrophic illness or such — they never reach their insurance. They’re paying the premium, they’ve got a pretty large deductible and they never get to the insurance,” said Wing-Heier. “Many Alaskans, we think in talking to them, would like to see this.”

Before the bill’s passage, lawmakers amended it to require any clinics offering direct health care agreements to also accept low-income patients who rely on public health insurance, or set a quota of at least 20% of patients who are either uninsured, enrolled in Medicare or eligible for Medicaid.

“For many of my constituents in East Anchorage and I know many Alaskans across the state — they will not be able to afford this payment,” said Sen. Bill Wielechowski, an Anchorage Democrat who sponsored the amendment. He said part of his motivation for introducing the amendment was to ensure the bill does not exacerbate the existing shortage in providers who accept patients on Medicare.

Wade Erickson, a physician with Capstone Family Medicine in Wasilla, told a legislative committee earlier in the session that he’s been approached by small-business owners who can’t afford to provide health insurance for their workers but are interested in providing a direct agreement for some health care services.

“It spurred me to expend the time and effort and money to try to bring this to our state,” said Erickson.

But some of the bill’s primary cheerleaders are not Alaska residents. Physicians from Florida and Kansas called in to committee hearings to advocate for the bill, and public testimony on the measures was minimal.