Monday, February 18, 2008

Senate Bill 160

The current draft of Senate Bill 160 contains improvements over the original draft proposed by the sponsors, but it still fails to address the real problem of high costs of health care for the heaviest users of health care in Alaska: the total cost of health care of which insurance premiums are just a part. The bill seeks only to provide affordable health insurance, not affordable health care. For those Alaskans needing the most health care, the cost of insurance premiums is often only a fraction of the total cost of health care. They also have to pay for insurance deductibles, co-payments, and additional out-of-pocket expenses.

By mandating the purchase of insurance from private industry, the bill can only drive up overall health care costs for Alaskans. Private insurance companies have much higher administrative costs than government insurance programs such as Medicare and Medicaid, and they rake off additional money for shareholder profit. Roughly 20 to 30 percent of the health care dollars funneled through private insurers are lost in administrative costs and shareholder profits. This is money that should be spent directly for health care.

Because the effect of the bill will be to increase total health care costs, its passage by the legislature will be a backward step toward more affordable health care. The legislature would do better to expand Alaska’s highly efficient Medicaid program, making it available to more low-income Alaskans.

No comments: