Obamacare’s next victim may be access to medical care in Alaska, particularly in rural areas and for all who are mandated to buy their insurance on the Affordable Care Act exchange.
This Friday, the Alaska Division of Insurance holds a listening session to gather information on the “80th percentile rule,” which is a consumer protection regulation that governs insurance reimbursements to out-of-network medical providers in Alaska.
This listening session only applies to one insurance company — Premera Blue Cross Blue Shield — because it is the last man standing in an Obamacare insurance market that collapsed in Alaska after President Obama signed the Affordable Care Act into law.
Premera wants the rule removed so that they can pay out-of-network providers at a loss instead of a market rate. This will give them the hammer to force those doctors into their network.
The Governor’s Office, through senior adviser Jim Whitaker, is pressuring for the change.
The problem with only looking at the private insurance market, as Premera does, is that it doesn’t account for veterans, Tri-care, Medicare, or Medicaid, or the impacts to these programs.
For better or worse, our health care system relies on cost-shifting from private payors to these government health care programs. If Premera can leverage doctors into its network, it reduces the ability for physicians to take on and subsidize government health care. Our veterans and seniors will find it even harder to get care.
Premera has to make money. Its biggest cost driver right now is the Obamacare law and the multiple mandates that go with it, which have made insurance even less affordable for people in Alaska not covered by Walker’s Medicaid expansion, or those who don’t qualify for the federal tax rebates.
Many Alaskans are now paying $1,500 a month or higher for basic, “bronze plan” insurance, that has deductibles as high as $6,000 to $10,000. And the rates will go up again this year.
In the late 1990s, insurance companies began reducing their reimbursement rates as a way of increasing their margins. This shifted the cost burden to Alaskans.
The Division of Insurance realized consumers were being hurt with huge medical bills. In 2004, the Division adopted a regulation requiring insurance companies to pay at the 80th percentile as the usual and customary rate.
For instance, if you go to a surgeon in Alaska who is out-of-network (and many are), and your bill is $10,000, but Premera has set the “usual and customary rate” at $2,000, you’ll be ponying up $8,400 from your own pocket. That may seem like an extreme example, but for a chemotherapy or radiation therapy center in a small community, the rates charged are typically much higher because there are so few patients.
Alaska’s specialty doctors and medical providers have very small patient loads across which to spread their costs. In Seattle, doctors have hundreds of thousands of patients. But in Alaska, a specialty physician doesn’t have a huge number of patients to help him/her spread out the costs. So they charge more.
Whether 80 percent is the right level is the debate at hand. But to change anything now in the insurance market would be risky. With the Republican Congress and with an incoming Republican president, Obamacare is facing repeal or, at the very least, overhaul.
For Alaska to make any changes to reimbursements in the marketplace at this time seems premature, considering that major federal changes are most certainly on the horizon.