Alaska Doesn’t Need 80th Percentile Rule Repeal: Opinion
TL/DR –
The Seattle-based insurance company Premera Blue Cross Blue Shield has been lobbying extensively to repeal Alaska’s 80th percentile rule, a consumer protection measure that ensured insurance companies paid for medical bills at the community rate instead of a lower, arbitrary amount. The rule, which was adopted in 2004, was intended to balance out Premera’s monopoly in the Alaskan health insurance market and protect consumers from high out-of-pocket costs. However, the recent repeal of the rule now allows insurance companies to manipulate costs, resulting in higher copays, deductibles and balance bills for consumers, while reducing the number of in-network providers.
State Dominated Insurance Market Repeals Crucial Rule
Premera Blue Cross Blue Shield, a dominant insurance company in Alaska’s market, has successfully lobbied for a rule repeal that has safeguarded Alaskans for nearly 20 years. The 80th percentile rule, which made insurers pay the market rate for medical bills instead of arbitrarily low amounts, is no more, following extensive lobbying by Premera. Despite their claim of protecting Alaskans from exorbitant medical costs, the repeal might have unfavorable implications for consumers.
Impact on Alaskan Health Insurance Costs
According to the independent health policy organization KFF, a silver plan costs 41% more in Alaska than in San Francisco for a family of four. This is a stark example of the contrast in insurance costs despite similar health care costs in both regions. The repeal of the 80th percentile rule, which has been vital for Alaskans, could potentially exacerbate this situation by allowing Premera to dictate the terms of our health care system.
Consequences of the Repeal for Health Service Providers
The repeal is forcing health care providers into retirement or out of state, reducing available care for Alaskans. It’s a misconception that the repeal will lead to lower charges from providers and hospitals. Instead, patients are likely to shoulder a larger portion of medical bills, bearing resemblance to the situation before the rule’s introduction in 2004 to curb such predatory practices by insurers.
Insurance Competition and Price Inflation
Contrary to Premera’s assertions, no recent credible studies blame the 80th percentile rule for rising insurance prices. A recent research by the Urban Institute and Robert Wood Johnson Foundation reveals that higher premiums are likely in markets with fewer competing insurers and a presence of Blue Cross Blue Shield insurers. In Alaska, where Premera controls the market, these higher premiums are a reality.
Regulatory Concerns in the Alaskan Insurance Market
Over time, regulatory capture can occur, making government regulators biased towards corporations they oversee. The Division of Insurance’s recent actions, such as the two-year-long artificial price inflation, indicating their primary concern is the solvency of insurance companies and not the affordability or usefulness of insurance for Alaskans. This situation warrants a public debate about the 80th percentile rule, Premera’s misleading claims, and potential ways to improve health outcomes for Alaskans.
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