Saturday, August 11, 2007

Alaska State Senator Hollis French's SB160 To Formally Mandate Universal Health Care For All Alaskans; Bill Still Exists As SB61 In 2010

Update July 31st, 2010: Post updated to remove superseded references to and SB160. The current version of the legislation is SB61.

Back on March 17th, 2007, I discussed Alaska Democratic State Senator Hollis French's ideas for mandatory universal health care for all Alaskans, which he outlined in an Anchorage Daily News column at the time. However, the formal legislation hadn't been drafted and submitted.

This changed on April 23rd when Senator French, along with co-sponsors Senator Johnny Ellis (D-Anchorage) and Bill Wielechowski (D-Anchorage), introduced SB160 to enact this proposal. To his credit, Senator French has attempted to fully and candidly inform the public about this scheme, setting up a detailed website presenting the specific bill itself, answering the anticipated FAQs, and even including a sample means-testing worksheet so one can get an idea, based upon his income, how much one might have to pay.

And pay you will, under certain circumstances. If SB160 passes, health insurance will NOT be an option, but a REQUIREMENT for all Alaskans. This means if you don't get insurance through your employer or any other source, you will have to enroll in Sen. French's system, paying a premium calculated through means-testing. And this, more than anything else, is the most controversial feature and, as far as I'm concerned, the DEALBREAKER.

French originally set up a dedicated website at the following link:

However, the website was allowed to expire and is parked as of July 31st, 2010. SB160 ultimately died and has been replaced by SB61. The remainder of the post is preserved to inform readers as to what the Healthy Alaskans website was all about.

Senator French begins by explaining his rationale. He believes that, because of Federal inaction, states must take the lead in addressing the rapidly escalating costs of health care and disparity in coverage and access. He claims that SB160 is NOT "socialized medicine", as it doesn't call for the replacement of the current health care system with a new and untested model. The driving principal behind the bill is individual responsibility, while acknowledging that not everyone can afford meaningful health coverage. The ultimate goal is to make affordable insurance a reality for all Alaskans.

As justification, Senator French cites a March 2006 Institute of Social and Economic Research study, which showed that only a third of Alaska businesses with fewer than 50 employees offer coverage, compared with 43 percent nationwide. Over 60,000 working Alaskans do not get health care insurance through their jobs.

By providing for a competitive 'health care clearinghouse' framework, SB 160 intends to have insurers compete for health care dollars, giving individuals a marketplace where they can easily choose between companies. When every Alaskan has coverage, the health benefits will be substantial and premium costs will go down across the board.

Click HERE to review the specific language of SB160 (now SB61 in 2010). Here are the highlights:

1). Mandates that all Alaskans carry health insurance, even if they must pay out of their own pocket.

2). Establishes contribution requirements for Alaskan employers.

3). Establishes the Alaska Health Care Board, which will oversee the program and review private insurance plans, ensuring that each plan is a quality product.

4). Establishes a health care clearinghouse would be created under the bill, where private insurers could compete for health care 'vouchers', adding competition and personal choice of plans into the mix. Two types of vouchers will be established by the proposal: needs based and specified beneficiary vouchers. Needs based vouchers will ensure that all Alaskans can afford insurance by providing assistance to individuals and families that cannot afford plans on their own. Specified beneficiary vouchers allow employers and individuals to contribute additional dollars towards a health plan.

French originally provided a page on which you could calculate your eligibility and how much you might have to pay. Two-income families should calculate eligibility not only based on both incomes, but also on one income to see the effect the loss of a job might have on means-testing. This page has since passed out of existence.

Note: The referenced ISER study is entitled "The Role of Social and Economic Research in Public Health", produced by former Alaska Lt. Gov. Fran Ulmer on March 14th, 2006. This study is 50 pages in PDF format.

Analysis: Since nothing has really changed since March 17th, I will simply reiterate my previous analysis. Some of Senator French's proposals are rather meritorious. For example, his idea of diverting Medicaid funds from reimbursing hospitals to subsidize health insurance for lower-income or hard-to-insure people is quite smart. This is actually a welcome move towards more free market involvement, promotion of greater individual responsibility, and increased self-empowerment.

Expanding Medicaid benefits to include vision and dental is another needed reform. Many low-income people neglect dental health due to lack of funds or insurance; they think the loss of a tooth is inconsequential. Unfortunately, this can lead to other more serious dental health issues such as gum disease, subsequent bone loss, and possible facial disfigurement.

However, requiring all businesses, regardless of size, to either provide health insurance or contribute to a subsidization fund could jeopardize the existence of many small businesses. French proposes that small businesses be required to pay 4% of workers' wages to a "subsidization" fund. What if the business's profit margin is only 4%? In effect, French has just transformed a profitable business into a non-profit charity. Combine that with proposed hikes in the minimal wage, and one can see a noticeable number of business failures. Or, a business may comply and not fail, but compensate by cutting back a worker's weekly hours.

The fatal flaw in French's proposal is to require that all people purchase health insurance. This is another unfunded mandate imposed on the people. He should know how the Anchorage School District has struggled to meet the underfunded mandates of No Child Left Behind; why would he want to impose yet another unfunded mandate on people? This would be one more way of requiring people to constantly prove their legitimacy with every breath they take, consistent with the growing police state being spawned by this "War on Terror".

And using mandatory auto insurance as a precedence is absolutely bogus; no one really "has to drive", so one can avoid the obligation of auto insurance by not driving. It is not so convenient to invite people to avoid the obligation of health insurance by "not breathing".

And mandating the purchase of health insurance would be inhumane if the occasional person who falls through French's proposed "safety net" is forced to sell his house or his car to pay for it. This means we would have to establish a standard by which no one would be required to pay more than a designated percentage of one's income for health insurance. And if we do that, how do we define "income"? Do we also include assets? If so, do we include all assets in the means test, or only "discretionary" assets. Mandating the purchase of health insurance opens up an incredible bucket of worms.

And finally, if we force everyone to purchase health insurance, we hand an entire captive constituency to the insurance industry. If everyone is forced to buy health insurance, what incentive would the insurance companies have to keep prices competitive? We also know from industry performance in other areas that the insurance companies employ every possible strategem to evade and escape their obligations. Oh, and one more question for you, Senator French. What happens if, for some reason, carriers refuse to provide coverage in Alaska? How would you solve that problem?

I also decided to check the Alaska Public Office Commission's list of individual contributors to his last political campaign in 2004, to see if any insurance companies had exercised inordinate financial influence over Senator French. Out of 67 individual contributors listed, only one identified with the insurance business, so it appears Senator French is not responding to corporate interest.

Perhaps Senator French should examine another jurisdiction's existing similar plan before launching one for Alaska. San Francisco's plan, called the Health Access Plan, previously discussed here on June 24th, 2006, was designed to target an estimated 82,000 uninsured residents who earn too much to qualify for Medicaid. San Francisco Mayor Gavin Newsome stressed that the plan was not meant to replace private health insurance, but rather provide a way to consistently treat uninsured people so they don't end up seeking medical care in hospital emergency rooms. Their plan provides comprehensive preventive and catastrophic health care, covering everything from checkups, prescription drugs and X-rays to ambulance rides, blood tests and surgeries. Pre-existing conditions are also covered. Estimated costs are around $200 million a year, to be paid for by taxpayers, businesses that don't already insure all their workers, and participants themselves. Residents pay both monthly fees and service co-payments on a sliding scale depending on income. A person with annual earnings at the federal poverty line pay $3 per month, while someone who makes between $19,600 and $40,000 — or up to 400 percent above the poverty line — would pay an average of $35 per month. Employer contribution, as outlined in the most recent version of the plan sponsored by Supervisor Tom Ammiano, would require every business with more than 20 employees to pay at least $1.60 an hour into the system for all employees not already covered by a health plan, no matter how few hours they work. Specifically, small businesses (20-99 employees) would end up paying $182.50 per month per employee, and businesses with 100 or more employees would pay $273.75 per month per employee. But while the premiums are quite affordable to people, can our small businesses afford these costs, though?

Ultimately, if the goal is to get more people to purchase health insurance, it must be made more affordable. To expect people to pay more than 10% of their income for health insurance is ludicrous. But we can't be driving small businesses into bankruptcy, either.

1 comment:

  1. speaking of universal health care you need to check this out for alaska

    Public Employees Local 71

    thought you might find it interesting