Medical blues: many factors impact increasing health care costs in Alaska.

• Author: Barbour, Tracy

Since 1991, heath care spending in Alaska has escalated from $1.6 billion to $5.3 billion-a 230 percent increase. Per-person spending for Alaskans increased 176 percent, going from $2,884 to $7,970. If these trends continue, health care spending in Alaska could double again by 2013.

These figures are based on a study by University of Alaska Anchorage's Institute of Social and Economic Research (ISER). The research was summarized in a March 2006 report titled the "Alaska's $5 Billion Health Care Bill-Who's Paying?"

"Everybody knows that health care costs have been rising," says Scott Goldsmith, a UAA professor of economics who co-authored the ISER report with research consultant Mark Foster. "But one of the things that surprised me was the magnitude of the expenditure of the $5 billion; $5 billion sort of blows you away."

Just how large is $5 billion? It equals a third of the value of North Slope oil exports in 2005-a year of high oil prices. And it's also almost one-sixth the value of everything Alaska's economy produced in 2005.

The $5.3 billion spending in 2005 was for all the 665,000 people who live in Alaska. Individuals paid 20 percent of the costs out of their pockets and through payroll deductions, while businesses (including nonprofits) and the government paid about 80 percent, according to the ISER study. Researchers categorized health care spending as stays in the hospital, visits to doctors and dentists, prescription drugs and program administration and public health programs. Their estimates don't include capital expenditures.

The ISER study revealed a number of other interesting findings about health care in Alaska:

* Individual Alaskans spent about $1 billion of the total in 2005, up from $360 million in 1991. This includes everything Alaska households spent-not just out-of-pocket costs, but deductions taken from their paychecks to help fund health care coverage through their employers.

* Employers (government and private) spent more than $2 billion for employee health care coverage in 2005. For comparison, employers spent about $11.8 billion for wages in 2005.

* Government programs paid $2.2 billion of the $5.3 billion total. Medicaid alone made up nearly $1 billion of that spending.

* In terms of how spending changed, employers saw the fastest growth. Combined spending by private and government employers increased about 290 percent. Spending by individual Alaskans went up by 184 percent.

A VARIETY OF FACTORS INCREASING COSTS

So what's causing the upsurge in health care costs in Alaska? It's a multi-faceted issue, and there's no...