The Exorbitant Cost of Healthcare in Alaska: Health insurance and the bottom line.

• Author: Barbour, Tracy
• Position: INSURANCE

Ever-evolving regulations, escalating costs, and other challenges can make it difficult for businesses to provide health insurance benefits for their employees. The situation is having an adverse effect on their bottom line, leading some employers to forgo offering insurance or to at least consider the possibility of dropping the benefit.

A primary factor impacting the cost of health insurance is the high cost of medical care. Alaska has some of the most exorbitant healthcare costs in the country--and world--and employers cover the bulk of that burden. In Alaska, the cost of many medical procedures is twice as high as in the Lower 48 on average, according to Jeff Roe, CEO of Premera, which operates in both Washington and Alaska.

"While the consumer price index is about 6 percent higher here, payments to doctors and hospitals in Alaska are 76 percent higher than nationwide averages, and, after accounting for cost of living, are increasing twice as fast as inflation," Roe said in his July 2018 speech at the 3-Year Outlook Luncheon of the Anchorage Economic Development Corporation.

Over the years, health insurance premiums in Alaska have skyrocketed, making it difficult for some employers to balance offering benefits and paying premiums, according to Anchorage-based Lynette Wood of Aurora National Insurance. "Health insurance premiums are usually the second-largest expense an employer has, second only to payroll," she explains. "It is a difficult balance for an employer and their broker to find the right balance between a good quality, user-friendly plan and premium. The struggle truly is real."

Next to pricing, Wood says, employers have significant concerns about the insurance carrier's network and how easy it will be to find a provider. They also want their employees to be able to easily understand their benefits, have online access to plan summaries or mobile apps, and to be able to reach customer service without being left on hold for the rest of their lives.

Regardless of the cost and other issues, it is almost essential for companies to provide health insurance for their employees. Health insurance is the primary employee benefit that employees want and need, Wood says. Plus, having insurance in place will mitigate needless worker's compensation claims, which ultimately cause the employer's worker's comp premium to increase. Health insurance is also a pre-tax benefit that employers can use to reduce their overall tax burden.

For these and other reasons, it's not hard to sell most companies on the idea of purchasing health insurance. And some employers are legally obligated to do so because the Affordable Care Act (ACA) requires businesses with fifty or more full-time equivalent employees to offer health...