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Stones & Bones / health care / volume 12 number 3, March 2010 DOSE OF REALITY Most states have “high risk pools” that provide health insurance to residents who have been denied coverage from for-profit insurers because of pre-existing conditions. Alaska has one, too. It’s called the Alaska Comprehensive Health Insurance Association, ACHIA for short because nobody can remember all those words. ACHIA has been around for about eighteen years, but we have not heard much about it, and only a tiny fraction, some 500 out of the 600,000+ Alaskans, have enrolled in the program. But all of a sudden in Alaska we are seeing television and newspaper ads touting ACHIA. These ads stress the idea that every Alaskan already has the ability to buy health insurance. Why do you suppose that is? Could it be that the ads are a propaganda ploy trying to promote the idea that we don’t really need health care reform just because it promises that everyone will be able to get insurance despite pre-existing conditions? Also, we might ask, why are so few Alaskans enrolled in the ACHIA program? The answers to these questions come from looking at the details of this insurance program. First off, buying ACHIA insurance is not cheap. In fact, according to Jeff Davis, president of major insurer Premera Blue Cross Blue Shield of Alaska, the cost of buying an ACHIA insurance policy is 40 percent higher than the cost of buying a similar policy on the open market. Of course a person with a pre-existing condition can’t buy a similar policy on the open market, but that person might be desperate enough to buy an ACHIA policy. Like Jeff Davis said in the February 26, 2010, issue of Alaska Health Policy Review, “You may not be able to afford it, but you can buy it.” ACHIA sells a traditional insurance policy with a $1,000 deductible and $2,500 out-of-pocket maximum. The annual cost of premiums ranges from $5,268 for a person under 19 years of age up to $34,000 for a person aged 64. Even our dysfunctional Congress recognizes that this wide range—the oldest person paying 6.4 times that of the youngest—is totally unreasonable. The recent reform bill passed by the Senate limits the age-related variation to three and the House limits it to two. The wide range in the ACHIA policies makes it virtually impossible for an older person to buy this insurance. Imagine what it would be like if you and your wife were both 64 years old and were faced with buying the ACHIA traditional policy. Your total premium cost would be $68,000 per year. However, the out-of-pocket maximum for this policy is low, only $2,500, so your maximum health care cost, no matter how sick you both might get, would be only $5,000 more. ACHIA also sells preferred provider policies (PPOs) with annual deductibles ranging from $1,000 up to $15,000 and out-of-pocket maximums ranging from $2,500 to $25,000. The premiums are lower than the traditional policy premiums but they are riskier for younger people because the maximum outlay for both premiums and out-of-pocket maximums is high if the person gets sick, ranging between $26,000 and $32,000, depending upon age. By contrast, with the traditional policy the maximum outlay for a person age 45 or younger would be only $18,268 or less. According to Jeff Davis, the 500+ Alaskans holding ACHIA insurance policies spend a total of about $3.5 million each year on premiums, an average of $7,000 per person. Davis states that the cost of their health care is far more than that, a total of about $13 million plus another $0.5 million for other costs. The $10 million deficit is paid for by assessments to the health insurance companies operating in Alaska, in amounts proportional to their business shares. Adding it all up this means that the average cost of health care per person enrolled in ACHIA is about $27,000 per year. That’s about three to four times the average cost of health care for Alaskans. The high cost of health care for the ACHIA enrollees is to be expected, of course, because only persons with pre-existing conditions likely to make their health care costly are enrolled in the program. To enroll is an act of desperation; otherwise a person would have to be insane to do it. Not surprising is that ACHIA is often referred to as Alaska’s health insurance program of last resort. But back to the question of why we are suddenly seeing insurance company ads touting ACHIA. Julia Gray, a mental health advocate, suggests that it is because ACHIA is afraid that Alaska Senate Bill 21 might come into law (www.facebook.com/topic.php?uid=146434275001&topic=8207). This bill requires that ACHIA and other Alaska insurers treat physical and mental health equally when it come to paying for it. Currently ACHIA pays out less for mental health care than for physical health care. This could be the reason for the sudden spate of ACHIA ads, but more likely the idea is to suggest to Alaskans that all of them can get health insurance without the health care reform still being debated. If reform does happen it will alter the age-related premium schedules so much as to make ACHIA unworkable in its present form. I don’t think it much matters: ACHIA serves so few Alaskans at such horribly high cost that there has to be a better way. There is one, of course. It’s called single-payer universal health care. Neil Davis is a retired geophysicist and author of several fiction and nonfiction books. His most recent book is Mired in the Health Care Morass. More on health care issues can be found at his blog, http://healthcaremorass.blogspot.com. Neil can be contacted at neildavs@mosquitonet.com. | ||
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