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State looks to get a handle on health care costs

Posted: February 5, 2013 - 1:01am

JUNEAU — State officials are looking at ways to lower the growth of Alaska’s health care costs, including an alternate retiree plan and developing an employee wellness program.

The path the state is on isn’t sustainable, Administration Commissioner Becky Hultberg and Health Commissioner Bill Streur told the House Finance Committee on Monday. Streur said he believes something can and must be done to address the issue.

The state’s health care costs have risen from $886 million in fiscal year 2001 to $2 billion in 2011, Streur said. That includes money spent on Medicaid, for the state Department of Corrections and as part of active employee and retirement programs. Streur said health care costs grew an average of 9 percent a year during fiscal years 2001 and 2010. More recently, he said the average cost per Medicaid recipient has stabilized, but he said he considers that more a respite than any real trend.

Streur said the budget for his department, Health and Social Services, is projected to grow from $2.6 billion this fiscal year to $6.6 billion in 2022, with a number of unknowns, including the impact of the federal health care law and tighter state and federal budgets.

Hultberg said the level of spending is driven significantly by the employee and retiree plans and the state’s contribution to the union health trust. She said it is difficult to make any changes to the retiree plan, because it could be considered a diminishment of benefits and lead to litigation.

Options for controlling Medicaid growth also currently are limited, Streur said. The quandary comes in when it comes to services: there are optional services under the program, such as inpatient psychiatric care for persons under 21 years of age and others that the department believes have been effective. Streur likened the situation to a balloon, where, when you push in at one spot, it bulges out in another.

Payment levels for a standard office visit under Alaska Medicaid are around $220, he told the committee. That compares to less than $80 for Washington Medicaid and about $120 for Idaho Medicaid.

On the Medicaid side, the state is looking at things like managing and reviewing utilization. Streur also talked about disease and case management, making sure people are getting the care they need, when they need it.

As far as employee and retiree health care, Hultberg said she would like to see people become “consumers of health,” and ask questions about the cost of a service or procedure, helping to send a message they care what things cost. She said it would be a mistake to look at the providers as being a problem but said the parties need to work together.

She said the state also is looking at developing an employee wellness program and a “culture of health.” The state also is considering expanded travel benefits or contracting with “centers of excellence” for certain services, something she said some large corporations have done in seeking a better value. She said the state supports local health care but cannot continue to see “double-digit price increases when we’re already so much more expensive than the rest of the country.”

She said the state also is looking at implementing a “plan B” system for retirees that would allow the state potentially to provide a cost structure that would keep pace with inflation and to steer retirees to preferred providers.

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