Health-care costs strain state budget

Palin creates panel to seek solutions

Posted: Sunday, February 25, 2007

Families know that going to the hospital can knock a big hole in their budgets. The state government is fast learning the same as rising health costs hit Alaska.

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Lawmakers were shocked recently to find an unexpected deficit in state retirement systems that may reach $10 billion. The state is pointing the finger at an actuarial firm that provided estimates of future costs now considered far too low.

While projections for retirement payments themselves are considered to be accurate, most of the unanticipated costs are for retiree health care, said Melanie Millhorn, deputy commissioner of the Alaska Department of Administration, which oversees retirement programs.

That's already causing budgets to soar, straining state, school and municipal finances around the state.

Gov. Sarah Palin has proposed the state spend $207 million to help schools with their costs next year and another $77 million to help out local governments. Direct state costs will be millions more.

Legislative leaders say that those amounts are almost certain to be paid. But there are reservations.

"The scary thing is, we're still just throwing money at it; we're not dealing with the underlying issues," said Beth Kerttula, D-Juneau, Democratic leader in the House of Representatives.

Some say Alaska's health care delivery system is broken.

U.S. Sen. Lisa Murkowski, R-Alaska, speaking to the Alaska Legislature last week, came to a similar conclusion.

"I believe that health care delivery in Alaska is in a state of crisis," she said.

She said the system should be better called "sick care" because it spends most of its money on treating the sick instead of keeping them healthy in the first place.

Palin last week convened a panel to look at ways to improve access to health care and lower its cost to the state.

The group's charge is to "start working on an action plan to focus on efforts on ensuring adequate health care is available for Alaskans that individuals and families can afford," Palin said.

She made the comment while announcing the creation of the Alaska Health Strategies Planning Council in the Office of the Governor.

Before Palin took office, her transition team reviewing the Department of Health and Social Services recommended creation of such a body. In the past, many parts of the health care system have been studied and numerous problems addressed.

One of the serious problems the team found was a lack of access to health care, especially among the one out of six Alaskans without insurance.

Studies in the last five years have recommended a variety of approaches to the problem, ranging from minimal cost interventions to those with "the high price tag" of universal health care.

At Bartlett Regional Hospital in Juneau, uninsured patients are a costly part of doing business.

"A significant portion of our bad debt comes out of our emergency rooms," said Garth Hamblin, the hospital's chief financial officer.

"We're ethically bound and legally bound to serve anyone who comes in," he said. "That's millions of dollars in uncompensated care that comes through our emergency department."

State Sen. Fred Dyson, R-Eagle River, has been advocating more free-market approaches to health care, but he thinks the state must help out its hospitals.

"I think it's good public policy that people get emergency care," he said.

A proposal in the past to subsidize emergency care in hospitals might be resurrected, he said, so those costs don't have to be passed on to other patients.

So far this year the Legislature has approved one significant health care-related program, a boost in the number of Alaska students who get financial help with medical training in the so-called WWAMI medical school program - sponsored by the states of Washington, Wyoming, Alaska, Montana and Idaho.

Recruiting doctors to Alaska has long been a challenge, especially for the state's more remote communities, and Hamblin said the expansion was a good idea.

Hamblin said Bartlett has struggled in the past to recruit doctors, but has recently brought to Juneau a new psychiatrist and new pediatrician and is now doing well.

"We've generally - with effort - been able to fill the needs for physicians we've had," Hamblin said.

He noted that many rural areas struggled, however, and increasing the number of doctors trained through the program was a good idea.

Dyson said he thought Palin's plan so far was a good idea and hoped it would provide major fixes, not simply "tweak an old system that I think is broken."

• Pat Forgey can be reached at

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