To build healthcare affordability in Alaska, we need to look at care costs

It’s a North Carolina story, but Alaskans should recognize the shape of it immediately because we’ve been living a version of it for years.

Alaska has carried the highest or near-highest healthcare costs in the nation for 15 consecutive years, according to Alaska Department of Labor and Workforce Development data. Costs in Anchorage, Juneau and Fairbanks run about 50% above the U.S. urban average. Urban Alaskans spend roughly 12% of household income on medical care, compared with 8% nationally. Providers here charge commercial insurers more than twice what Medicare pays for the same professional services, the highest ratio of any state in the country.

These numbers matter because they eventually show up in the places that affect everyday life: family budgets, business expenses, employee paychecks and monthly premiums.

 Hospital care drives the bulk of it. Nationally, hospitals accounted for roughly 40% of the total growth in healthcare spending between 2022 and 2024, more than any other part of the system, and consolidation is a major reason why. As more physicians and clinics become part of larger hospital-owned systems, the same visit or procedure often costs more, simply because of where it happens to take place. Alaska is especially exposed. A small population spread across enormous distances means limited providers in any given region. When the next option for care is a plane ticket away rather than a drive across town, the competitive pressure that holds prices down elsewhere doesn’t exist.

To be fair, delivering care in Alaska is genuinely expensive. Recruiting clinicians in a high-cost state, maintaining services across roadless geography and absorbing federal reimbursement pressures are real burdens our providers carry. Healthcare affordability is a challenge we all must tackle together.

But after 15 years among the most expensive healthcare markets in America, we should be willing to ask hard questions about what is driving those costs and who ultimately bears them. Premera Blue Cross Blue Shield of Alaska has served this state since 1952, before statehood. We believe Alaska families and employers deserve a healthcare system that is both high quality and affordable. When healthcare costs rise faster than wages, inflation and economic growth, the consequences are felt by every household and every business that provides coverage. Increasing health insurance claims and premiums are a function of the underlying cost of care, with more than 90% of every premium dollar received going straight to the providers of care, largely driven by hospital costs.

The conversation about healthcare costs cannot stop at premiums. We need greater transparency into the prices charged throughout the healthcare system so Alaskans can better understand what drives the bills they receive. We also need policymakers, purchasers and healthcare organizations to work together to address the factors that make Alaska an outlier year after year.

Affordability is not an insurance issue. It is an Alaska issue.

The nurse in North Carolina only had a road to drive down for more affordable care. For too many Alaskans, that road doesn’t exist. There’s only a plane ticket and a much longer wait.

Until it does, making healthcare more affordable should be a priority for all of us.

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