Surprise! Potential Solutions for High Health Care Costs

Alaska has the highest health care costs (per capita) in the nation.

There are many reasons for this, and one that has been receiving great attention in recent years is what is commonly referred to as Alaska’s “80th Percentile Rule.”  In summary, the rule requires insurance companies to reimburse providers at the 80th percentile of charges within geographic regions of the state.

Insurance companies and a group of employers have been advocating for changes to this rule, which they believe is driving up the cost of care.  During the 29th legislative session (2017-2018), Senator Cathy Giessel proposed legislation to change this rule but the legislation did not get a hearing.

The 80th Percentile Rule is a somewhat abstruse issue but the important point to understand is the intent of the rule:  the rule was originally put in place to reduce what is often referred to as balance billing or surprise billing. These are the bills that patients receive from out-of-network providers unexpectedly that aren’t covered by insurance. Surprise! All across the country, patient stories are countless and tragic such as the nearly $18,000 bill for Elizabeth Moreno to have a urine sample tested. The practice is especially common with emergency room treatment.

Other states have taken a variety of approaches in an effort to resolve the problem of surprise billing but most reforms have been ineffective or problematic in other ways.  A new white paper published by the American Enterprise Institute offers some innovative thoughts on dealing with this persistent and challenging issue. The solutions offered by the authors of the paper are particularly interesting because they involve far less government intervention in the market than many other solutions which have been tried.

Read the full paper here: