An engaged Alaskan democracy

Response to Charles Wohlforth’s columns about health care costs

Columnist misses mark on some of his health care conclusions
Author: Dr. Robert Hall | Opinion in the ADN. Full article here. Updated: January 18 Published January 18

The recent series on health care by ADN opinion columnist Charles Wohlforth culminated with his suggestions on how Alaska health care could be reformed. He then went on to predict that should the Legislature in Juneau try and enact any reform then Alaska doctors would try and block those efforts.

Wohlforth is a very busy man, writing three opinion columns a week, writing books, and hosting local radio talk shows to boot. Health-care financing is a very complicated topic and superficial examinations of very complex topics can lead to very misleading conclusions. Space constraints here prevent me from addressing in one column all the issues raised in this series. For those interested in a broader perspective visit the Orthopedic Physicians Alaska webpage at

The solution promoted by Wohlforth, managed care, has already been tried in Alaska in the private sector and didn’t turn out well. When the managed care movement was going strong in the Lower 48, Providence Alaska tried to set up a managed care network here in Anchorage. Due to objections from the local medical community to giving up control of patient care this effort never really got off the ground.

Southcentral Foundation’s primary care managed-care model was held up as an example of less expensive care with high patient satisfaction. As noted in the article, Southcentral only provides primary care services. Wohlforth quoted a cost of $500 per person per month which equates to $6,000 a year per person. Specialty and hospital care for Southcentral beneficiaries are provided through the Alaska Native Tribal Health Consortium which runs the Alaska Native Medical Center. The consortium’s 2015 annual report gives expenses for the year of more than $500 million to provide those services for 150,000 beneficiaries or roughly $3,000 per person per year. The total cost of comprehensive managed care services in Anchorage per beneficiary then would be roughly $9,000 per person per year. Compared to Kaiser Family Foundation data showing average single-person, employer-based private insurance in Alaska for 2015 of $7,800 per year this doesn’t actually represent a less expensive alternative.

Further, the health consortium and Southcentral receive funds from the Indian Health Service and in addition from bill payers such as Medicaid, Medicare and private insurance. They are allowed to accept payment from two sources for the services they provide. In the private sector, we are only allowed to submit one bill. Federal regulations exempt Alaska Natives seeking care through Southcentral or Alaska Native Medical Center from having to pay copays for government programs such as Medicaid and Medicare, which may help contribute to their high consumer satisfaction rate.

This is not meant in any way as a criticism of the Native health system which has done an outstanding job meeting its own enormous challenges in Alaska. Rather this is meant to demonstrate that holding up the Native health care model as a reasonable alternative to the current private sector system demonstrates a deep lack of understanding of both systems.

In its zeal to attack the local medical community the ADN has missed the real story in health-care financing. Major reform has already started at the federal level and regardless of what Alaska doctors or legislators do in Juneau that process will continue. In 2015, the U.S. Congress passed the Medicare Access and CHIP Reauthorization Act. This replaced the old Medicare funding mechanism called SGR. Forbes magazine has called this act a “tsunami” of changes in how doctors are paid and predicted we may see a wave of early retirements among older physicians as a result. The act requires Medicare and Medicaid to implement two payment tracks for physicians by 2019. Twenty-five percent of payments can continue under fee for service but only if doctors comply with reporting data that can be used for merit-based incentives or penalties. The remaining 75 percent of payments are to be made under alternative payment models, some of which are undergoing demonstration projects now and some of which are yet to be developed. Major insurers such as Aetna and Blue Cross have also stated that they plan on shifting the bulk of their payments away from fee for service to models that pay for value.

To make things even more complicated it appears that the current Congress is poised to repeal the Affordable Care Act without an explanation to date of what will replace it. If that were to occur then the combination of the repeal of the ACA and the reforms already started by the Medicare Access and CHIP Reauthorization Act has the potential to result in a major upheaval of health care everywhere in this country, not just in Alaska.

In my view, rather than wasting time and money trying to reform the current system that is already on the way out, Alaska should participate in the development of new health-care financing models that work for our unique situation. There has already been cooperation on projects to save money on Medicaid between the state and Anchorage doctors which shows that this is possible. Further developments will require some vigorous public discussion and debate. I can’t help noticing that a mere two days after Wohlforth labeled a large segment of the Anchorage medical community as “parasites” he wrote another column bemoaning the current lack of respect in public discourse. As this important discussion continues it is important for Alaskans to work together using real data rather than common knowledge if we are to achieve the best possible outcome for us all.

Robert Hall, MD, is an orthopedic surgeon who has been practicing in Anchorage for more than 20 years.

Alaska needs a fiscal solution in 2017: That’s now

Opinion in Alaska Dispatch News, May 26, 2017

We recognize and appreciate the hard work of the Legislature in reviewing a wide range of proposals to address the state’s fiscal gap. However, to date the Legislature has not reached agreement on a broad-based and balanced solution.

This session remains a turning point for Alaska. If the Legislature again balances the budget by relying on savings in the Constitutional Budget Reserve Fund, there will be no ability to balance the budget in 2018 without spending a substantial amount of the Permanent Fund Earnings Reserve Account.

As former Alaska House Speaker Mike Bradner has pointed out, if the Legislature fails to take big steps in 2017, we will be out of money and out of time in 2018. Ignoring the revenue side of the equation in 2017 is a recipe for drastic cuts to services, a heavy reduction in Permanent Fund Dividends, and a significant loss of jobs in both the public and private sectors. Proposed cuts to education are particularly damaging to young Alaskans and the future of our state. The “wait and see” approach constitutes a direct threat to our economy and our way of life. Adjusted for inflation and population, the budget this fiscal year is the lowest it has been in 10 years. All state of Alaska employees could be laid off, and the state of Alaska would still have a deficit. Already the signs of a recession are all around us.

Global and state realities demand that in 2017 the Legislature adopt a comprehensive fiscal plan. Alaska’s needs require us to include a broad-based tax — as does every other state — in the state’s response to its continuing fiscal challenge. A progressive income tax, set at levels that would have little or no effect on those with low to moderate incomes, avoids competition with municipalities, and is preferable to a statewide sales tax. Without a broad-based tax, draws on the Permanent Fund Earnings Reserve Account will be increased, then dividends can no longer be paid, and eventually the Permanent Fund itself will be threatened.

Timing is critical. The opportunity for an effective solution will be gone next year. We look forward to a plan that benefits all Alaskans, now and in the future.

Cliff Groh chairs the nonprofit organization Alaska Common Ground. He submitted this commentary on behalf of Alaska Common Ground’s board of directors.

The State’s Operating Budget: Critical Crossroads, Choices, and Opportunities

Two Year Update‐What’s Changed?

The focus of Commonwealth North’s 2015 report was on the operating budget, within the

context of the dramatic drop in state revenue. The revenue decline has continued and the

need to reduce recurring expenditures in the state’s operating budget has not lessened. The

one constant is that one‐time savings have been relied on to prop up recurring spending, albeit

at a somewhat

reduced level.

Check out the full report here.

How much might closing the state budget gap cost Alaska families

Alaska’s state government has a huge hole in its budget, created by plummeting oil revenues. The state has cut spending for the past several years, but in fiscal year 2017 a $3 billion gap remains between what it spends and what it collects. Closing that gap will require new revenues and more budget cuts – but different ways of balancing the budget would have different effects on Alaska families.

Read the report.

How will Alaskans talk climate change with the Trump administration?

Author: | Alaska Dispatch News | February 27th, 2017

How do state officials and indigenous leaders in Alaska, where the climate is warming faster than almost any other place in the world, pursue their work in a world where the new president has dismissed climate change as a hoax and has appointed like-minded people to key environmental posts?

Very carefully, it turns out.

That may start with wording. Take the description used for a glacier-shaped bar of soap, a door prize at an environmental conference this month in Anchorage.

“It symbolizes climate change, or what are we calling it now? ‘Ecological transition,'” Kurt Eilo, executive director of the Alaska Forum on the Environment, said when he gave the soap to one of the conference attendees.

Climate change is an important enough priority for the state of Alaska to have been invoked by Gov. Bill Walker in his state of the state address: “Alaska is the only Arctic state in the nation — and we are ground zero for climate impacts,” he said in his address, delivered a month ago.

Discussing the issue with the Trump administration might require a diplomatic approach, said Larry Hartig, commissioner of the Alaska Department of Environmental Conservation.

“You would try to tailor it in a way that you would find common ground,” he said when asked how he would approach the subject with the new administration. “I wouldn’t speculate a lot on what caused it,” he said. “I would focus on: What are we going to do for the communities?”

The same goes for non-fossil-fuel forms of energy, Hartig said.

“There’s a lot of no-regret type of opportunities when it comes to renewable energy. We don’t want to lose that momentum on that,” he said.

Renewable energy development has bipartisan support in Alaska, as costs of diesel fuel and other fossil fuels are especially burdensome in remote parts of the state.

On the international level, Hartig said, he would counsel the Trump administration against pulling out of the Paris climate agreement, which the president has vowed to do.

Jim Stotts, president of the Inuit Circumpolar Council of Alaska, is anticipating the need for a tougher approach.

He and his colleagues are concerned about the new person or people who will lead Arctic policy at the Arctic Council and State Department level.

“If it was somebody that was very much a climate-change denier, clearly we would go on the offense and make the case that, yes, there is climate change, and yes, it does affect the Arctic more than any place in the world,” Stotts said.

So far, though, the Trump administration has not taken any specific steps that would warrant a response from the Inuit Circumpolar Council, Stotts said.

“We haven’t reacted to anything because we haven’t had anything to react to yet,” he said. “I think until something happens, we’re just proceeding as things are normal. We realize they probably won’t be.”

President Donald Trump’s choice to head the Environmental Protection Agency, Scott Pruitt, fought the agency when he was Oklahoma attorney general, and environmental group leaders say he has questioned the overwhelming scientific evidence of climate change.

State Rep. Andy Josephson, an Anchorage Democrat, is arguing that the state should take climate action without federal support, if necessary.

He plans to introduce a bill that would revive the state climate-change advisory panel created by Gov. Sarah Palin in 2007 but deactivated under her successor, Sean Parnell — with some new twists, chiefly a mechanism to collect money for climate-mitigation work within Alaska. The bill in the works is an update of legislation Josephson introduced last year; that bill did not move out of committee.

Josephson said he is not optimistic about convincing the Trump administration to take Alaska climate change seriously. “I don’t know of any way” to do that, he said. Instead, he said, the state should take the initiative on the subject, study the work done by the previous climate commission and build on it.

“We don’t need to sit around and the issue is not going to sit around. We can’t afford to wait,” he said. “It’s about us right now and what we can do aside from the federal government and federal intervention.”

One notable Trump administration move was the decision to slash from 34 to 17 the number of EPA officials authorized to attend the recent Alaska Forum on the Environment — an annual gathering in Anchorage that attracts hundreds of participants from across the state. Issues discussed at the forum included climate change impacts in Alaska, security of wild foods needed by rural residents, water quality, marine debris and community waste management.

Read the full article here.

Barroom budget talk a precursor to looming battle in Capitol

Check out KTUU’s coverage of one of many events held by Alaska Common Ground in Juneau recently to inform the public about fiscal issues. KTUU, February 1st.

2017 Senate Poll results

You can find the Senate poll results here. Over 7,000 Alaskans shared their thoughts and opinions on issues facing Alaska.

Economists say recession will last three more years, followed by a smaller, poorer Alaska

Charles Wohlforth: Opinion, Alaska Dispatch News, 1/20/17

A leading Alaska economics firm predicts our recession will continue for three more years and foresees no real recovery, just decline and then a future with a smaller economy.

Jonathan King, vice president of Northern Economics, said he feels like he is riding a down-bound train, able to see hard times for his business a year ahead but unable to do anything about it. We visited to look down the track together and think about what is coming for his and others’ families.

King presented Wednesday to the Senate Labor and Commerce Committee after Mouhcine Guettabi, of the Institute of Social and Economic Research of the University of Alaska Anchorage. The economists’ teams worked independently, using different computer models, but they came to strikingly similar conclusions.

“This is our great recession. By the time this is over, we expect to lose 6 percent of our jobs,” King told the committee.

A recession is unfolding of similar severity to what the nation endured after the 2008 financial crisis, but with a critical difference, King said. The U.S. economy recovered. He expects Alaska’s economy to shrink long term to a smaller base.

The projections show job losses bottoming out in 2018 to 2020, but no bounce-back through 2026. Population predictions are uncertain because they contain more unknowns than job numbers, but Northern Economics projects decline continuing for at least a decade, with net loss of more than 30,000 residents.

Alaska’s gross state product, the total value of all the goods and services we produce, has declined for five years and is down 22 percent due to lower oil prices and production. With that much money subtracted from the economy, it has to shrink, with slower business, fewer jobs and a smaller population.

“What society looks like changes,” King said. “Mouhcine and I both said that the people who are most likely to leave are young, educated and have a lot of opportunity. The people who remain are people who have family ties, who have cultural ties, or who want the lifestyle and there’s nowhere else they want to go.”

King, at 43, falls in both groups. His business has 14 employees, down two in the last year. His wife, Elizabeth, has a good job and they own a house. They are happy with their children’s public schools.

When the couple came to Alaska in 2003 they passed up opportunities to make more money in the corporate world, because they wanted the quality of life here. But if budget cuts ruin the schools and threaten public safety, the balance could switch for families like the Kings.

A flat economy offers few opportunities to attract productive people. Bad schools and unsafe streets drive them away.

Added to that, drastic budget cuts like those being discussed in the Alaska Senate would worsen the recession by another 20 percent, according to the modeling. Revenues from an income tax or the Alaska Permanent Fund dividend would hurt less because everyone would lose a little rather than chopping off jobs.

We’re at a branching road for Alaska.

Draconian budget reductions to preserve dividends would buy us a cut-rate Alaska for people who are stuck here and can’t leave. Broad-based taxes and use of the fund would provide community stability we could eventually build upon.

And then there’s the third path, procrastination.

“We’re one tweet away from $100 a barrel oil,” King said. “All it takes is a shooting war in the Middle East and we’re back in business. Which I hate to say.”

Economic modeling starts with assumptions. You cannot include unknown future events. But you also can’t assume all unknown events will break in your favor.

“Stuff will happen. But it could be good stuff or bad stuff. We don’t know yet,” said Tim Bradner, a longtime petroleum analyst and co-publisher of the Alaska Legislative Digest.

Bradner and other observers agree oil prices will probably gravitate to a range of $50 to $60 a barrel for the foreseeable future. Enormous new oil finds last year in the shale of Texas will keep the $60 price as a ceiling, because if it goes much above that mark more oil can rapidly come into production.

Alaska has some new oil finds, but much of that oil is uneconomic below $60 a barrel. Bradner sees new oil being produced over the next 10 years that could, if all goes well, hold back a decline, but not enough to increase the state’s output.

On the downside, King and other economists see the health care sector as a risk. King called Alaska’s overinflated health care industry a bubble that is still growing. It accounts for 15 to 20 percent of the economy and employs more people than any other sector.

Read the rest of the article here.

What’s Happened to the Alaska Economy Since Oil Prices Dropped?

November 9, 2016, ISER: Research Matters No. 101

A combination of declining oil production and low oil prices has left the state budget billions of dollars in the red. But how has that big drop in oil prices affected the Alaska economy so far? Mouhcine Guettabi, an assistant professor of economics at ISER, examines that question in Alaska Snapshot No. 1, the first in a series of short papers that will report on various economic and fiscal issues important to Alaska.    In this paper, the author assesses economic changes by looking at changes in numbers of jobs from March 2014 through March 2016, the most recent time for which reliable employment figures are available. Among other things, he found:   Alaska lost close to 1% of its wage and salary job—nearly 2,300 jobs—from March 2014 to March 2016. Those losses could reach 2% by the end of 2016.   State government and private industry were hardest hit through March 2016, with the state government losing nearly 1,700 jobs and private industry more than 1,500. By contrast, local governments (which include school districts) added nearly 800 jobs during the study period and the number of federal civilian jobs was up about 165.   Even though Alaska as a whole lost jobs, some areas of the state and some sectors of the economy added jobs during the study period. The most robust growth was in the Mat-Su Borough, which added 1,100 jobs, and in the health-care sector, which added 1,400 jobs.   An estimated one-third of all local government revenues in recent years have been from the state—which raises questions about how vulnerable local governments are, as the state looks for ways to balance its budget. In some areas of the state, as many as half of all jobs are in local government.

Download the full paper (PDF, 752KB). If you have questions, email Mouhcine Guettabi at, or call 907-786-5496.

War and environmental disaster saved Alaska finances in the past: What will save us this time?

Dermot Cole, Alaska Dispatch News, September 16, 12016

FAIRBANKS—In the two years before the trans-Alaska oil pipeline began pumping in 1977, the state government avoided a distress sale of state assets or a government shutdown by borrowing hundreds of millions from the North Slope oil companies.

The $900 million collected from the giant 1969 lease sale was almost gone and as pipeline construction began, the state faced a financial crisis.

Steve Cowper, a Fairbanks lawyer and freshman legislator in 1975, recounted this chaotic chapter in state history in a presentation here Wednesday morning.

His audience at the Osher Life Long Learning Institute included about 40 people, most of whom have been around long enough to know that the name of the former Alaska governor, who has been in Texas the last 15 years, is pronounced “Cooper.”

Now 78, Cowper has long since gone gray, but he has not lost his North Carolina drawl or his ability to spin a yarn. I knew that when he started talking about how he had almost become an oil and gas adviser to Somalia some years back and was told, “We’re going to fly you guys over to the Mogadishu airport and you’re going to jump out in parachutes.'”

He never made that leap, but 30 years ago he was elected governor on his second try, claiming to be the oldest rugby player in Alaska. An Anchorage Daily News story by Hal Spencer in early 1986 set the stage for how he was portrayed: “Steve Cowper’s fellow state legislators nicknamed him the High Plains Drifter after a Clint Eastwood character — a loner whose strong, silent ways carried a hint of danger.”

I did see him kick a trash can once like a soccer ball as a legislator, and there is a famous story about how he tossed a telephone out a state Capitol window in frustration, but Cowper always settled down fast after volcanic episodes, and he inspired a dedicated following during those difficult years of the first big oil collapse.

A former boss, the late Attorney General Edgar Paul Boyko, once said with Cowper’s penchant for always trying the unexpected, he never knew whether Cowper was about to “take a year off to enter a monastery in Tibet or be a war correspondent in Vietnam.”

In 1974, Cowper followed through on a threat to run for the Legislature. He said Wednesday the four years he spent in the state House were the “most remarkable experience of my life.”

It was a time when pipeline construction overwhelmed every aspect of life in Alaska and two things — the disappearance of the $900 million windfall and the need to borrow money to run state government — helped ensure the creation of the Alaska Permanent Fund.

There is truth in the proverb, “Success has many fathers and failure is an orphan.”

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