According to an April 6, 2017, CNN story titled “High-cost Alaska sits in the eye of health care reform storm,” Alaska currently has the highest healthcare costs of any U.S. state. In this first profile edition, we look at the state of Alaska and compare just how different the cost profile is for people living in the far North.
To start, we look at the state on a per member per month (PMPM) basis. As seen in Exhibit 1 and described in the CNN story, healthcare costs are significantly higher in Alaska than any other state in the U.S. In fact, on average, each Alaska resident spends about USD 525 per month on healthcare as of October 2016, versus a cost of just USD 366 nationally—a USD 160 a month difference, or 43% more. One could argue that the Affordable Care Act (ACA) is a major reason for this huge cost difference. However, as Exhibit 1 illustrates, this difference has existed long before the introduction of the ACA.
There Is Hope
There is hope for those in Alaska. Between August 2015 and October 2016, the increase in healthcare cost trends across the state declined rapidly (see Exhibit 2). This decline was much more rapid than elsewhere in the country. In fact, during that same period, change in cost trends in the state of New York continued to increase, peaking at a rate of over 8%. Even the national trend, which dropped from a high of 5.51% to 4.40%, was not close to the decline in cost increases from 8.84% to 1.71% that we saw in Alaska. Since October 2014, Alaska has been trending flat. The average PMPM cost in Alaska between October 2014 and October 2016 was just USD 550, with costs starting at USD 577 per month and ending at USD 525 per month.