Healthcare Opportunity in Alaska Erased in Fiscal Cliff Deal

The last three months were busy for Richard Miltenberger. The benefits consultant stayed up late, worked Saturdays and ignored some of his regular work responsibilities to help Alaska and four other Western states submit applications for federal health cooperative loans by the December 31st deadline. He sums up the amount of time he spent on the project this way:

“An embarrassing amount.”

When the 400 page applications were finally complete and in the hands of Fed Ex, the plane broke down in Memphis. A colleague of Miltenberger’s was tracking the packages and stayed up all night making phone calls:

“(She) had somebody get on the plane, get the package off at Memphis, put on a non Federal Express airplane to get it to DC overnight.”

He calls the episode comical. But for Miltenberger, the stakes were high. He has spent the last two years living and breathing health insurance cooperatives. In 2011, he helped Montana file the first health cooperative application under the new health reform law. As a former insurance executive, he immediately saw the appeal of a consumer owned health plan:

“Its very hard to change an existing insurance company, I’ve been there before and it’s like trying to steer a battle ship. But if you’re starting fresh, you can really do some innovative things.”

Health cooperatives are non-profit health insurance companies governed by members. They work with hospitals and medical providers to make sure patients get the best and most cost effective care. Miltenberger got so excited about the idea, he helped launched the National Alliance of State Health Cooperatives to encourage other states to apply for the federal loans.

“And I think, in Alaska, we have the best case of any state, to start a health cooperative. Its absolutely needed there.”

That’s because Alaska has high health care costs and limited insurance options. So last fall, with the final deadline for health cooperative applications looming, Miltenberger called up Lon Wilson, President of the Wilson Agency in Alaska. Wilson runs an employee benefits company and knows the ins and outs of the health insurance industry in the state. And it didn’t take long for Miltenberger to convince Wilson that a health cooperative could be one answer to the high cost of health insurance in Alaska.

“It was something that really could be transformative in our community and really appeal to a certain segment of our population.”

So the pair spent three months working on the application. They had to incorporate a non-profit, do a feasibility study and collect two dozen letters of support. Wilson also had to recruit a board of directors. He says he didn’t have trouble finding people in Alaska who embraced the idea:

“Healthcare, as we all know, it’s all local. And having a plan that is formed in Alaska, run by Alaskan, directed by Alaskans for the benefit of Alaskans in my opinion is a good thing. It’s an alternative, it’s not for everybody. But it would be just one more alternative in a small market that has limited choice.”

But as it stands now, Alaska won’t get the chance to see if a health cooperative could have worked. The state’s application miraculously made it to Washington DC on December 31st. But Wilson says the celebrating was short lived:

“The very next day we learned of the fiscal cliff compromise that was passed by the Senate.”

The fiscal cliff deal eliminated all funding for health cooperatives that had not yet been approved. That means 24 states will have cooperatives, but 26 states, including Alaska, will not. Miltenberger had to read an e-mail explaining the news three times before he could believe it.

“It was incredibly disheartening, almost to the point of tears for me.”

Lon Wilson, in Alaska, took the news a little better. But he thinks the last minute deal sets up a unequal situation, with about half the states getting a chance to test health co-ops, and half left out. Wilson says it’s disappointing:

“Without the application even being reviewed, without the opportunity for funding, we’ll never know if it could have had an impact on price, quality or access in our state. And that’s the unfortunate part about this.”

Miltenberger and Wilson aren’t giving up though. They’ve already been in touch with members of Congress, trying to get the funding restored.

This story is part of a reporting partnership that includes APRN, NPR and Kaiser Health News.

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