FLOOR SPEECH: Harmful Impacts of Affordable Care Act on Alaskans

Madam President, I have come to the Floor to once again talk about how the Affordable Care Act is harming the people of the State of Alaska.

Alaskans have the highest insurance premiums in the country, and I hear from folks back home all the time about the burden these costs place on them.  Our state’s largest newspaper has been reporting as we’ve been seeing these premium increases coming out over the past several months, detailing the incredible rise of premiums throughout the state. The average monthly premium for a single 40-year-old in the state of Alaska is now over $700, more than double the national average.  People are paying thousands of dollars each month to insure their families, and costs have been going up somewhere between 25-40 percent each year. How do you budget for that? 

A family of three in Ketchikan will be paying almost $2,000 per month next year, for one of the cheapest bronze plans available.  This plan comes with a $10,500 deductible. Heck of a deal. So despite paying almost $24,000 for insurance, nearly all medical bills will still be paid out-of-pocket by this family.  They will not see any benefit until they have spent almost $35,000.  Contrast that $2,000 per month for health insurance with their mortgage payment of $1,250.  Does that seem right to anyone?  It should not cost more to insure your family than to own a home.

A married couple in Wasilla was paying about $850 per month prior to the ACA, but that plan was not acceptable under the new regulations, despite the President’s promise that “if you like your plan, you can keep it,” and they had to find another insurer.  Next year, they will be paying over $2,300 per month.  That means they will be paying over $17,000 more per year for the same coverage.  A 268 percent increase in just over one calendar year. This is not right, this is not conscionable. It’s not like this married couple have somehow or another increased their income by an additional $17,000 last year. No, this is just the cost to cover their insurance.

A self-employed man in Homer, whose insurance covers himself, his wife, and his son, has seen his costs increase from about $325 per month two years ago to $1,325 per month since the ACA was passed.  That’s an additional $1,000 per month these folks are now paying, for the cheapest bronze plan available, with a $12,000 deductible. So this is not some Cadillac plan. This is the cheapest plan available.

The ACA repeal bill that we are currently debating addresses this problem by reducing the penalty for not buying insurance to $0.  Alaskans would be able to choose to buy insurance, or simply to save the thousands of dollars they would be paying every month.  That money could be spent on medical bills as needed, but would be available to families to use how they see fit.

On top of the outrageous cost of the individual mandate, the so-called Cadillac tax hits Alaskans harder than anyone else in the country.  Premera, the largest insurer in the state, tells me that about 62 percent of its customers in Alaska will be forced to pay tax penalties in 2018, the first year of the tax, at the average cost of $420 per plan.  Due to the high cost of health care in Alaska, the Cadillac tax is not really a Cadillac tax.  The tax penalizes Alaskans simply because health care is more expensive in a rural, low population state.  This tax will hit the state, it will hit the boroughs, and it will hit school districts.  It will take money away from public education and other services the state provides. I’m hearing from school districts that are coming to me, instead of saying I’m concerned about testing, I’m concerned about some issues they are dealing with, they are saying their number 1 concern is the implication of the Cadillac tax coming to them.

The single greatest threat to quality public education.  That is how Robert Boyle, the superintendent of the Ketchikan Gateway Borough School District, describes the ACA.  I’ll say it again: the single greatest threat to quality public education.  Bob’s district is facing a tax penalty of over $500,000 due to the Cadillac tax in 2018.  Remember, 2018 is the first year of the tax, and the penalties will only increase from there. So you’ve got the Ketchikan Gateway Borough School District looking at a half a million dollar tax coming due in 2018. They’re not getting more money to run their school district. This is money out the door that isn’t improving the education of a single child in that district.

Alaska is facing a fiscal crisis. The state cut the education budget this year and is looking hard at cutting more next year. We’re a state that relies on oil revenues, you see what’s going on with the price of oil—that’s an impact to us. We’re feeling it desperately.  School districts cannot handle the imposition of hundreds of thousands of dollars in new taxes on top of a budget reduction.  The money would be far better spent on paying teachers what they deserve. School districts are now possibly looking to reduce benefits for teachers in order to avoid paying this new tax.  With low pay and no benefits, how are our schools going to get ahead? How can we expect schools to attract and retain quality teachers? The answer is: we can’t.  And without quality teachers, it will be our kids who suffer. 

The bill we are debating solves this problem for six years by delaying the Cadillac tax until 2024.  That gives us here in Congress time to find a way to address it permanently, and in a responsible way. And I’m one of those who have advocate to eliminate the Cadillac tax altogether.

But the problems of the ACA don’t end with hundreds of thousands of dollars in new taxes on schools, or charging individuals outrageous premiums.  It also impacts our small businesses.  I have heard from business owners around the state who want to expand, but can’t.  They simply can’t afford to both expand their business, then hit the 50 employee threshold at which they are required to provide insurance.  So, at best, these businesses are forced to tread water. 

The ACA requires every business owned by an individual to be grouped together when counting employees. I’ve heard from one employer in my state, Bill Vivlamore, owns several businesses in Fairbanks – from a plumbing distribution company to coffee shops to a hotel.  For tax purposes, they are treated as separate entities.  For legal purposes, they are treated as separate entities.  But for some reason, for the purposes of health insurance, they are all lumped in one bucket.  He will be required to provide health insurance when the mandate kicks in because he employs more than 50 people across all his companies – even though he does not have 50 employees at every one of his very different businesses.  He has talked to me about having to downsize because the cost of doing business under the ACA is too high. 

This issue is also resolved in the bill by reducing the penalty for non-compliance with the employer mandate to $0.  Employers will once again be free to offer workers more hours, hire more staff or expand operations without facing a large tax penalty for not offering insurance or an equally significant cost increase when they are forced to provide insurance.

I’ve asked this question before, but I will ask it again: for whom is the Affordable Care Act actually affordable?  Certainly not the average, hard-working Alaskans who are being forced to shell out thousands of dollars for their premiums each month.  It isn’t affordable for school districts and other state entities, who will pay huge taxes.  It isn’t affordable for kids, whose education will potentially suffer. 

This law is not affordable for us in Alaska.  That is why I will support the bill that repeals the ACA and wipes out its harmful impacts.  I can’t watch premiums for Alaskans shoot up by 30 percent or more each year, see businesses artificially constrained, or see the quality of public education decline. It just doesn’t work.

So with that, Madam President, I thank you for the time this morning and look forward to the opportunity this afternoon to weigh in on some of these significant issues that have a great and considerable impact on the people of Alaska.