Session: State Capitol, Room 518 Juneau, AK 99801-1182 Phone: (907) 465-2327 Fax: (907) 465-5241 Interim: 119 N. Cushman St., Suite 201 Fairbanks, AK 99701-2879 Phone: (907) 456-8161 Fax: (907) 451-9293

Sponsor Statement for SB 37
Physician Negotiations with Health Insurance

An Act relating to collective negotiation by competing physicians with health benefit plans, to health benefit plan contracts, to the application of antitrust laws to agreements involving providers and groups of providers affected by collective negotiations, and to the effect of the collective negotiation provisions on health care providers.

Senate Bill 37 attempts to level the playing field for Alaska's patients and the physicians who care for them.

Over the past eight years, the health insurance market has continued to consolidate at a rapid pace. There were once 18 national health insurance companies that physicians could choose to contract with. These companies have since merged into 6. It is even more severe for Alaskan physicians who have only 2 choices of insurers in this state. Physicians are given little if any opportunity to advocate for the best care of their patients.

Independent physicians are prevented from collective action by federal antitrust laws and are subject to aggressive antitrust enforcement actions. Large corporations, however, can adopt a "take it or leave it" position without any antitrust ramifications. This plus the market concentration of health insurers causes a damaging imbalance in bargaining power.

This inequity between health insurers and medical care providers dictates physician contracts. The resulting contracts favor the insurance companies over the health care patients receive and can result in such policies where physicians are required to use a low cost treatment when a higher cost treatment may be medically necessary.

Senate Bill 37 will enable independent, competing physicians to become effective advocates for their patients through collective negotiations with health insurers. These negotiations will fall into a narrow scope of topics with regard to the provisions of physician services contracts and will be under the scrutiny of the Attorney General's office. SB 37 will still prohibit a group of independent competing physicians from striking or otherwise engaging in activities that would result in a boycott.

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