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State Senator District E

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Senator Cathy Giessel Newsletter

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your family, community and jobs.

November 9, 2023

Dear Friends and Neighbors,

GCI is discontinuing their email service so if you want to keep receiving these weekly newsletters, you can reply to this email with your new email address and I would be happy to change it.

Items in this Newsletter:

· Why Are Healthcare Costs So High In Alaska?

· Carbon Credits- Are They Real?

· Alaska Permanent Fund Corporation Board

· Alaska Economic Trends November Issue

· Alaska Health Fair Events Coming Up

· AARP & Chugach Electric's Rate Case

· CCUS: Too Little, Too Late, Too Slow

· Safer Seward Highway Project Open Houses

· Current Topics: Education, Economy, Minerals, Health Care, Politics

· Resource Values, Permanent Fund

· Alaska's Olympic Ice Skater!

Email me

Why are healthcare costs so high in Alaska?

We hear it over and over again: the U.S. has the highest healthcare costs in the world, and Alaska has the highest healthcare costs in the U.S.” While there is no one simple answer to why this is the case, there are a few reasons that stand out. Illustrating the imperfections of our current healthcare system, read this story about a cancer patient residing in Juneau:

She received chemo in two states. Why did is cost so much more in Alaska? KFF Health News

In Anchorage, for instance, prices for medical items increased nearly three times as fast from 1991 through 2017 than prices overall. Alaska also has a unique policy that may be increasing prices. Its “80th percentile rule” was enacted in 2004 to limit the amount of money patients pay when treated by providers outside their health insurers’ network. But like many experiments meant to rein in costs, the rule has instead been increasing healthcare spending, according to a study by Guettabi.

But there is good news on the horizon. On May 12, 2023, the Alaska Dept. of Commerce, Community and Economic Development announced elements of its healthcare reform package. It included, among other measures, to repeal the 80^th percentile regulation. The repeal will not go into effect until January 1, 2024. As part of the repeal, insurance companies will be required to submit for approval an alternative basis for reimbursement of out-of-network claims as part of their 2024 rate filings. I will keep you updated as this repeal approaches its January start date.

I’d like to mention another driver of increased healthcare costs - pharmacy benefit managers (PBMs). They have a massive impact on accelerating costs not just in Alaska, but across our entire national healthcare system.

The elusiveness and opaqueness of the PBM business model is attracting the attention of not only members of Congress, but also of the Federal Trade Commission, the National Association of Insurance Commissioners, and many state legislatures, including ours. Recently, several pharmacies have opened a class-action lawsuit against the 3 largest PBMs. Read this story for a quick overview of the problem:

Pharmacy benefit managers caught in crosshairs of battle to reduce drug costs. The Hill

Alaska’s community pharmacies have been suffering under the burden of deceptive PBM practices for years, and their numbers are dwindling, reducing pharmacy access for patients. Meanwhile, as they continue to fill your prescriptions while being under-reimbursed and contracted out of business by the PBMs, the PBMs are making record amounts of money.

Here is a little history on how PBMs began and their trajectory into becoming multi-billion-dollar businesses:

How 3 companies came to dominate the PBM market. Healthcare Brew

New analysis shows PBMs use fees as a profit center. PhRMA

In an effort to curb the deceptive and punitive practices used by the large PBMs, I have introduced Senate Bill 121.

Alaska Permanent Fund Corporation Board

Here’s what happened at the Alaska Permanent Fund Corporation board meeting, as reported by Matt Buxton. Alaskans should know what’s happening at their Board controlling more than 50% of our annual revenue for state services.

The Alaska Permanent Fund’s Board of Trustees met on Monday to get their first look as a group at an ambitious plan to boost the fund’s value from about $75 billion to $100 billion in a matter of years. For trustee Ellie Rubenstein, it was supposed to be a victory lap. Just days before, she was on the stage of an investor conference in Saudi Arabia, hyping the plan as a victory for higher-risk private equity.

“My baby has been our $100 billion strategic plan that we will hit over the next three to five years. We’re unveiling that next week,” she said, adding, “We will finally be in the $100 billion club when we unveil this, and the only way to pull that off will be to increase private equity. I won my battle with [Chief Investment Officer Marcus Frampton].”

Rubenstein’s “baby,” however, would require a sea change in the Alaska Permanent Fund’s investment strategy, leaning into higher-risk private equity investments to a level that would require the fund to borrow heavily. Fund managers said there was simply no other feasible way to hit $100 billion in that timeframe because it requires higher returns than the fund’s current target of 5% annual growth on top of inflation.

The proposal championed by Rubenstein—with input from fellow trustees that included former DEC Commissioner Jason Brune, Craig Richards, and, at least for some of the sessions, Department of Revenue Commissioner Adam Crum during a series of private, closed-door meetings—would require increasing the growth goal to about 7% on top of inflation, or total annual growth of about 9.3%. Fund managers said that would require the Alaska Permanent Fund to leverage itself, borrowing money it doesn’t have for the additional investments.

The proposal landed with a thud at Monday’s hearing.

Everyone from the Alaska Permanent Fund’s investment staff, Frampton included, to several analysts said it was too risky for their liking, especially with cooling markets and the ever-looming fear of a crash.

In a particularly telling exchange at Monday’s hearing, Jason Brune responded to the naysayers by demanding the analysts weigh in with their preferred growth targets if they didn’t support the 7% target. Would it be 5.5%, 5.25% or something else?

“4%” was the first response from one analyst who said things were already too risky given the outlook for the world markets. John Skjervem, the Chief Investment Officer of the Utah Retirement System, doubled down on the point, arguing that the state of the economy doesn’t support getting more aggressive at this time.

“I’d be uncomfortable with a return target any greater than what we currently have. I think CPI plus 5 is the upper limit of what we should be pursuing,” he said. “Most of the investment history of the Permanent Fund has played out in a four-decade, secular bull market and bonds. You’ve had 40 years of the wind at your back. That changed last year. … It’s hard to say it’s over, but it’s not going to be a tailwind. It’s probably going to be a headwind.”

He went over various economic indicators that warned against taking on additional risk, noting that there’s plenty of uncertainty at this time. Others noted that it would take considerable investment from the Alaska Permanent Fund to manage the loans and the relationships with the all-important credit rating agencies and that those costs would eat into profits and likely undercut the spendable portion of the fund.

“This is a uniquely bad time to consider raising the return target,” Skjervem said.

It’s not what Rubenstein, who has been pushing for the Alaska Permanent Fund to take on more risk and increase its private equity investments, wanted to hear.

“If you’re a board member wanting to see more risk than has been taken, what area or what boundary would you be pushing?” she responded to Skjervem.

“I don’t support additional risk,” Skjervem said flatly. “I don’t have a satisfactory answer to that question because I wouldn’t support additional risk.”

The board ultimately took no action on the long-term strategic plan. Further discussion is expected at the board’s December meeting, but most indications from Monday’s meeting are that there’s not enough support for the change.

Carbon Credits- Are They Real?

By Phred Dvorak

Mike Korchinsky gave up a lucrative career in management consulting after an “epiphany in the African bush,” turning to wildlife conservation and ultimately helping create one of the most popular tools for cutting carbon emissions.

Now, the 62-year-old from the California Bay Area is fighting to keep that business—and his own revenue stream—alive amid a crisis of confidence that is shaking the industry he helped start.

Korchinsky is a champion of carbon credits—a financial instrument that funnels private money to climate-friendly projects such as building solar farms or planting trees. Typically, such projects strive to stop global-warming emissions from hitting the atmosphere. The companies or individuals writing the checks get to claim they are reducing, or offsetting, their carbon footprints by the same amount.

Korchinsky’s company, Wildlife Works, issues credits from two big conservation projects—one in a savanna of southeast Kenya frequented by elephants and giraffes and another in a rainforest of the Democratic Republic of Congo that hosts bonobo and pangolin.

A growing number of skeptics say the math behind carbon credits is squishy and that the projects don’t do as much good for the climate as they report. Environmentalists are accusing companies of using credits to avoid the hard work of trimming emissions on their own, sometimes bringing lawsuits against those, such as Delta Air Lines, with big offset claims. Credit sales and prices have collapsed this year.

Last month, Korchinsky announced he was trying to regain buyers’ trust by helping start a new standard, or set of carbon-crediting procedures and best practices, for conservation projects. In a drastic move, the standard would eliminate the concept of offsets altogether — undercutting a prime reason companies buy carbon credits now.

Korchinsky says he is talking to companies about an alternate rationale for buying credits—one that still links purchases to a firm’s emissions, while avoiding the suggestion that procuring credits actually reduces them. How that would work exactly remains unclear, as does corporate appetite for credits without the “offset” component.

Korchinsky spent years trying to fund conservation activities in other ways, even enlisting celebrities such as Paris Hilton and Charlize Theron to hawk a Wildlife Works fashion line. Only carbon credits attract enough money for a full-fledged push to halt tropical deforestation, he says.

If the carbon market fails, “we squander the best opportunity we ever had for driving corporate finance to protect forests,” says Korchinsky.

A host of people are trying to fix the voluntary carbon market—so-called because companies and organizations that buy credits there aren’t required to do so, in contrast to government-regulated carbon markets such as the European Union’s Emissions Trading System. Other groups are proposing their own guidelines for how best to evaluate and use credits.

There are touches of Africa throughout the Wildlife Works offices in Mill Valley, California.

Last year and the year prior were the voluntary market’s biggest ever, with around $2 billion each year in transactions, and predictions that carbon-credit sales could soon grow to more than $150 billion annually. Wildlife Works announced plans for at least 20 projects with projected credit sales of more than $2 billion.

But during the past several months, the bottom has fallen out of the market as buyers grapple with a tidal wave of new risks.

Carbon-credit trading volumes for the year through September were roughly a quarter of the same period in 2022, while prices were around half, according to data from the carbon-credit exchange run by environmental-commodities broker Xpansiv.

Several big buyers of Wildlife Works’ carbon credits have halted or delayed purchases, including Delta, which said it has moved away from offsets to decarbonizing operations, including investing in sustainable aviation fuel. The company says the lawsuit against it, which alleges Delta falsely claimed to be carbon neutral based on offsets, is without merit.

Meanwhile, governments are moving to take greater control of carbon rules and revenue, adding to the confusion.

Wildlife Works has delayed its expansion plans, fought against allegations that its credits aren’t worth what it says and canceled the issuance of $90 million worth of credits from its Congolese project after the government there implemented a new carbon-accounting system.

One of the most contentious issues is how to ensure the quality of credits, each of which is supposed to equal a metric ton of carbon emissions avoided, reduced or removed.

Forest conservation projects such as Wildlife Works’ are some of the toughest to parse. They issue credits based on how much deforestation would have occurred, and carbon dioxide released, if the project hadn’t existed—something impossible to predict with certainty.

Academics and journalists have accused such projects of shunting logging to other areas, or taking credit for tree growth that would have happened anyway. Some have said projects, including Wildlife Works’, haven’t given local communities the benefits they promised.

“We found poor quality under every rock we turned,” says Barbara Haya, director of a carbon-offsets research group at the University of California, Berkeley, of conservation projects in general. She is a co-author of a September report saying conservation projects generally vastly overestimate how many credits they should issue.

Korchinsky has rebutted such claims, saying they don’t understand the science or ground conditions. He argues that getting money to projects that need it is more important than haggling over carbon math. But he also says calculating carbon credits isn’t an exact science.

“There’s not a meter running on a forest,” says Korchinsky. “It’s an imprecise world.”

Korchinsky set up Wildlife Works in 1997, after the sale of his business consulting firm. He used some of that money to set up a wildlife sanctuary in southeast Kenya, leasing a strip of land where ranchers grazed cattle.

If he could provide an alternate source of income for locals, they would let the area revert to a wilder state, and elephants, giraffes and lions would return, Korchinsky reasoned.

For years, Korchinsky struggled to deter poachers and fund the sanctuary and local communities with proceeds from a clothing factory Wildlife Works set up with local workers. He hired designers and marketers, sponsoring fashion shows in Paris and peddling merchandise at trendy venues such as the Sundance Film Festival.

Expenses were heavy, margins thin, and Korchinsky ended up subsidizing the sanctuary with his own dwindling savings.

Wildlife Works has a major project in the Mai Ndombe area in the Democratic Republic of the Congo.

In the mid-2000s, Korchinsky heard about carbon credits, and decided to give them a shot. At the time, there were no procedures set up for issuing credits tied to forest conservation. So Korchinsky and his team constructed their own—a 174-page methodology, now nearly double that length, covering everything from how to estimate deforestation from satellite photos to equations for calculating the carbon stored in trees versus shrubs and bushes.

Wildlife Works ended up selling the credits in 2011 to a South African bank that had pledged to become the first African lender to go carbon neutral. The sale totaled a bit less than $10 million dollars—a lot more money than T-shirt sales.

Around the same time, Korchinsky was approached by JR Bwangoy, a Congolese forestry professor who wanted to see whether carbon credits would work in the Congo.

Korchinsky says the Congo, with its political turmoil and civil wars, was on a list of countries where he didn’t want to work. The business center of the hotel in Kinshasa where he stayed had a sign warning against carrying AK-47s.

Bwangoy convinced Korchinsky to take a look anyway. “I showed him the forest, the people. It was tough at that time because the country was just coming out of war. In these villages there was basically nothing,” Bwangoy recalls.

The offices of Wildlife Works in Mill Valley, Calif.

That project is now Wildlife Works’—and the Congo’s—biggest, covering nearly 750,000 acres with 50,000 residents, including a pygmy tribe. The company says the project has halted logging, brought back elephants, improved the local standard of living and prevented millions of tons of carbon emissions.

Appetite for carbon offsets soared in 2021, amid a wave of government and corporate pledges to trim emissions and head off global warming. Wildlife Works’ fortunes picked up, too. In 2022, the Congo project alone sold $194 million in carbon credits.

Korchinsky says that is now all in jeopardy unless confidence is restored in the market.

“It’s troubling times,” he says.

Read the November issue of Alaska Trends Magazine

Dear Friends!

As the first snow begins to blanket our state's majestic landscapes, we welcome November—a month that brings a focus on diabetes and pre-diabetes and marks the end of our health fair season. For more information please see the article below. A listing of November events is also included in this email.

We would also like to highlight the FREE A1C blood sugar screenings available at health fairs this fall. AHF is proud to offer these in partnership with the State of Alaska, please note that limitations do apply. For details, please refer to the linked article.

Attention Local Partners and Community Organizations: Now is the perfect time to get in touch with our team to set a date for your Winter/Spring 2024 health fair. Available dates are filling up quickly; please don't delay. Give us a call today at (907) 278-0234 for Anchorage and statewide, (907) 374-6853 for Fairbanks, or (907) 723-5100 for Juneau.

November Health Fairs and Affordable Blood Tests

The health fair season is winding down, and we have just a handful of events left before AHF will go on a winter break. AHF health fairs will resume in February. As always, you can schedule your appointment online and view the most current event lineup on our front page at www.alaskahealthfair.org. Walk-ins are always welcomed at all our events.

· Fairbanks - 11/14/2023, 8am-1pm: Fairbanks Office Draw, 725 26th Ave., Suite 201, Fairbanks, AK 99701

· Anchorage - 11/18/2023, 8am-12pm: Community Health Fair on O'Malley, 1801 O'Malley Rd, Anchorage AK 99507 Flu and Covid Immunizations will be available

· Fairbanks - 11/18/2023, 8am-12pm: Fairbanks Community, 725 26th Ave., Suite 201, Fairbanks, AK 99701

· Talkeetna - 11/18/2023, 8am-12 pm: Talkeetna Community Health Fair, Upper Susitna Senior Center & Community Center, 16463 E. Helena Ave, Talkeetna, AK 99676

If you need assistance understanding your blood test results, please call our toll-free voicemail box at 1-833-800-1292. An AHF Health Educator & RN will return your call and address your questions. Remember, blood testing is an invaluable tool, but only your healthcare provider can provide a comprehensive assessment of your health.

AARP & Chugach Electric's Rate Case

You may have heard that Chugach Electric Association has a rate case in front of the Regulatory Commission of Alaska. AARP Alaska has formally intervened in rate case because we see this case as an important inflection point for energy rates in Anchorage. We are primarily concerned with the fair treatment of residential customers, ensuring they are not required to subsidize other customer classes. Read our full blog post here.

Learn more by watching the October 18 webinar recording AARP did in partnership with REAP.

CCUS: Too little, too late, too slow

Despite the recent surge of policy incentives for carbon capture projects, the world is not on track to meet the CO2 reductions expected from this technology by 2050:

· Supercharged incentives for carbon capture projects in the last year have accelerated the momentum that this market is experiencing. From the USA, increasing more than 70% the tax credits for carbon capture projects, to Europe looking into mandating 50MMTPA of CO2 storage for oil and gas producers, the policy landmark for carbon capture projects is evolving quickly to improve the conditions for this technology.

· Despite the expected momentous growth in carbon capture (see the S&P Global Commodity Insights CCUS projects analytics dashboard - part of the Clean Energy Technology service), more efforts are needed to close the gap between the projected CO2 capture capacity installations and the expected CO2 reduction amounts to meet the climate ambitions. S&P Global developed a bottom-up outlook for CO2 capture capacity installations using an "emitter-driven" methodology that incorporates: S&P analysis on country attractiveness, S&P CCUS project analytics, S&P database on emitters profile, carbon pricing and emissions, expertise of S&P's industry and regional specialists, and characterization of high-level CO2 storage capacity.

· The S&P Global Commodity Insights outlook indicates that by 2030, we will have operational projects able to capture around 25% of the 1 Gigaton of CO2/y needed to meet the Net Zero Scenario from the IEA, putting in perspective how even in the short-term we are far from meeting the climate goals. Although North America and Europe are leading the way accounting for more than 67% of the projected capture capacity installed, the CCUS industry still needs more incentives from other regions to get closer to the climate targets.

· The gap is exacerbated when the S&P Global Commodity Insights CCUS capture capacity outlook by 2050 is compared to scenarios like the IPCC-1.5 degree Celsius. Our S&P Global outlook estimates the capture capacity will reach 2.2 Gigaton of CO2/y by 2050 mainly driven by China, which translates into only 4% of the expected CO2 reductions by the IPCC-1.5-degree Celsius scenario. Although S&P outlook estimates a historical growth in capacity installations for the next three decades, the CCUS industry still needs a significant improvement in the crucial drivers like policy, technology innovations and CCUS hubs to close the gap between the expected and the needed capture capacity to meet our climate targets.

Join Us The First Week of December!

We are holding our second round of public meetings for the Safer Seward Highway project (Seward Highway MP 98.5 and 118, Bird Flats to Rabbit Creek project) this December and you are invited! Join us to learn more about where the project is at and dive into some of our initial design concepts.

The meetings will be hosted in-person featuring an open house from 5:30 PM to 7:30 PM, with a presentation at 5:45 PM at three locations:

ANCHORAGE

Anchorage Public Library

3600 Denali Street

Anchorage, AK 99503

Tuesday, December 5

GIRDWOOD

Girdwood Library

250 Egloff Drive

Girdwood, AK 99587

Wednesday, December 6

INDIAN

Valley Bible Chalet

Seward Highway

Indian, AK 99540

Thursday, December 7

Can’t make the meeting?

Visit us here from December 5, 2023 – January 4, 2024, for an online open house.

Questions or comments?

Contact us at (907) 802-3656 or info@safersewardhighway.com.

The Safer Seward Highway Project Team

Economy

Alaska Permanent Fund board unlikely to pursue faster, riskier path to $100B. Alaska Public Media

Alaska Beacon reporter James Brooks says the meeting was a sort of brainstorming session, ahead of a decision on a four-year strategic plan for the state’s sovereign oil wealth fund, which pays for both state government and annual dividends to Alaskans. Brooks says the Permanent Fund board’s discussions are happening in the context of a long-term goal of growing the fund to $100 billion.

Stat do jour: Minimum wage cost. Axios

Pay equity (or really just a start at closing the gap)

We're former Alaska labor commissioners. We're disturbed by this administration suppressing teacher pay data. ADN

For over 50 years, the repository for much of this information and analysis has been the publication Alaska Economic Trends, recognized both in Alaska and nationally as an essential tool for understanding Alaska’s unique economy.

Politics

Daylight Saving Time- State Legislation. NCSL

We all hate it, but we can’t get it to stop!

Loneliness is a policy problem. A big one. Governing

Lack of human connection is bad for your health.

Health Care

CVS' big cuts help drive profits. Axios

Advocates link Alaska's high rate of traumatic brain injury with domestic violence. Alaska Beacon

S. can’t remember how many times she has been hit in the head, but she remembers vividly the time she was choked. Those are two categories of injury she has survived over the course of her abusive marriages, and they are distinct because they can cause or contribute to traumatic brain injury.

Alaska food security concerns and the Kroger/ Albertsons merger. ADN

Alaskans live at the end of a very long and vulnerable food supply chain. We have all seen empty shelves in our local grocery stores after a weather event or an earthquake. Although we fill our freezers each fall with local meat, veggies or subsistence foods, we still rely on 95% of our food from Outside.

Fighting the winter blues. Axios

As the days get shorter, you could start feeling the winter blues- or worse. Although feeling some sadness during the darker months is normal, the American Psychiatric Association says millions of U.S. adults deal with something more serious: seasonal affective disorder (SAD) or seasonal depression.

U.S. lags OECD average on most measures. Axios

The U.S. performs worse than the average developed nation on 77% of health status indicators like life expectancy, obesity and opioid mortality rate. U.S. health spending as a share of gross domestic product yet again far outpaces the other 37 OECD nations while the country continues to have poor outcomes.