By: Corinne Smith, Alaska Beacon
The University of Alaska is anticipating an increase of up to 10% for health care costs this fiscal year, on par with what employers are anticipating nationally, according to officials presenting to the Board of Regents at their meeting on Nov. 6.
Nikole Conley, chief of human resources for the university system, gave a presentation outlining the university system’s health care costs so far, and projections for the rest of this fiscal year, ending in July 2026. Her presentation included medical, dental and pharmacy care.
“We do see health care costs across the nation going up and increasing, and we’re not necessarily expecting this to decline anytime soon,” she said.
The university is projecting 8% to 10% overall cost increases across the system for this fiscal year. That means health coverage for 3,442 employees is estimated to cost $85.5 million.
“We are seeing trend increases of 8% for medical, 13% for pharmacy and 4% for dental. We’ll do another recast in January of 2026 and hopefully try to firm up that figure and what that’s going to look like,” Conley said.
Nationally, employers are expecting an 8.5% increase in medical costs and an 11% increase in pharmacy costs, she said, so the university’s costs and projections are mirroring that trend.
Health care costs in Alaska are among the highest in the nation, according to state data. Since 2023, the average cost of a health insurance marketplace plan in Alaska rose by more than 16% each year. In 2023 alone, the cost went up by an average of 18.4%.
The university has a cost split for health care with 18% paid by employees in premiums, and 82% paid by the universities. Conley presented total cost projections to the board.
Conley said the number of university employees isn’t growing, but more people are opting into the university’s health care plan. She said system-wide the largest cost increase is in pharmacy claims, but her department is expecting to renegotiate pharmacy costs, which could save the university about $3 million.
Last year, the university saw pharmacy spending increase 11.2% from the year before. Over the last five years, overall pharmacy costs more than doubled from $9.2 million to $19.2 million, she said.
Conley said that’s partly due to a rise in prescriptions for drugs used for weight loss and to treat diabetes, known as GLP-1 drugs like Ozempic. They were the second highest pharmacy claim within the university’s plan, totaling $4.1 million last fiscal year.
“We’re also looking at the potential elimination of GLP-1s, because they are a major cost driver for us,” she added.
University of Alaska Regent Karen Perdue pushed back against that idea, pointing out that weight loss can also improve employees’ health outcomes and result in less health care costs. “It’s not just a plus, there can be a minus on the bottom line as well,” she said.
University of Alaska President Pat Pitney also pointed out other high pharmacy costs last year. The largest costs were on inflammatory diseases, with the highest cost at $4.3 million, and cancer treatments at $1.3 million.
The highest medical costs for the university last fiscal year were for muscle, joint and bone claims at $10.7 million, followed by cancer at $7 million, and behavioral health and disorder treatments at $5.3 million.
Last year, the university’s total costs came in at $80.1 million, which was $1.1 million over the university’s projection. Conley said next year’s premiums will go up to recover those costs.
Conley said her department is working to push more education and use of wellness programs and preventative health care.
“Not only are we seeing this growth of 8% to 10% in cost, but we’re also seeing less use, for some reason, of our preventative health care. And so we’re really trying to encourage folks to use preventative health care, because that will help minimize some of our costs in the future,” she said.
According to university data presented by Conley, only half of health care participants used preventative screenings, like annual physical exams or checkups; nearly 38% of emergency room visits could have been avoided with better primary care or urgent care use; and 38% of participants are categorized as pre-obese or obese.
The university is insured through Premera Blue Cross, and Conley said her department discusses health care plan changes with the university’s Joint Health Care Committee, an advisory committee made up of representatives from the faculty union, management and staff.
The university is also expecting a health care rebate, which is a benefit paid back to employees if they utilize the prevention programs throughout the year, like cancer screenings, dental care, and regular check ups.
“We’re estimating about a $1.5 million rebate,” Conley said, for this year, ending in July 2026. “We’re going to see up to a $2.5 million rebate increase in FY27 with new rates. So that’s a good positive.”
The debate around national health care, federal tax credits, and costs for Americans has been at the heart of bitter negotiations around ending the longest government shutdown in U.S. history. The U.S Congress approved a stopgap spending bill ending the shutdown. Democrats have introduced a discharge petition to force a vote to extend tax credits for three years under the Affordable Care Act. White the Senate Majority leader has promised a vote by the end of the year, leaders of the Republican-majority House have remained opposed, and discussions on health care are ongoing.
