Life In Alaska's Cities Costs More Due To Health Care; Cost Of Poorer Rural Alaska Medicine Not Addressed

 FROM THE ALASKA BEACON 

Health care takes big toll on cost of living in Alaska’s cities, report shows

BY: YERETH ROSEN - JULY 12, 2025 

 Alaska Regional Hospital and related medical buildings are seen on Friday beyond a scupture at the facilities' Anchorage campus. Health care costs in Alaska's three largest cities are about 50% higher than the national average for urban areas, a new report says. (Photo by Yereth Rosen/Alaska Beacon)

Alaska’s three biggest cities have the highest health care costs among the nation’s urban areas, with costs that are about 50% higher than the U.S. urban average, a state analysis shows.

The findings, part of a broader analysis of Alaska’s cost of living that was released by the Alaska Department of Labor and Workforce Development, are the latest in a series of reports detailing Alaska’s extraordinarily high medical costs.

“It was not surprising at all,” said Sam Tappen, the state economist who did the analysis. His findings are in an article in the current issue of Alaska Economic Trends, the monthly magazine of the department’s research section.

Similar analysis has shown that Anchorage, Juneau and Fairbanks have held the top three spots for urban health costs in each of the past 15 years, he said.

Using available data, Tappen found that Fairbanks had health costs that were 51.5% higher in 2024 than the average among 254 U.S. cities and metro areas. Juneau was in second at 50.9% and Anchorage third at 47.5% above the urban average.

Medical costs in urban Alaska also rose more than the costs in almost all other sectors, Tappen’s analysis found. Medical costs increased by 7.8% in 2023, compared with an overall inflation rate in Alaska that was under 2% that year and just slightly above 2% in 2024, the analysis found.

Compared to the U.S. average, urban Alaskans also devote a higher percentage of their annual household spending to medical care – 12% in 2023, compared to a national average of 8%, the report said.

The findings, which did not extend to health costs in rural areas of the state, are consistent with past reports on medical costs in Alaska.

In 2016, for example, a consultant’s report prepared for insurer Premera Blue Cross found that payments to Alaska providers were 76% higher than the national average and that operating costs for hospitals outside of Anchorage were more than twice the national average.

Reports by the Institute of Social and Economic Research at the University of Alaska Anchorage have also documented steep increases in Alaska health care costs. One ISER report, issued in 2018, found that annual health care spending in Alaska increased from $1.5 billion in 1991 to $8.2 billion in 2014. A 2023 report by ISER, ranked Alaska second in per-capita health care spending, behind the District of Columbia, and said Alaska’s total health care spending had risen to $9.7 billion by 2019.

Beyond medical costs, Tappen’s analysis showed that Fairbanks had the highest utility costs among the 254 cities and urban areas in the analysis. Utility costs in Fairbanks in 2024 were more than twice the U.S. urban average, the analysis said.

The three Alaska cities also had among the highest U.S. urban grocery costs, with Juneau ranking second, Fairbanks third and Anchorage fourth. Honolulu had the highest average grocery costs of the 254 cities in the analysis.

Overall, the Alaska cities’ cost of living, though 21.5% to 27.2% higher than the national urban average, was not extraordinary in 2024, Tappen’s analysis found.

That is because housing costs in Alaska that once were among the nation’s highest have now been far surpassed by those in several cities elsewhere. “The U.S. housing market has just been a lot hotter than Alaska’s, and so they’re getting more expensive faster than us,” Tappen said.