The largest health insurer in Alaska is likely to get a lot bigger next year. Premera Blue Cross Blue Shield is one of two insurance companies that will offer plans on the new federally run marketplace under the Affordable Care Act. The company is expecting to serve thousands more customers in the state, but that growth will come with the kind of uncertainty the insurance industry has never had before.
Jeff Davis spends a lot of time thinking about Alaska’s health insurance Marketplace.
“This is a big, big undertaking for everyone that’s involved.”
Davis is President of Premera Blue Cross Blue Shield of Alaska. Right now, the company has 10,000 individual customers in the state. And Premera thinks that number could double by the end of next year, thanks to the new marketplace. But Davis doesn’t talk like a guy who may double a segment of his customer base. He sounds worried. He says in the long run having new customers will be great, but there will be some growing pains.
“We are fully prepared that we could lose a significant amount of money in 2014 because of just the uncertainty of who comes in and when they come in.”
That’s because for the first time, health insurers won’t be able to exclude customers with pre-existing conditions. Davis says that’s kind of like letting people buy home owners insurance while their house is on fire. The new law has provisions, like open enrollment periods, to help lessen the impact. But Davis thinks the first wave of people to sign up on the marketplace will have significant health problems. Then he expects healthier people will follow, especially those who qualify for subsidies. In Alaska, that’s anyone who makes less than $57,000 a year.
“For people who are subsidy eligible who are buying a plan today, they’re likely to see the amount they’re paying out of pocket every month actually go down because of the effect of the subsidies.”
But for those without subsidies, individual insurance could be quite costly. Premera says most rates it filed to offer on the marketplace are higher than its current plans. Davis explains the policies are required to have better benefits and smaller deductibles than the most popular plans today. He says a young family of four, earning more than $117,000 a year is likely to see the biggest out of pocket increase, because they won’t qualify for a subsidy.
“There will be winners and losers. There will be some people who [pay] significantly more out of pocket for their health insurance after January 1st, 2014 and there will be some who pay significantly less. And it’s just that upheaval and that mix that worries me.”
Adding to that upheaval is the uncertainty of what the online marketplace will actually look like. Davis says there is still a lot unknown about how it will work on October 1st, when it is supposed to be up and running. He does expect it to be functional, but says it will probably be bare bones at first, with more features added in later on. Susan Johnson, the regional administrator for the federal Health and Human Services Department, acknowledges it won’t be perfect at first.
“Let’s be clear, there will be problems, but let’s not have the news on October 2nd be Susan Johnson had to wait 45 minutes to get through the call center. Let’s have the news be Susan Johnson finally has the opportunity to have insurance that she never had before. ”
Johnson says the Marketplace will be a huge step forward for how people buy individual and small group insurance in Alaska and across the country. For Davis, that huge step will completely transform the way he does business in the state. And he’s prepared for a wild ride.
“You get on the roller coaster and there are some ups and downs and it’s pretty scary and maybe you’re in the dark at Disneyland and you don’t know what’s coming next. It’s a lot like that but as with a roller coaster ride, at the end, you get off.”
Davis expects to get off the roller coaster in two or three years and arrive at a ‘new normal’ where a lot more Alaskans have health insurance.
This story is part of a reporting partnership between APRN, NPR and Kaiser Health News.