The Affordable Care Act was supposed to make health insurance accessible to all Americans. But in Alaska, the high cost of premiums on the individual market has some residents thinking about dropping their coverage.
Gunnar Ebbesson is used to paying a lot for health insurance. But the small business owner from Fairbanks got a shock recently when his quote came in for next year’s coverage. The premium for his family of five came to more than $40,000 a year. That’s for a bare bones plan with a $10,500 deductible.
“I mean who really can afford this? I can pay it, but I can’t afford it,” he says.
Ebbesson makes a good living. He doesn’t qualify for a subsidy to help pay for insurance because his family income is over $142,000 per year. But he isn’t rich. Paying for insurance that amounts to more than his home mortgage has forced him to make sacrifices.
“I’m not able to put money in retirement, savings for my kid for college — my 10-year-old — believe me I could find lots of stuff to do for my future with $40,000,” he says.
Ebbesson supports the Affordable Care Act. He calls the Alaska rates a “wrinkle” in the law that need fixing.
Alaska has the most expensive individual health insurance in the country, according to a new report from the Kaiser Family Foundation. The average 2016 premium for a 40-year-old in Anchorage is $719, more than double the national average. Most Alaskans who buy individual plans qualify for a generous subsidy that rises with premium increases. But about 5,000 Alaskans are paying full sticker price.
Eric Earling is a spokesperson for Premera Alaska, one of only two companies left who offer individual health insurance in the state.
“We want people to have access to affordable coverage and that’s not happening right now in the marketplace in Alaska,” he says.
Earling says even at the high premium rates, the company is losing millions of dollars on the individual market in Alaska. He says there aren’t enough customers to absorb the high cost of medical care for some Premera members.
Earling says in the first six months of this year, 37 customers filed over $11 million in claims.
“The important thing is they deserve access to coverage and we’re glad they have it. The trick is creating a sustainable environment where those costs can be absorbed in a way that doesn’t adversely impact all consumers.”
Premera is drafting legislation to use an existing high risk pool to insulate the individual market from those outsized claims. The largest medical claims would be redirected into the pool and paid for with a tax on all health plans in the state. The company is working with Moda Health, the other insurer on the individual market in Alaska, to develop the legislation.
The state’s Division of Insurance is helping with some of the details, but director Lori Wing-Heier says she won’t take a position on the idea until she can review the bill.
“We want to see the individual rates stabilized so that people can afford them, there’s no doubt,” she says.
Wing-Heier is more focused on another issue driving up premium rates, the high cost of health care. The price for some specialty care in Alaska is double or triple the cost for the same service in Seattle. Wing-Heier says she wants to work with doctors and hospitals to come to some type of agreement that would ensure more reasonable rates.
“There’s room for everybody to make a living in the medical field, but we have to get the rates to at some point (where) people can afford them,” she says.
Victoria Cronquist doesn’t care what the solution is, as long as it helps her find more affordable insurance. This year, the Anchorage resident is paying $1,600 dollars a month for a high-deductible plan for herself, her husband and two kids. The rate is going up to $2,600 a month next year. Her employer, a dental office, gives her some money each month to defray the cost, but that amount isn’t rising with the premium.
“It’s just getting too expensive, I’m up against the wall. I can’t do it all,” she says.
Cronquist is considering dropping health insurance. Her family has been uninsured in the past. And she paid the price for that decision when her daughter ended up in the ICU. Still, she says going without insurance may be the best option:
“To be quite frank, to have a $2,600 monthly premium payment in all this is stressful to me. And that increases my odds of getting ill,” she says with a laugh.
The high rates will push more Alaskans into a category that allows them to avoid paying a penalty for not having insurance. The law includes an “unaffordability” exemption from the individual mandate if the lowest cost insurance amounts to more than eight percent of your income.
This story is part of a reporting partnership between APRN, NPR and Kaiser Health News.