Premera Alaska is the only individual health insurer left in the state. Moda Health withdrew from the market last week, after Oregon regulators revealed the company was facing “enormous financial losses.” Before Moda’s announcement, Premera and Moda were working on a plan to stabilize Alaska’s individual market.
In the last two years, Alaska insurance rates on healthcare.gov have increased an average of 70 percent. The state now has the highest average premiums in the country by a wide margin. Premera says they lost more than $13 million serving Alaska’s individual market in 2014 and expects to lose a similar amount for 2015. Sheela Tallman is Premera’s legislative manager.
“These are all just signs pointing to this crisis, I think that the individual market is in,” she said.
Alaska’s individual market is small, about 22,000 people, according to recent figures from the federal government. Tallman says there aren’t enough Alaskans buying individual insurance to absorb the really big medical claims from the sickest members in the insurance pool.
“We’re trying to find ways to spread the risk of the individual market in Alaska to a broader population,” she said.
Premera wants to take those large health claims, for things like chronic heart failure or some types of cancer treatment, and send them into a separate high risk pool. That pool already exists, it’s called the Alaska Comprehensive Health Insurance Association, or ACHIA. The state administers the pool and it’s paid for by a tax on employer health plans in Alaska.
Premera is funding a study that will look at how much that tax will amount to under different scenarios in their proposal. Alaska Insurance Director Lori Wing-Heier says she can’t support the proposal until she sees that report.
“Because basically this bill is asking all Alaskans (with employer insurance) to be assessed to subsidize the individual market to stabilize premiums. And I think we have to have a number to say that’s what the cost is going to be,” she said.
The report is expected to be released next week. In the meantime, Wing-Heier says she’s setting up meetings with health insurers to try to bring new companies to the state’s individual market. But how hard is it to convince insurers to set up shop in Alaska? Louise Norris is a health insurance broker in Colorado who writes about the health exchanges in every state for healthinsurance.org.
“I would say in the current environment without making any changes it would be very difficult,” she said.
Norris says the state division of insurance should consider proposals like Premera’s as a way to entice other companies into the market.
“Other carriers are going to see Premera has been losing money on the individual market and obviously so has Moda. It’s a challenging environment,” Norris said.
Premera says the program isn’t likely to decrease rates on Alaska’s individual market, but it should put an end to the massive increases the market has endured since the launch of healthcare.gov. Melanie Coon is a spokesperson for Premera. She says besides stabilizing rates, the program should encourage competition in the market.
“What we’re proposing in Alaska, in the reinsurance program, we want to make it more attractive for carriers to come in. So if things stabilize and the market gets more attractive, that can really help consumer choice,” Coon said.
Premera’s proposal requires legislation. The company is working to find a state lawmaker to sponsor a bill this session. Premera would like to have the program in place before they have to file their rate increase for 2017. That deadline is this spring.
This story is part of a reporting partnership between APRN, NPR and Kaiser Health News.