Another year of astronomical rate increases is expected for Alaska's individual health insurance market, a state insurance official said Tuesday, and the administration of Gov. Bill Walker has introduced a new bill that it hopes would help alleviate some of that pain by spreading costs to all insured plans in Alaska.
Senate Bill 206 was introduced Friday and heard by the Senate Labor and Commerce Committee Tuesday afternoon. Its goal is to dampen the drastic rates increases that have so far defined Alaska's individual health insurance market.
Roughly 23,000 Alaskans are enrolled on the individual health insurance market, one component of the Affordable Care Act. Since its rollout in 2014, price increases have reigned in Alaska. A 22 to 40 percent raise in 2015 was followed by another hefty increase in 2016. Two insurers left the individual market last year, leaving only Moda Health (itself briefly halted by the state) and Premera Blue Cross on the market.
More rate increases are on the way. On Tuesday, Division of Insurance Director Lori Wing-Heier said she expects to see another roughly 40 percent rate increase for 2017, although insurers haven't filed rate requests yet.
"In 2014, if you were 45 years old, you were paying $486 for a gold plan," Wing-Heier told legislators during Tuesday's hearing. For that same plan in 2017, "we're looking at something around $1,300 a month," she said.
Premera, the state's largest group insurance provider, has blamed the rate increases on high-cost claims. In the first six months of 2014, 33 of its members accounted for more than $7 million in medical claims, the company said. With a relatively small individual market (only 8,484 in 2014, a fraction of its total insured in Alaska), there's no way to spread out those costs without taking huge losses, Premera has argued.
Both Premera and Moda continue to struggle, according to Wing-Heier. "They've both suffered significant losses this year and we're not even through the first quarter yet," she said.
High-cost claims are targeted by the bill. The claims' costs would be spread out to roughly 225,000 Alaskans, Wing-Heier said.
"Basically the cost of those policies are spread across all insured plans," Wing-Heier said.
The Alaska Comprehensive Health Insurance Association functions under the same concept. Before the Affordable Care Act, ACHIA provided Alaskans unable to get coverage with health care. All Alaska insurers paid out money for those claims. ACHIA's numbers have since diminished by at least half, as people now cannot be excluded from health coverage due to pre-existing conditions as they had been when the association was created.
Should the bill pass, Alaskans with the highest-cost conditions (such as hemophilia or muscular dystrophy) will be transferred from the individual market to the ACHIA program, Wing-Heier said, which already has the staff to take on those claims.
Those costs will then be spread among the 225,000 Alaska insurance plans provided by 84 different insurers. "It will affect anyone who has an insured program, including stop loss," she said.
The state will set an assessment cost that each insurer will pay based on the number of people insured. That per-person assessment hasn't been determined yet, Wing-Heier said. Unlike ACHIA, insurers won't be able to write off some of those costs as tax credits, Wing-Heier said.
Those costs are expected to be passed to the policy holder, Wing-Heier said.
On some insurance plans, there may be no noticeable difference, Wing-Heier said.
Costs will stay high, even with the bill, she said. "Rates are still going to increase but this will help stabilize them or alleviate some of the increase," Wing-Heier said.
During the hearing, Sen. Johnny Ellis, D-Anchorage, questioned the possible impacts of the bill.
"I just don't know what we're getting for this kind of investment on the part of the state," Ellis said.
Wing-Heier responded that the market is at a point where it may become so costly that Alaskans may flee the marketplace, creating an even smaller pool, and larger rate increase. The individual market could "go into a death spiral," she told legislators.
"We have to keep the market alive," Wing-Heier said later.
During the hearing Tuesday, both Premera and Moda voiced support for the bill. The Alaska Association of Health Underwriters also supports the bill.
Sen. Ellis questioned Premera's senior legislative policy manager, Sheila Tallman, asking whether the company would make a firm commitment to raising rate increases only by a certain percent.
"I'm not able to make specific commitments regarding our rates," Tallman said, but added that the company was "very committed" to working with Alaska.
State government will not incur any additional costs should the bill become law, according to Wing-Heier. The ACHIA office will handle staffing and administration. The state is self-insured, and all self-insured entities are not subject to the program, she said.