The sole remaining health insurance provider on the individual market in Alaska says claims are unexpectedly down and it will pay $25 million to a new state program that absorbs high-cost cases.
Alaska's volatile insurance market for individuals is finally stabilizing and, officials say, the new program is the reason why.
Premera Blue Cross Blue Shield of Alaska has agreed to a one-time reimbursement of $25 million. Premera and the state Division of Insurance finalized the agreement Monday.
Lori Wing-Heier, the insurance division director, said Saturday that the money will go into the Alaska Reinsurance Program, which covers high-cost claims that previously were tapping out insurers. The Legislature has put $55 million into the program to absorb claims for high-risk individuals with any of 33 specified conditions including kidney failure, severe cancers and hemophilia.
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Nothing required Premera to reimburse the state, she said.
"Premera is committed to Alaska," Wing-Heier said. "They most definitely have been working with us to try to stabilize the market for a number of years. … They don't want to see it go backward."
The insurance company alerted the state several months ago that claims were down, she said.
"We did an examination to confirm their data," she said.
The state program is absorbing expensive claims but the dip in claims goes beyond that, officials said.
"We started to see that claims were down. People were not using their benefits as much," said Premera spokeswoman Melanie Coon. "We saw the possibility that it's the right thing to do, to contribute some more money to the state reinsurance program."
The Alaska Reinsurance Program was created in 2016 by the Legislature to provide stability to Alaska's market for individual health insurance, which had been defined by escalating premiums, deep losses to insurers and limited choices for customers.
The program is believed to be a major factor in tempering skyrocketing health insurance costs, Wing-Heier said.
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Alaska's approach is considered innovative. This year, the federal government agreed to put $322 million into the Alaska Reinsurance Program over the next five years. Insurance premiums — which the federal government subsidizes — are already lower as a result, officials said.
Premera sought rate increases of close to 40 percent in 2015 and 2016, then, with the new state program in place, 7 percent for this calendar year. Its premiums are dropping more than 26 percent on average in 2018.
Alaska had two insurers in the individual health coverage marketplace: Premera and Moda Health. Then Moda bowed out.
It's hard to predict the use of medical services in markets with small customer pools, Premera said. It set its rates for 2017 with thousands of new customers on its rolls. The former Moda customers may have had fewer health issues than Premera's base customers, dropping the cost per customer.
The state is unsure if the trend toward stability will continue. Officials want to increase enrollment to help that happen, Wing-Heier said.