Polly Hess got a letter last month from her health insurance company saying that the premium for her and her husband's health insurance plan would increase next year by more than 30 percent -- from $1,648 to about $2,500 a month.
Their deductibles would also increase by about $600 -- to $6,850 each, she said.
The letter from Moda Health went on to tell Hess that if she was OK with the hike, she didn't have to do anything else, recalled Hess, who lives in Homer and owns a small business with her husband.
"It was almost comical, really," she said, "because the first thing I thought is, 'I don't care what I have to do but I'm not paying this.'"
Hess, 60, and her husband own Puffin Electric, an electrical contracting company. They earn more than $79,600 a year -- the cutoff for a family of two to get a federal subsidy toward a monthly premium on the online health insurance marketplace set up by President Barack Obama's signature health care law.
The Hess couple falls into a group of several thousand Alaskans who buy insurance on the individual market and who will see their premiums increase in 2016 at one of the highest rates in the country, according to the Kaiser Family Foundation. Alaska already had the country's most expensive premium costs this year, Kaiser reported.
Most Alaskans get subsidy but those who don't pay big
Open enrollment in the federal health insurance marketplace started Sunday and runs through Jan. 31.
Most Alaskans enrolling in plans on the individual market won't pay the high premiums. That's because those who make between one and four times the federal poverty level can get subsidies, which have kept pace with premium increases.
But others, like Hess, who earn too much for a subsidy have seen their premiums go up year after year without sign of reprieve.
Insurers blame the increases on factors that include high medical costs in Alaska paired with a relatively small market and a small group of people in that market with very high medical bills. Only two insurance companies -- Premera Blue Cross Blue Shield and Moda Health -- offer insurance on the online marketplace in Alaska.
Melanie Coon, a Premera spokeswoman, said insurers saw many members of the state's high-risk pool enroll in insurance through the online marketplace once it opened. There, they could get a subsidy toward their premiums. Premiums had been high outside the marketplace, she said.
Obama's health care law barred insurers from turning people away because of pre-existing conditions.
Between the start of January and the end of September of this year, Coon said, 37 Premera members enrolled in individual health insurance plans generated $17.5 million in medical bills. In total, Premera had about 7,400 members during that time in the individual market with $68.3 million in claims.
"You have less than 1 percent of the pool generating a quarter of medical claims," Coon said. She described the marketplace in Alaska as "unsustainable." Coon said Premera lost millions of dollars last year in Alaska.
In August, the state Division of Insurance approved average rate increases for next year of nearly 40 percent for Premera and Moda. That came on top of double-digit increases this year.
"Since the beginning of the metallic plans in 2014, rates have increased by 91 percent," Coon said. "That's why we can't keep going on at this point."
On average in the United States, premiums for the second-lowest Silver plan (also called the benchmark plan) will increase by 7.5 percent in 2016 compared to this year. In Alaska, that plan will go up by 31.5 percent, Kaiser reported.
Hess said that while she supports Obama's health care law and getting more people insured, she could only hang on to her health insurance plan for so long.
"You can only take one for the team to a certain extent and then you have to look at your own personal situation and say, 'This is crazy. I can't do this,'" she said.
She said she considered trying to become a resident of Washington state to get into that state's health insurance pool. In Seattle, the second lowest-cost Silver plan for a 40-year old cost $227 a month compared to $719 a month in Anchorage, according to a Kaiser analysis.
Hess said she eventually decided to join an Ohio-based health care sharing ministry, which a group of healthy people pay into across the country and essentially share one another's medical bills.
For now, Hess and her husband no longer participate in Alaska's health insurance market.
Health officials work on legal fix
Lori Wing-Heier, director of the state's Division of Insurance, said in an email that several groups, including the state, the Alaska Primary Care Association, the University of Alaska and AARP, among others, are working on health reform in the state.
"The goal is healthier Alaskans with reduced cost for health care and, consequently, insurance," she said.
Coon said Premera is working with Moda and other stakeholders to craft legislation for the upcoming legislative session. The bill in the works would spread the costs of high medical bills across the state's entire insurance population instead of only across those enrolled in the individual marketplace, she said.
"By spreading the high-cost claims among a larger pool, individual market rates are expected to stabilize without significant swings year over year," she said. "Employer groups would experience an increase in their premiums, through the high-risk pool assessment, but how much depends on how the program is implemented."
She said the goal is to strike a balance that gives those in the individual market some relief.
Wing-Heier said the division cannot comment on if it would support the bill until it sees a draft.