The state is looking to extend health care reinsurance program, which is set to expire this year.
Senate Bill 165, currently before the Legislature and scheduled for a hearing before the Senate Labor and Commerce committee on Thursday, would extend the Alaska Comprehensive Health Insurance Fund through 2024. It’s currently set to expire after June 30, 2018.
The fund was part of an effort passed by the Legislature to help control health insurance costs in the state. Theprogram creates an insurance pool for insurers, providing reimbursement for the highest-cost patients in the risk pool as a way to stabilize the market and prevent premiums from escalating. There are currently about 18,000 Alaskans covered by individual insurance, which includes those not eligible for public insurance like Medicare or Medicaid and do not have health insurance through their employers.
The Legislature passed a bill creating it in 2016 and injected $55 million into the effort, with funds from the federal government through a state innovation waiver.
So far, it seems to have paid off. Premera Blue Cross Blue Shield, the sole private insurer on the state’s federally facilitated marketplace, announced in December 2017 that it would return about $25 million to the state reinsurance program because claims had been lower than the company expected.
The bill’s sponsor, Sen. Anna MacKinnon (R-Eagle River), wrote in her sponsor’s statement that the reinsurance program has stabilized the individual health insurance market, which was on shaky ground in 2016 with only two insurers left and one set to leave in January 2017.
“The (federal) state innovation waiver provided funding for the Alaska Reinsurance Program, through the Alaska comprehensive health insurance fund,” she wrote. “Now this legislation is necessary to ensure the continued effectiveness of the Alaska Reinsurance Program, meet the intent of the waiver, and receive the federal funding.”
The federal government is set to contribute about $58.5 million to the reinsurance program for 2018, according to a letter from Centers for Medicare and Medicaid Services Deputy Administrator Randy Pate to the Alaska Division of Insurance. The total amount is still subject to review by the U.S. Department of the Treasury, he wrote. Through the waiver program, the federal government committed to funding the program with a total of $322 million over five years.
Gov. Bill Walker praised the decision in a press release issued Feb. 9, saying the program has been successful and other states are looking to replicate it. Division of Insurance Director Lori Wing-Heier said in the release that the program led to a statewide decrease in individual insurance premiums in 2018.
“Alaska’s small population creates challenges, but while premiums in the individual market are rising sharply in most states, because of the reinsurance program Alaskans saw only a modest rate increase in 2017 and a 22 percent decrease in the average individual market plan in 2018,” Wing-Heier said in the release.
Health insurance costs are a major pressure for employers and individuals across Alaska, which has some of the highest health care costs in the country. Alaska Department of Commerce, Community and Economic Development Commissioner Mike Navarre, who has not yet been confirmed but was appointed to the position by Walker in October, said during a confirmation hearing before the Senate Labor and Commerce Committee on Thursday that the department supports the bill to extend the program. The Department of Commerce, Community and Economic Development oversees the Division of Insurance.
“It’s been a huge success story,” he said. “That’s something I think you for and we need to make sure that that’s extended.”
Reach Elizabeth Earl at eearl@peninsulaclarion.com.
