House approves bailout of health insurance market

The Alaska House has voted to bail out the state’s high-risk health insurance market to reduce the possibility of a collapse.

Lawmakers on Monday approved House Bill 374, which calls for subsidizing some health insurance plans with $55 million. The money will come from taxes levied on most insurance policies — including ones that aren’t health care-related.

The bill must be approved by the Senate and signed into law by Gov. Bill Walker to become effective.

Last week, the director of the Alaska Division of Insurance warned members of the House Finance Committee that without action, the state’s individual health insurance market could collapse.

“I can’t imagine in 2018 we’re going to have insurance throughout the state, if we don’t do something,” Lori Wing-Heier told lawmakers.

Wing-Heier’s warning was first reported by Rachel Waldholz of the Alaska Public Radio Network.

Because Alaska’s population is so small, it has fewer healthy policyholders to balance the costs of paying for the sick few. Aggravating that problem is the high cost of health care in the 49th state.

Insurers have repeatedly asked for steep premium increases, but the state has put the brakes on those. Wing-Heier’s division has tried to shield Alaskans from sticker shock by approving smaller increases than requested.

In response, many have left Alaska’s individual health insurance marketplace. Since 2013, three have left the marketplace, leaving only Premera, which is expected to raise rates again.

“It’s expected that in 2017, there will again be a significant increase,” said Rep. Kurt Olson, R-Soldotna.

By paying for high-risk plans — those covering Alaskans with chronic medical problems — the state is trying to discourage Premera from raising rates. The state previously offered a tax credit on such plans, and now it is attempting a direct subsidy.

Rep. Lora Reinbold, R-Eagle River, was the sole ‘no’ vote.

“This is another casualty of the failed federal government policies” known as the Affordable Care Act, she said. “It is not the Affordable Care Act; it is the unaffordable care act.”

Rep. Dan Saddler, Reinbold’s fellow Eagle River Republican, said the bill isn’t a case of propping up the ACA — it’s an attempt to keep the state from being required to set up an entire health care insurance company of its own.

If Premera withdraws from Alaska, Saddler said, the state might have no choice but to set up its own health care insurance program at a cost of hundreds of millions of dollars.

HB 374 now advances to the Senate for consideration.

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