Premera returns $25M to state reinsurance program

Alaska’s sole individual market health insurer says it has paid $25 million to the state as part of a reinsurance plan meant to stabilize the insurance market.

In 2016, the Alaska Legislature approved a plan to inject $55 million into a fund to help cover the costs of some of Premera Blue Cross Blue Shield of Alaska’s most high-cost members. Called the Alaska Reinsurance Program, reinsurance fundamentally works as insurance for insurers — transferring part of the risk pool to another party, which in this case is the state of Alaska.

The goal was to help stabilize the market for the average health care insurance customer by taking the highest-cost patients out of the risk pool. And in its first year, it seems to have helped provide more stability, according to a news release issued Friday by Premera.

The company reached a memorandum of understanding with the Alaska Division of Insurance to make a one-time $25 million payment after finding that claims filed by Alaska customers were at a 10-year low in 2017, according to the news release.

“We believe offering to make a one-time reimbursement to the Alaska Reinsurance Program was the right thing to do, given that our claims this year were much lower than we or the state anticipated,” said Jim Grazko, President and General Manager of Premera’s Alaska office, in the release. “This reimbursement underscores our continued commitment to Alaska’s individual insurance market, especially to those individuals who are most in need of care, and reinforces our efforts to work with the state to provide all Alaskans with access to high-quality care at an affordable price.”

Premera also reduced its premium rates by about 22.4 percent for 2018 plans, a sharp contrast to the year-over-year percentage increases the company has filed for in the past several years. Alaska has exceptionally high health care costs compared to the rest of the country, and correspondingly high premium rates. Premera is the last company standing in Alaska’s health care insurance marketplace after Moda Health left effective January 2017, following several other companies who departed in the years preceding.

The company called the rate reduction for 2018 plans “unprecedented” in its news release and said it expected the individual market to profitable for the second year in a row, “a sign the market in Alaska is continuing to stabilize.”

Gov. Bill Walker said in a Friday news release from the Alaska Division of Insurance that the reinsurance program helped contribute to the rate reduction for Premera in 2018. The memorandum of understanding directs the payments back to the Alaska Comprehensive Health Insurance Association, which operates the reinsurance program, which will use them for health insurance claims on the individual market, according to the news release from the state.

“Because the 2017 claims were lower than anyone expected, this agreement will pass benefits back to Alaskans,” Walker said.

Alaska’s individual insurance market is very small, with fewer than 20,000 customers, so claim costs can vary widely year by year. Director of the Division of Insurance Lori Wing-Heier warned caution in the news release.

“Premera’s preliminary 2017 results are better than expected, which indicates that the market may be beginning to stabilize. However, with a small pool of Alaskans in the individual market, it is difficult to predict whether the trend will continue,” she said. “We will continue to work on additional measures to contain costs and increase enrollment numbers so that all eligible Alaskans can access affordable health insurance.”

Premera insures only individuals who don’t receive public insurance or employer insurance, which is the minority in the state. Many Alaskans are eligible for health insurance through the Veterans Health Administration, Medicare or through Indian Health Services, and about one quarter of the state’s population is enrolled in Medicaid. As of September 2017, 195,913 Alaskans were enrolled in Medicaid or Denali KidCare, the state’s version of the children’s health insurance program, according to the Centers for Medicare and Medicaid Services. That’s a 60.15 percent increase from 2013, in part attributed to the expansion of Medicaid in the state.

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.

More in News

COVID-19. (Image courtesy CDC)
503 new cases; borough positivity rate hits 14.65%

Affected peninsula communities include Kenai, Other North, Soldotna and Seward

In this March 18, 2020 file photo, Thomas Waerner, of Norway, celebrates his win in the Iditarod Trail Sled Dog Race in Nome, Alaska. The world’s most famous sled dog race will go forward in 2021 officials are preparing for every potential contingency now for what the coronavirus and the world might look like in March when the Iditarod starts. It’s not the mushers that worry Iditarod CEO Rob Urbach; they’re used to social distancing along the 1,000 mile trail. The headaches start with what to do with hundreds of volunteers needed to run the race, some scattered in villages along the trail between Anchorage and Nome, to protect them and the village populations. (Marc Lester/Anchorage Daily News via AP, File)
Virus restrictions lead Norwegian champ to drop Iditarod

“I cannot find a way to get the dogs to Alaska.”

Dr. Anne Zink, Alaska’s chief medical officer, addresses reporters during a Wendesday, March 25, 2020 press conference in the Atwood Building in Anchorage, Alaska. (Photo courtesy Office of the Governor)
First COVID vaccines could arrive in Alaska next month

Pfizer announced their COVID-19 vaccine candidate earlier this month, with Moderna not long after

File
DHSS encourages COVID-positive Alaskans to do their own contact tracing

In a Monday release, DHSS said that surging COVID-19 cases are creating a data backlog

Public input sought on proposed Skilak-area boat launch changes

The public scoping period will last from Dec. 8, 2020 to Jan. 8, 2021

Risk levels
Schools status: Nov. 23

34 KPBSD schools continue to operate 100% remotely through at least Nov. 25

Dr. Anne Zink, Alaska’s chief medical officer, addresses reporters during a Wendesday, March 25, 2020 press conference in the Atwood Building in Anchorage, Alaska. (Photo courtesy Office of the Governor)
State COVID officials brief Soldotna City Council in work session

The council was joined by Chief Medical Officer Dr. Anne Zink and State Testing Coordinator Dr. Coleman Cutchins

COVID-19. (Image courtesy CDC)
State reports more than 4,000 cases this week, 357 on peninsula

The state reported 462 new COVID-19 cases on Friday

Seward junior Lydia Jacoby swims in August 2019 at the Speedo Junior National Championships in Stanford, California. (Photo by Jack Spitser)
Improving through challenging times

Seward junior swimmer Jacoby wins national title at U.S. Open

Most Read