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Alaska health insurance exchange / marketplace

AK marketplace: Subsidies help with 31% cost hike

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Through 11 weeks of open enrollment, 17,466 Alaskans selected qualified health plans (QHPs). That’s about 4,600 more QHP selections than during the entire 2014 open enrollment period.

The strong start to 2015 open enrollment is encouraging, given that premiums in Alaska grew 31 percent on average. The 2015 average cost for a silver plan in Alaska is higher than in any other state.

The good news is that the subsidies, which are available to the majority of those who use the exchange, will limit the pain for many people. During the first two months of 2015 open enrollment, 89 percent of Alaskans purchasing plans qualified for premium subsidies.

Subsidies help consumers handle increases

Alaska insurance officials announced significant premium increases for 2015: 35 to 40 percent for policies sold by Premera Blue Cross and 22 to 29 percent for policies sold by Moda Health. According to the Commonwealth Fund, Alaska had the biggest average premium increase in the nation: 31 percent. The Commonwealth Fund also found that Alaska has the highest average cost for silver plans in 2015: $583, before subsidies.

Insurance Commissioner Lori Wing-Heier said the rate increases are justified. The state’s small population and limited marketplace enrollment makes for a small risk pool. With high claim costs and few people to spread those costs across, insurance companies are raising rates to cover their expenses.

While the rate increases are certainly a burden for some, the impact will be muted for most consumers. Wing-Heier pointed out that people who qualify for subsidies — 88 percent of Alaskans using the exchange in 2014 — won’t bear the brunt of those increases.

A study by the U.S. Department of Health and Human Services showed Alaskans who received subsidies in 2014 qualified on average for an 81 percent reduction in their premiums, resulting in an average monthly premium, after tax credits, of $94 in 2014. Forty-two percent of Alaska enrollees who received subsidies paid $50 or less per month in 2014.

Auto-renewal: convenient, but potentially costly

Most people who had coverage in 2014 but didn’t take action by Dec. 15 were automatically re-enrolled. While auto-renewing is easy, you could end up paying more than you really need to.

Take time to check your 2015 options. You may find a new plan that is a better fit or costs less than your old plan. Even if you ultimately decide to stick with your auto-renewed plan, update your income and report any household change, like a new baby, so your subsidy is correctly calculated for 2015.

While auto-renewals took effect Jan. 1, consumers can make changes until Feb. 15. After that, changes can only be made by those qualifying for a special enrollment period.

Sign up to avoid 2015’s higher penalties

The penalty for going without health insurance is higher this year. If you don’t qualify for an exemption, you’ll have to pay the higher of:

  • 2% of annual household income. The maximum penalty under this calculation method is the national average premium for a bronze plan, which is just over $3,000 according to Exhibit 1 in this Commonwealth Fund analysis.
  • $325 per adult or $162.50 per child under 18. The maximum penalty per family using this method is $975.

Use this penalty calculator to see how much you may have to pay.

Small businesses can enroll year-round

Alaskan businesses with 50 or fewer employees can now enroll online in the Small Business Health Options Program (SHOP). Employers set up an account, and then employees enroll in coverage online. Employers can work with an agent or broker if they want help with the process.

Small businesses can sign up on the SHOP at anytime and offer coverage to their employees throughout the year. Unlike the marketplace for individuals, there is no specific open enrollment period for small businesses.

Varied approach to ‘grandmothered’ plans

The two insurers participating in the marketplace are split in their approach to “grandmothered” health plans — plans that don’t comply with ACA but were granted a temporary extension. While the state authorized the extension of the non-compliant plants, the individual carriers get to decide if they will continue to offer them. Premera Blue Cross will continue its grandmothered plans in 2015, but Moda Health will not. About 800 people will have to pick a new plan for 2015.

Signups during first enrollment period

Fewer than 13,000 Alaskans enrolled in private health insurance through the federal marketplace during the 2014 open enrollment period. Just Wyoming, the District of Columbia, North Dakota, and Hawaii had lower enrollment in private health plans. About 4,200 people qualified for Medicaid or the CHIP. Alaska’s uninsured rate remains high at nearly 19 percent.

Among Alaska residents selecting a QHP, 88 percent qualified for financial assistance, compared to 85 percent nationally. A report released in June by the U.S. Department of Health and Human Services showed the average monthly premium, after tax credits, for Alaska consumers was $94. Among states using the federal marketplace, the average was $82. Forty-two percent of Alaska enrollees pay $50 or less per month after subsidies.

Twenty-seven percent of Alaska residents selected a bronze plan (20 percent nationally), 65 percent selected a silver plan (65 percent nationally), 8 percent selected a gold plan (9 percent nationally), 0 percent selected a platinum plan (5 percent nationally) and 1 percent selected a catastrophic plan (2 percent nationally). Twenty-nine percent of Alaska enrollees were between the ages of 18 and 34.

Alaska’s position on exchange, Medicaid expansion

Alaska is among the 26 states that opted to use the federal health insurance marketplace. Alaska refused all federal funding to evaluate and implement a health insurance marketplace, and it was one of the first states to announce it would leave responsibility for its marketplace in the hands of the federal government. While former Gov. Sean Parnell officially announced his decision in July 2012, he had previously made his opposition to the Affordable Care Act, which mandated the exchanges, well known.

Parnell also opposed expanding the Medicaid program. He rejected an expansion in late 2013, saying that Alaska wouldn’t be able to afford the program if the federal government were ever to cut funding. (The federal government will pay 100 percent of Medicaid expansion through 2016 and 90 percent through 2020.) In January, Democrats proposed legislation to expand Medicaid, and they included a provision to return to the current eligibility standards if federal funding drops below 90 percent. Even with that safeguard, the bill did not make it out of committee before the legislature adjourned.

However, the new governor — Bill Walker — has vowed to reverse the course on Medicaid expansion. Walker took office Dec. 1, 2014, and announced his intention to authorize expansion within his first 90 days in office through either an executive order or collaboration with the Legislature.

Valerie Davidson, Alaska’s health department commissioner, appointed Chris Ashenbrenner to the new role of Medicaid expansion project director to help execute on Walker’s pledge. Ashenbrenner, Davidson, and Walker need to convince the Republican-controlled legislature to help fund expansion costs and fix existing problems with the state’s Medicaid systems, even if Walker authorizes expansion by executive order.  The recent drop in oil prices has created a huge budget problem in Alaska, so no funding requests are being warmly received right now, least of all one related to Obamacare.

If the state authorizes expansion, about 30,000 Alaskans would qualify for Medicaid according to the Kaiser Family Foundation and the state would receive about $2.1 billion in federal funding through 2020 according to an Urban Institute study.

Alaska health insurance exchange links

State of Alaska Insurance Department: Affordable Care Act

HHS: How the ACA Is Making a Difference