Subsidies safe in Alaska
The Supreme Court ruled on June 25 that subsidies are legal in every state, regardless of whether the exchange is run by the state or federal government. Subsidies are no longer in jeopardy for 16,000 residents in Alaska, and subsidized coverage will continue to be available when open enrollment begins again in November.
Alaska is one of a handful of states where premiums would have increased by more than 500 percent for people losing access to subsidies; the Kaiser Family Foundation estimated that premiums for people losing subsidies would have gone up by 520 percent, pushing the health insurance market into a “death spiral.” Fortunately for the residents, insurers, and medical providers in Alaska, that didn’t come to pass.
The fallout from subsidy elimination would not have been limited to those currently receiving subsidies. The Urban Institute had predicted that if subsidies had been eliminated, premiums for people who currently pay full price for their coverage would have increased by 55 percent, in addition to regular annual rate hikes.
In many of the 34 states that use the federally-run exchange, carriers would have had to scramble to file new rates if subsidies had been eliminated – assuming state regulators allowed them to refile. But Alaska required carriers to submit two sets of rates in May. The primary proposed rates (including the postings on Healthcare.gov’s rate review tool for plans with proposed rate hikes of at least 10 percent), were based on the assumption that subsidies will continue to be available in Alaska. The second set of higher rates would have been used if subsidies had been struck down, but they’re no longer needed.
There are six individual plans (from Moda and Premera Blue Cross Blue Shield) on the Alaska exchange that have proposed rate increases of at least 10 percent (plans with lower proposed rate hikes don’t show up on Healthcare.gov’s rate review tool). There are also five small group plans that have requested double digit rate increases. Time Insurance Company had proposed a 77 percent rate increase, but their parent company, Assurant, announced in early June that they will be exiting the individual insurance market, and will not be participating in the upcoming open enrollment period that begins November 1.
Rates have not yet been finalized, and the rate review process will be ongoing throughout the summer.
Enrollment grows in 2015
During 2015 open enrollment, 20,897 Alaskans selected qualified health plans (QHPs). About 24 percent of the residents who were eligible to use the marketplace signed up for QHPs for 2015. For 2014, only 15 percent of eligible residents enrolled in QHPs.
The stronger enrollment in 2015 came despite an average 31 percent increase in marketplace premiums for 2015. The 2015 average cost for a silver plan in Alaska is higher than in any other state.
The good news is that subsidies are tempering the higher cost for most enrollees. During the first two months of 2015 open enrollment, 89 percent of Alaskans purchasing plans qualified for premium subsidies.
higher penalties for being uninsured in 2015
While open enrollment ended in February, a special enrollment period (SEP) gave some consumers another chance to sign up for health insurance. The SEP ran from March 15 to April 30 and was available to consumers who learned – when filing their taxes – that they owe a tax penalty for not having health insurance in 2014. While these consumers will still be responsible for the 2014 penalty, they were able to minimize the penalty for 2015 by enrolling in coverage before the end of April.
That’s important, as the tax penalties increase next tax season. If you don’t qualify for an exemption, you’ll have to pay the higher of:
- 2% of annual household income, up to a maximum of the national average premium for a bronze plan, which is over $3,000.
- $325 per adult or $162.50 per child under 18. The maximum penalty per family using this method is $975.
Other opportunities to enroll
If you missed open enrollment and don’t qualify for the tax-related SEP, you can still sign up for coverage before the next open enrollment period if one of the following applies:
- You experience a qualifying event. You have 60 days from the date of the event to sign up for insurance.
- You are a Native American or Alaska Native. You can sign up for health insurance at any time during the year.
- You qualify for Medicaid. Medicaid accepts applications throughout the year.
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.
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.
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 16.1 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 2014, 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 — 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.
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. The recent drop in oil prices has created a huge budget problem in Alaska, so no funding requests are being warmly received, least of all one related to Obamacare.
In late February 2015, the House Finance Committee stripped Medicaid funding from Walker’s budget and called for Walker to introduce legislation to expand Medicaid. The administration countered that Democratic legislators have introduced such a bill. In early March, Republican Sen. Pete Kelly announced he would introduce a bill to reform, but not expand, Medicaid. Kelly said the bill will include a managed care provision and health savings accounts.
If the state ultimately authorizes Medicaid expansion, about 30,000 Alaskans would qualify according to the Kaiser Family Foundation. The state would receive about $2.1 billion in federal funding through 2020 according to an Urban Institute study.
Alaska health insurance exchange links