The individual market in Alaska had just two carriers in 2016, and only one carrier is offering coverage for 2017. Moda and Premera have both struggled with significant losses under the ACA, and Moda nearly exited the Alaska market altogether in January 2016 (more details below).
Although Moda was ultimately able to remain in Alaska’s individual market in 2016, the carrier is exiting the state’s individual medical market at the end of 2016. They will continue to offer individual dental coverage, along with medical coverage in the group market. But their 14,000 members who have health insurance in the individual market — both on and off-exchange — need to switch to a plan from Premera for 2017.
Several other states have just one carrier in their exchanges for 2017: Wyoming, Alabama, South Carolina, and Oklahoma. And an analysis by Avalere in mid-August found that more than a third of U.S. counties will have just a single carrier offering coverage in the exchange in 2017, and several carriers around the country have announced their plans to exit the exchanges since that analysis was done.
Alaska’s affordability solution as a national model?
Alaska’s individual health insurance market has been by far the most expensive in the country over the last few years. Their market is quite small, so the exceedingly high costs of just a few hundred individuals have been driving up the overall costs for everyone, to levels that were unaffordable for many people who earned a little too much to qualify for subsidies (Alaska is an excellent example of a place where the ACA’s subsidy cliff exists).
In 2016, lawmakers passed legislation to create a state-funded reinsurance pool to prevent premiums from skyrocketing even further (details below). They only funded the program for 2017, however, and the state has drafted a 1332 waiver proposal that seeks five years of federal funding to continue the Alaska Reinsurance Program. The public comment period for the draft proposal ran from November 22 to December 23.
There’s uncertainty in terms of the future of the ACA (including 1332 waivers, which are part of the ACA) under the Trump Administration’s, as Trump and Congressional Republicans have vowed to repeal and replace the ACA.
But the specifics of what they’re planning to do are unclear. One theme that has gained widespread support from Republican lawmakers is the resurrection of high-risk pools. Alaska’s reinsurance program is somewhat reminiscent of a high-risk pool, in that the state is offsetting the cost of providing care for the sickest enrollees in the individual market.
Alaska’s program could end up being more widespread (with federal funding) under the Trump Administration, if lawmakers see it as a viable way to keep the individual market viable while providing coverage for pre-existing conditions. State of Reform lists it as one of the six best policy ideas that states can implement to stabilize their insurance markets during the volatile time that’s likely to exist during the upcoming transition.
Open enrollment for 2017 coverage began on November 1. A week later, Donald Trump won the presidential election, and his victory makes the future of the ACA very uncertain. For the time being, however, nothing has changed. Coverage — including subsidies for those eligible — is available regardless of pre-existing conditions. Open enrollment continues through January 31. Enrollments completed by January 15 will have coverage effective February 1, while enrollments completed between January 16 and January 31 will have coverage effective March 1.
By December 19, there were 13,172 people who had enrolled in coverage for 2017 through the exchange, including new enrollees and those who already had coverage in 2016 and either actively renewed it (or picked a different plan) or were auto-renewed for 2017. For perspective, 17,995 people had effectuated coverage through the exchange in Alaska as of March 2016.
Moda enrollees who have coverage through the exchange were mapped to a Premera plan for 2017 if they didn’t return to the exchange to pick their own plan by December 15. Lori Wing-Heier, Director of the Alaska Division of Insurance, noted that the process of mapping Moda enrollees to Premera plans was conducted jointly by the Alaska Division of Insurance and CMS. In an email, she explained that “the division [Alaska DOI] reviewed the Moda and Premera plans to match the plans as closely as we could … The actual mapping was done by the Centers for Medicare and Medicaid Services (CMS) as they hold the data that is available on healthcare.gov. The division does not have names of actual Alaskan consumers and the plans that they have chosen so we do not know which plan any one individual is on.”
But Moda enrollees — along with anyone else — also had the option to pick a plan by December 19, and have that coverage take effect January 1 (this is an extension; the original deadline was December 15, but HealthCare.gov pushed out the deadline due to extremely high enrollment volume nationwide). Even after December 19, Moda enrollees can pick their own plan for 2017 (anytime until January 31), and it will take effect in February or March, depending on when they enroll.
State shores up individual market with reinsurance program, seeks federal funding with 1332 waiver
Even with the high premiums in the individual market in Alaska, insurers continued to lose money. In the first half of 2015, Premera – which insured about 8,500 people in the individual market in 2015 – had roughly $45 million in claims in the individual market, but $11 million of that came from just 37 members. And in a sparsely-populated state with small enrollment in each plan, the impact of spreading those costs across the pool of insureds results in astronomical rate hikes for everyone.
Premera is the only carrier remaining in Alaska’s exchange for 2017, and the expectation was that they were going to have to raise rates by at least 40 percent in order to cover claims costs. Premera made it clear that they cannot continue to absorb losses in the individual market.
In February 2016, Alaska’s Insurance Commissioner, Lori Wing-Heier, presented lawmakers with a summary of the state of the health insurance market in Alaska. Wing-Heier explained that the small group market was doing well, but that the individual market was struggling. In addition to the possibility of a state reinsurance program, Wing-Heier also floated the idea of combining the individual and small group markets into a single risk pool (this is allowed under the ACA, but only Massachusetts and Vermont have done so thus far). She also mentioned the possibility of creating a regional exchange in partnership with other states in the western US, or drafting a 1332 waiver proposal to implement the ACA in an Alaska-specific way (1332 waivers are available to every state, but only Vermont and Hawaii have officially submitted waiver proposals).
In an effort to address the problem caused by the very small individual market in Alaska, legislation was introduced in March 2016 to implement an assessment on all health plans in the state (not just the individual market) to fund a supplemental reinsurance program for Alaska that would help to cover the individual market’s largest claims. The legislation was passed in June by the Republican-dominated legislature, and Governor Bill Walker signed H.B.374 into law in July 2016.
Although it has the effect of shoring up Obamacare in the state, lawmakers were quick to point out that they’re still opposed to the ACA ACA, but considered the legislation to be the best way to avoid having the state’s individual health insurance market collapse altogether.
H.B.374 uses an existing assessment that is currently sent to the general fund, and directs it instead into a reinsurance fund for the individual market. Prior to 2014, the Alaska Comprehensive Health Insurance Association—a high-risk pool—was the only way people with serious pre-existing conditions could get coverage in the non-group market; instead of funding ACHIA, the money is now used to fund the reinsurance program. Insureds whose claims end up being covered under the reinsurance program are still covered by the same individual market coverage as everyone else; they are not enrolled in separate plans, so this is different from the way ACHIA used to work.
H.B.374 is a temporary program, and is only funded by the state for 2017. But lawmakers hope to develop a permanent solution during that time. For now, the reinsurance program will use $55 million of the $64 million that was collected in 2015 to cover claims for high-cost insureds in the individual market. Those funds are generated via a 2.7 percent premium tax on all insurers (not just health insurers) in Alaska, and lawmakers appropriated $55 million for the reinsurance program for 2017.
In an effort to garner long-term funding from the federal government (as opposed to taxing Alaska insurance companies), in November 2016, the state posted a draft proposal of a 1332 waiver, and opened a one-month public comment period. The waiver requests five years of federal funding for the Alaska Reinsurance Program, with an option to renew after that.
The state is proposing that the federal money that would otherwise be used for premium subsidies (to offset the higher premiums that would apply without the reinsurance program) be funneled instead into the reinsurance program. They note that 1,485 additional people will have coverage in Alaska’s individual market from 2018-2022 with the reinsurance program. But the cost of the program is substantial. Their waiver proposal states that the reinsurance program will result in a $51.6 million reduction in premium subsidy payments from the federal government in 2018, and Alaska wants to use that money to fund the state reinsurance program, with supplemental funding appropriated by the state.
Alaska lawmakers and the state Division of Insurance spent months considering possible fixes to the impending “death spiral” in Alaska’s individual health insurance market. Although subsidies offset the high premiums for those who are eligible for subsidies, they do nothing for the people whose income puts them just a little over the subsidy-eligible level (the average premium in Alaska’s exchange was $863 per month in 2016, versus a nationwide average of $396; the average subsidy in 2016 in Alaska was $750 per month, compared with an average of $291 per month nationwide; the dramatically higher subsidy amount is necessary in Alaska in order to bring premiums down to the same level as the rest of the country).
Premera rate increase: 7.3 percent
On July 18—the same day Governor Walker signed H.B.374 into law—Premera announced that they had filed rates with an average increase of 9.8 percent for 2017. The rate increase is significantly lower than the carrier’s rate increases were in 2015 and 2016, and Premera attributed that to the new reinsurance program.
A month later, on August 19, Premera filed a new rate proposal, requesting an average rate increase of just 7.3 percent for 2017. State regulators approved the 7.3 percent average rate increase a few days later, and the rates will take effect in January.
Average rate increases will be higher for current Moda members, as their rates are currently lower than Premera rates, and they will have no choice but to switch to Premera—with rates an average of 7.3 percent higher than Premera’s current rates — for 2017.
For perspective, for a 40-year-old in Anchorage, the lowest-priced plan from Moda in 2016 is $579 per month, while the lowest-priced plan from Premera is about 12 percent higher, at $649 per month. Members who currently have Moda plans will see overall rate increases that amount to an average of 7.3 percent higher than the current Premera rates.
2016 market share
In 2014, Premera had 58 percent of the individual market in Alaska, Moda had 36 percent, and the remaining six percent were distributed across Time, Celtic, and Aetna. These figures included grandfathered plans, grandmothered plans, and ACA-compliant plans both on and off exchange.
By 2015, Premera’s market share had dropped to 43 percent, and Moda’s had increased to 51 percent. Moda’s total individual market enrollment in 2015 was 14,825, but had dropped to under 10,000 people by January 2016, when Moda briefly exited the individual market.
According to Moda’s press release regarding their exit from the individual market in Alaska at the end of 2016, their individual medical plans covered “nearly 14,000” members as of May 2016. The revised rate proposal that Premera filed in August 2016 indicated that Moda had 13,634 members, and Premera was expecting all or most of them to transition to Premera for 2017. Premera’s membership at that point stood at 6,800 people, but will grow substantially in 2017.
All of Moda’s individual market plans in Alaska were ACA-compliant by 2015 (this includes plans sold outside the exchange since 2014), but Premera still has grandfathered and grandmothered individual plans in the state.
As of 2015, there were 2,466 people with individual grandfathered plans in Alaska (mostly Premera, but 192 had coverage from Aetna), and 2,345 people with grandmothered plans from Premera. All grandmothered plans must terminate no later than December 31, 2017, although Premera also has the option to terminate them before that date.
Alaska senators introduce federal legislation to waive EHB requirements
In September 2016, Alaska’s U.S. Senators, Lisa Murkowski and Dan Sullivan, introduced H.R.6018, known as the “Ensuring Health Care Opportunities Act.”
The legislation would allow states to permit plans to be sold on the exchange without including coverage for all of the ACA’s essential health benefits, as long as at least one county in the state has only a single insurer offering plans.
Murkowski and Sullivan introduced H.R.6018 in an effort to curb the runaway premiums and lack of competition in Alaska’s individual market. The future of the ACA is very much up in the air with the incoming Trump Administration, and the essential health benefits mandate might not stand the test of time on a federal level, making H.R.6018 unnecessary in Alaska.
By March 31, 2016, effectuated enrollment in the Alaska exchange stood at 17,995 people, and 90 percent of those enrollees were receiving premium subsidies.
Because Alaska’s average premiums are dramatically higher than anywhere else in the country, subsidies play a particularly important role in keeping net premiums affordable for low-income and middle-class Alaskans.
Although open enrollment for 2016 ended January 31, enrollment is available year-round for Native Americans and Alaska Natives. People eligible for Medicaid or CHIP can also enroll year-round. Other than these populations, enrollment after January 31 is limited to people who have a qualifying event that triggers a special enrollment period. The next open enrollment period – for coverage effective in 2017 – will begin on November 1, 2017.
Moda and Premera both offer plans in the Alaska exchange in 2016, and rate increases of nearly 40 percent were approved for each of them:
- Premera Blue Cross Blue Shield: 38.7 percent average rate increase.
- Moda Health: 39.6 percent average rate increase.
The steep rate hikes for 2016 came on the heels of an average rate increase of 31 percent for 2015; Alaska’s average premiums were already the highest in the country in 2015, and they’re dramatically higher than the rest of the country for 2016.
For now, premium subsidies bear the brunt of the rate hikes in Alaska – but only for people who earn up to 400 percent of the poverty level. People with incomes a little over that amount are facing health insurance costs that are truly unaffordable.
But for people who do qualify for subsidies, the subsidies ensure that the cost of the benchmark plan remains at a level deemed affordable under the ACA. Of the people who enrolled in coverage for 2016, 86 percent are receiving premium subsidies. The average subsidy in Alaska in 2016 is $737/month – more than two and a half times as high as the $290/month average across all the states that use Healthcare.gov.
Premium subsidies are particularly important in Alaska; they’re higher there than anywhere else in the US, thanks to the fact that unsubsidized premiums are so much higher than they are in the rest of the country.
For people who enrolled in a health plan through the Alaska exchange during the 2016 open enrollment period, the average pre-subsidy premium was $863/month. This is more than double the $396/month average across all states that use Healthcare.gov. But for the 86 percent of enrollees who are receiving a premium subsidy, the average after-subsidy premium is just $126/month.
This is slightly higher than the $119/month average in 2015, but the average pre-subsidy premium was $652/month in Alaska in 2015. So while the average pre-subsidy premium increased by more than $200/month, subsidies mitigated almost the entire increase (for additional perspective, the average after-subsidy premium in 2014 was $94/month in Alaska).
Obviously this doesn’t help the 14 percent of enrollees who aren’t receiving premium subsidies, or the people who enrolled in plans outside the exchange, without access to premium subsidies (anyone eligible for subsidies should make sure to purchase a plan through the exchange, as subsidies aren’t available off-exchange).
Moda remained in for 2016, but did not stay for 2017
Moda Health Plan Inc. had a tumultuous couple weeks in early 2016. But they ended up remaining in Alaska’s individual market for 2016, although they will not participate in 2017. Here’s what happened:
On January 28, 2016, the Alaska Division of Insurance announced that Moda Health’s financial losses and dwindling capital reserves had reached the point where the carrier could no longer sell or renew policies in the individual market in Alaska (Oregon, the only other state where Moda was still operating, came to the same conclusion). In 2015, Moda lost $58 million, and ended the year with lower enrollment than they had projected. As was the case with several CO-OPs at the end of 2015, Moda’s financial losses were tied in large part to the risk corridor shortfall that was announced in October 2015.
At that point, regulators in Oregon had given Moda until January 29 to come up with a business plan that would make them viable, and regulators in Oregon and Alaska were working together on the issue. It was a more significant problem in Alaska, since Moda’s exit from the individual market was going to leave Alaska with just one carrier – Premera Blue Cross Blue Shield – offering plans in the individual market, both on and off-exchange.
As of late January, there were about 9,800 people in Alaska with individual plans from Moda. The Division of Insurance reassured insureds that as long as they continued to pay their premiums, their claims would still be paid. And as of late January, insureds were told that if their plans were to terminate at a later date, enrollees would have access to a special enrollment period during which they’d be able to switch to a plan from Permera.
But on February 8, regulators in Alaska and Oregon reached an agreement with Moda that allowed the carrier to resume selling and renewing coverage in the individual markets in both states. Part of the agreement was a commitment from Moda to continue to service individual market policy-holders until at least the end of 2016. Ultimately, the carrier decided to exit the state’s individual market at the end of 2016, so individual plans will terminate on December 31, 2016.
Ultimately, the carrier decided to exit the state’s individual market at the end of 2016, so individual plans will terminate on December 31, 2016.
Moda has said that they will revisit this decision next year, and the carrier might eventually return to the individual market in Alaska. But they noted that “the market requires significant reform in order to be sustainable for Alaskans and for Moda.” Moda’s Director of Alaska Sales & Service, Jason Gootee, explained that “our preliminary calculations showed that we would need a significant premium increase in 2017 to be sustainable on the individual market. At some point, you can’t keep passing these significant costs on to consumers.” Gootee noted that the decision was a difficult one for Moda.
Enrollment grew 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.
But some enrollees never paid their initial premiums, so their coverage was never effectuated. And others cancelled their coverage early in the year, for one reason or another. By the end of March, 18,320 people had in-force private plan coverage through the Alaska exchange. The attrition rate in Alaska was slightly less than the national average, and attrition is a normal part of the individual insurance market. By the end of June, total enrollments nationwide had dropped slightly lower than they were in March. But in Alaska, effectuated enrollment grew by more than a thousand people in the second quarter of 2015. 19,380 people had in-force private plan coverage through Alaska’s exchange by June 30.
Even after accounting for attrition, enrollment in Alaska’s exchange was nearly 50 percent higher in 2015 than it was in 2014. 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. Of the Alaska enrollees with effectuated coverage as of June 2015, 88.8 percent had premium subsidies, and 53.3 percent had cost-sharing subsidies.
According to Gallup data, the uninsured rate in Alaska was 18.9 percent in 2013, and had dropped to 10.3 percent by the first half of 2015.
Even higher penalties for being uninsured in 2016
Starting in 2014, the IRS began assessing penalties on people who went without health insurance despite the availability of affordable options. The penalty started out small, but has ramped up to its full amount in 2016 (it will increase in future years, but only in line with inflation).
If you remain uninsured in 2016 and don’t qualify for an exemption, you’ll have to pay the higher of:
- 2.5% of annual household income, up to a maximum of the national average premium for a bronze plan. For 2015, the national average cost of a bronze plan was $2,484 for a single person, and $12,420 for a family of five or more.
- $695 per adult or $347.50 per child under 18. The maximum penalty per family using this method is $2,085.
Use this penalty calculator to see how much you may have to pay. Note: Native Americans and Alaska Natives are exempt from the penalty. There are many other situations that trigger an exemption, so check with your exchange to see specifics for your situation.
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.
In 2015, the total small group market in Alaska covered 21,645 people, but the majority of them had coverage outside the SHOP exchange.
Subsidies mitigate rate hikes in 2015
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 were 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 raised rates to cover their expenses.
While the rate increases in 2015 were certainly a burden for some, the impact was muted for most consumers. Wing-Heier pointed out that people who qualify for subsidies — 88 percent of Alaskans using the exchange in 2014 — didn’t bear the brunt of those increases.
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 remained high in 2014, 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. 42 percent of Alaska enrollees in 2014 paid $50 or less per month for coverage in 2014.
In 2014, 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 well known.
Parnell also opposed expanding the Medicaid program. Medicaid expansion was originally an integral, mandatory portion of the ACA, but in 2012 the Supreme Court ruled that Medicaid expansion would be optional, paving the way for states to keep their Medicaid programs as-is and essentially condemn their low-income residents to the coverage gap. Parnell 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, after which the states will gradually assume a small portion of the bill – starting in 2020 the federal government will be paying 90 percent of the cost of Medicaid expansion, and it will remain at that level going forward.)
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, an Independent who was formerly a Republican — 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. With expanded Medicaid, the state will receive about $2.1 billion in federal funding through 2020 according to an Urban Institute study.
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 worked 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 had already 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 would include a managed care provision and health savings accounts (Alaska is currently one of just 12 states that does not contract with managed care organizations for at least a portion of its Medicaid program).
Governor expands Medicaid on his own
In July 2015, Governor Walker announced that he would use his executive power to expand Medicaid, since lawmakers had rejected the inclusion of Medicaid expansion in the state budget, and had also ended the 2015 legislative session without a vote on the bill that would have expanded Medicaid. Walker noted that he had tried all of the other options for working with the Republican-controlled legislature on the issue, and had eventually run out of possibilities.
Under Walker’s executive authority, Medicaid expansion took effect in September 2015 in Alaska. In the first month, 2,000 people enrolled under the new guidelines, and by December 30, enrollment in the state’s expanded Medicaid had grown to 7,700. GOP lawmakers filed a lawsuit to block expansion, but the case was dismissed in March 2016. The Alaska House of Representatives filed an appeal, but dropped it in June 2016.
About 45 percent of the newly-eligible population is employed but with household incomes under 138 percent of the poverty level. Prior to expansion of Medicaid, the coverage gap was particularly onerous in Alaska, since people who didn’t qualify for Medicaid or premium subsidies (ie, people with incomes below the poverty level) were entirely unable to pay the sky-high premiums that are charged in Alaska for people who don’t have premium subsidies.
Alaska health insurance exchange links