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Pending 1332 waiver would allocate federal funding for Alaska's new reinsurance program

  • By
  • healthinsurance.org contributor
  • March 17, 2017

Alaska had reason for concern that their already high health care costs would skyrocket when Moda confirmed its exit from the state’s individual market at the end of 2016, leaving Premera as the only individual health insurance carrier remaining. However, the state stepped in to prevent such a scenario. In July 2016, Governor Bill Walker signed

However, the state stepped in to prevent such a scenario. In July 2016, Governor Bill Walker signed H.B.374 into law. A two-year program, H.B. 374 uses an existing assessment that was previously sent to the general fund, and redirects it to a reinsurance fund for the individual market (the Alaska Reinsurance Program, or ARP).

The state has filed a 1332 waiver proposal, asking the federal government to fund the ARP using the money that would have otherwise been paid via larger premium subsidies that would have been necessary if the APR had not been implemented and rates had continued their unmitigated upward trajectory. Former HHS Secretary Sylvia Burwell indicated in a letter to Alaska Governor Bill Walker that approval was likely, contingent on lawmakers passing additional legislation to fund the state’s portion of the ARP cost for years beyond 2017.

In 2016, Alaska’s health insurance rates were the highest in the country, with benchmark premiums for a 40-year-old in a major metropolitan area averaging $719. Premera requested an average rate increase of 7.3 percent – that increase was approved. Alaska’s premiums are still by far the highest in the country, although their average percentage rate increase was smaller than the national average for 2017.

Because Alaska’s average premiums are so much higher than the rest of the country, and because the federal poverty level is higher in Alaska, premium subsidies under the ACA are much higher in Alaska than they are in other states. But if the American Health Care Act (AHCA), introduced by House Republicans in March 2017, is enacted, premium subsidies in Alaska would be much smaller starting in 2020. They would vary based only on age, so they would no longer be tied to he high premiums and high cost of living in Alaska. Coverage in the individual market would be much less affordable for Alaska residents under the AHCA than it is under the ACA.

Alaska health ratings

Alaska ranks in the middle of the pack in several nationwide rankings of public health status. The state known as The Last Frontier placed 32nd in The Commonwealth Fund’s 2015 Scorecard on State Health System Performance, but improved slightly in 2016, climbing to 30th place. In the 2016 ranking, however, Alaska’s uninsured rate lowered its performance, placing 49th, down from 46th in 2015 (despite the fact that Medicaid expansion took effect in September 2015, insuring low-income residents who were previously uninsured). But Alaska is first in the nation in public health funding.

Review Alaska’s 2016 scorecard for a more comprehensive look at the factors that determine these rankings.

America’s Health Rankings (2016 edition) also puts Alaska in 30th place, down from 27th in 2015. Alaska earned strong marks for high per capita health funding (#1) and its number of dentists (#2). Yet, again, lack of health insurance was among its worst-performing measures (49th).

Another source for public health indictors and comparisons among the states is Trust for America’s Health. Check out its compilation of Key Health Data About Alaska.

If you want to take zero in on a particular area within Alaska, check out county-level rankings for Alaska. This data was compiled by the Robert Wood Johnson Foundation and the Population Health Institute at the University of Wisconsin.

Obamacare’s impact on Alaska

While the ACA is credited with a sharp decline in the uninsured rate across the nation, the impact in Alaska started out more modest. Alaska’s uninsured rate dropped 2.8 percent during 2014 open enrollment, from 18.9 percent to 16.1 percent.

However, the state soon made up for its slow start. By late 2015, Alaska ranked 7th among the 10 states with the greatest reduction in uninsured. In 2013, Alaska’s uninsured rate was 18.9 percent; by 2015, it was 10.3 percent – down 8.1 percentage points. In the same timeframe, the nation’s uninsured rate fell to 11.7 percent.

Alaska expanded Medicaid in September 2015, nearly two years after many other states had implemented Medicaid expansion. By December 2016, more than 25,000 people had gained coverage under Alaska’s expanded Medicaid. The AHCA calls for Medicaid expansion to be frozen as of 2020, so enrollment would decline from that point forward. The bill also calls for Medicaid funding to switch from the current open-ended federal matching program to a per-capita allotment. This could leave states holding the bag (and low-income people ultimately losing their coverage) as Medicaid costs increase.

2017 rates and carriers for Alaska’s exchange

Alaska’s two individual market carriers struggled under the Affordable Care Act, and one exited the individual market completely at the end of 2016. Moda is still offering individual dental plans as well as group medical coverage; however, the 14,000 Alaskans who had on- and off-exchange individual health insurance plans from Moda in 2016 had to switch to Premera for 2017, or become uninsured (some opted for the latter option, no doubt; enrollment in Alaska’s exchange dropped by almost 17 percent in 2017. Some may have opted to switch to off-exchange Premera plans, but some are likely uninsured for 2017).

Premera is Alaska’s only carrier offering health insurance for 2017. Alaska’s health insurance rates are higher than anywhere else in the country. And as Alaska’s sole exchange carrier, Premera was set to raise rates by at least 40 percent in order to cover claims costs.

As a means to stopping an impending “death spiral,” Alaska Governor Bill Walker signed H.B. 374 into law in July 16. This two-year program utilizes a reinsurance fund to cover claims for high-cost insureds in the individual market, and the state has filed a 1332 waiver requesting federal funding to continue the reinsurance program.

On the same day Gov. Walker signed H.B. 374 into law, Premera announced they had filed their 2017 rate proposal, requesting an average increase of 9.8 percent. One month later, it filed a new rate proposal, which requested an average rate increase of 7.3 percent; that proposal was approved.

Alaskans enrollment in qualified health plans

The Kaiser Family Foundation estimated in the fall of 2013 that about 78,000 Alaska residents would be eligible to enroll through the marketplace and that about 70 percent would qualify for premiums subsidies. However, just 12,890 people signed up for qualified health plans (QHPs) through Alaska’s health insurance exchange during the 2014 open enrollment period. Among those who did enroll in a QHP, 88 percent qualified for financial assistance, compared to 85 percent nationally according to the U.S. Department of Health and Human Services (HHS).

By March 31, 2016, Alaska’s effectuated enrollment was 17,995. Of those remaining enrollees, 90 percent were receiving premium subsidies.

19,145 people who enrolled in coverage through the Alaska exchange during the 2017 open enrollment period. That’s 17 percent lower than the year before, when 23,029 people enrolled during open enrollment. It’s lower than even the 2015 enrollment total, when 20,897 signed up. Premiums in Alaska have become largely unaffordable for people whose income is just a little bit above 400 percent of the poverty level, and people who had Moda plans in 2016 had no choice but to switch to more expensive Premera plans if they wished to remain insured in 2017. Some people clearly opted to go uninsured instead.

Alaska and the Affordable Care Act

Alaska’s three-member U.S. Congressional delegation voted 2-1 against the Affordable Care Act, which was signed into law in 2010. Sen. Mark Begich, a Democrat, was alone in supporting the ACA. Sen. Lisa Murkowski and Rep. Dan Young, both Republicans, voted no. Former Gov. Sean Parnell opposed the overall ACA and spoke out strongly against a state-run exchange.

Sen. Dan Sullivan, a Republican who has talked about the need to repeal and replace Obamacare, defeated Begich in the 2014 election, so the state’s entire U.S. Congressional delegation is Republican. All are opposed to the ACA, but Senator Murkowski has expressed reservations about voting for the AHCA, due to the bill’s cuts for Planned Parenthood funding. Murkowski also disapproved of an earlier leaked draft of a GOP bill that would have eliminated Medicaid expansion (the AHCA keeps Medicaid expansion through 2019, but then freezes enrollment as of 2020 and switches Medicaid to a per-capita funding system, rather than the current open-ended federal matching program).

Alaska is the only state that did not to apply for the $1 million exchange-planning grant that was available from the federal government. State legislators considered a state-run exchange in the 2011 and 2012 sessions, but didn’t pass a bill either year. Parnell announced in July 2012 that the state would default to the federally facilitated exchange.

Initially, Alaska did not adopt Medicaid expansion. Governor Bill Walker, an Independent, took office on December 1, 2014, and announced his intention to expand Medicaid within his first 90 days in office. Though it took a little more time, he succeeded and the state expanded Medicaid on September 1, 2015.

New governor expands Medicaid, enrollment up 42% over 2013

Alaska decided against Medicaid expansion for 2014, and a Kaiser Family Foundation study estimated 30,000 Alaska residents were excluded from coverage as a result. The same study estimated that 17,000 Alaska residents were in the Medicaid coverage gap – meaning they didn’t qualify for Medicaid (e.g., they didn’t meet the pre-ACA eligibility guidelines), yet they didn’t make enough to qualify for federal subsidies that would help them purchase individual coverage through the marketplace.

Those left out of Medicaid coverage in 2014 faced brighter prospects in 2015. Gov. Bill Walker took office on Dec. 1, 2014, and made Medicaid expansion a priority in his first months. Walker’s administration explored whether the governor could proceed through an executive order or if legislative action is needed to authorize expansion. Walker’s administration had set a July 2015 target for having Medicaid expansion in place. However, they faced budget challenges and problems with the state’s existing Medicaid systems technology. Lawmakers rejected Medicaid expansion in the state budget, and the 2015 legislative session ended without a vote on the Medicaid expansion bill.

On July 16, 2015, Walker used his executive authority to expand Medicaid on his own, noting that he had run out of options. Alaska Medicaid expansion took effect September 1. Within a month of the expanded guidelines taking effect, 2,000 people enrolled Alaska Medicaid.

Alaska Medicare enrollment has grown by 42 percent since the ACA took effect. In 2013, average monthly enrollments were 122,334; by December 2016, they reached 173,321.

Visit the Alaska Department of Health and Social Services to learn about Medicaid and CHIP in Alaska. The state is implementing a series of reforms to Medicaid, as a result of 2016’s Senate Bill 74.

Does Alaska have a high-risk pool?

Before the ACA reformed the individual health insurance market, coverage was underwritten in nearly every state, including Alaska. This meant that medical history was an important component in eligibility for a private individual plan, and people with pre-existing conditions often found themselves unable to purchase coverage, or only able to get a policy that excluded pre-existing conditions.

The Alaska Comprehensive Health Insurance Association (ACHIA) was created in 1993 to give people an alternative if they were unable to obtain individual health insurance because of pre-existing conditions.

As a provision of the ACA, all new health insurance policies became guaranteed issue starting on January 1, 2014. This reform largely eliminated the need for high-risk pools, but the pool is still operational as of 2017. But funding that used to be sent to ACHIA is now used to fund the Alaska Reinsurance Program.

Medicare enrollment in AK

Alaska Medicare enrollment reached 83,863 in 2015, about 11 percent of the state’s population. Nationwide, 17 percent of the population is enrolled in Medicare.

Historically, 84 percent of Alaska Medicare recipients qualify for coverage based on age alone, whereas the other 16 percent are on Medicare as the result of a disability. These numbers match national averages.

Medicare pays about $6,412 per enrollee in Alaska each year, and as of 2009, the state ranks 51st in overall spending with $553 million annually.

Alaskans that want additional benefits beyond what original Medicare offers can select a Medicare Advantage plan instead. Less than 1 percent of Alaska Medicare recipients make this choice, compared with 31 percent of all Medicare recipients (the number of people in Alaska opting for Medicare Advantage grew to 93 in 2016, up from 56 in 2015)

However, 40 percent of Alaska Medicare enrollees select Medicare Part D plans, which provide stand-alone prescription drug coverage. Of all U.S. Medicare recipients, 45 percent have stand-alone Rx plans.

State-based health reform legislation

Here’s a summary of what’s happening at the state level in Alaska with regard to healthcare reform:

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