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Two insurers offer plans in Alaska's exchange. Average pre-subsidy premiums increased by about 19% for 2023
Alaska has a federally-operated health insurance exchange with two carriers (Premera and Moda) offering coverage. Average premiums increased by about 19% in Alaska for 2023, which was quite a bit more than the national average. But most enrollees receive subsidies that offset some or all of the premium cost.
Outside of the yearly open enrollment period, a qualifying event is required to enroll or make changes to coverage (Native Americans/Alaska Natives can enroll year-round). 22,786 people enrolled in private individual market plans through the Alaska exchange during open enrollment for 2022 coverage.
Alaska’s health insurance marketplace is run by the federal government, and residents enroll via HealthCare.gov, or via an approved enhanced direct enrollment entity.
After the ACA was enacted, 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.
There are two insurers that offer exchange plans in Alaska:
Moda returned to Alaska’s exchange for 2020, and began expanding its coverage area in 2021. As of 2023, Moda offers coverage in the Municipality of Anchorage, Matanuska-Susitna Borough, Kenai Peninsula Borough, Fairbanks Northstar Borough, and Southeast Alaska (note that this is a reduction in coverage area versus where they offered plans in 2022).
Premera Blue Cross Blue Shield continues to offer coverage statewide.
From 2014 through 2016, plans were available in Alaska’s exchange from both Moda and Premera.
But for 2017 through 2019, Premera was the only insurer offering individual market plans in Alaska, including on the exchange.
In 2014, Premera had 58% of the individual market in Alaska, Moda had 36%, and the remaining 6% were distributed across Time, Celtic, and Aetna. These figures included grandfathered plans, grandmothered plans, and ACA-compliant plans both on and off exchange (Time, Celtic, and Aetna were only available outside the exchange).
By 2015, Premera’s market share had dropped to 43%, and Moda’s had increased to 51%. 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.
Moda Health Plan Inc. had a tumultuous couple weeks in early 2016, although they ended up remaining in Alaska’s market until the end of that year. In October 2015, Moda had exited the market in Washington and California, in order to focus on Oregon and Alaska.
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).
At that point, there were about 9,800 people in Alaska with individual plans from Moda. 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 policyholders until at least the end of 2016, which they did. But Moda’s plans were no longer available after the end of 2016, and Alaska’s exchange—and individual market—only had plans from Premera until the end of 2019.
But for 2020, Moda rejoined the exchange, providing additional options for residents who purchased their own health insurance in Anchorage, the Kenai Peninsula, and the Mat-Su Borough. Delta Dental of California invested $152 million in Moda earlier in 2019, obtaining a 49.5% stake in the company. While Alaska’s regulators had concerns about Moda’s financial health in 2016 and 2017, they noted that those concerns were no longer an issue after the infusion of capital in the agreement with Delta Dental of California.
Moda expanded its coverage area into three additional counties as of 2021. Although Premera was still the only participating insurer in most of the state, residents in some of the more populated areas could choose between Moda and Premera.
Moda again expanded its coverage area in 2022, although they reduced it somewhat in 2023.
The open enrollment period for individual/family health coverage runs from November 1 to January 15 in Alaska.
Outside of open enrollment, a qualifying life event is generally necessary to enroll or make changes to your coverage. But Native Americans/Alaska Natives can enroll year-round. Subsidy-eligible applicants with household income up to 150% of the poverty level can also enroll year-round.
If you have questions about open enrollment, you can learn more in our comprehensive guide to open enrollment.
As of 2022, Alaska had the fifth-highest average individual insurance premiums in the country (before any subsidies were applied). But Alaska’s overall average rate increase for 2023 was much more significant than the national average, and only two states (West Virginia and Wyoming) have higher average full-price premiums in 2023.
Alaska law does not allow the state to publicly share rate filing details — via the Alaska Division of Insurance or on SERFF — until after the policies take effect, which means they aren’t publicized for ACA-compliant individual market health plans until January 1 each year. Preliminary filings are posted on the federal rate review site as of August each year, but some of the pertinent data are redacted.
For 2023, the federal rate review site shows the following proposed average rate changes for Alaska’s individual market insurers:
Premera has the bulk of the state’s market share, and the overall average rate increase amounted to about 19% across both insurers.
Although Alaska’s reinsurance program extension (for 2023 through 2027) didn’t get approved by the federal government until July 2022, the Alaska Division of Insurance confirmed that they instructed the insurers to file their 2023 rates with the assumption that the reinsurance program would continue (the rates would have been significantly higher without the ongoing reinsurance program, but that never came into play).
Although Alaska’s rate increase was more significant than we saw nationwide for 2023, it’s important to keep in mind that overall average premiums dropped four years in a row in Alaska, and then increased only modestly for 2022. However, Alaska does still have among the highest overall average premiums (before subsidies) in the country, and only two states have higher average premiums in 2023.
When we talk about overall average rate changes, it’s important to understand that a specific enrollee’s rate change might be quite different, for a few reasons:
Enrollment in Alaska’s health insurance exchange peaked in 2016. That year, 23,029 people enrolled in private plans (QHPs) through the Alaska exchange.
Enrollment declined quite a bit after that, but began to increase again in 2021. And it returned almost to 2016’s level by 2022, when nearly 23,000 people enrolled. Here’s a summary of how enrollment has looked each year in Alaska’s exchange:
Two insurers currently offer dental plans through the Alaska marketplace. Learn about dental coverage options in Alaska.
Although Alaska had the highest health insurance premiums in the country in the first few years of ACA implementation (and that continued to be the case through 2017), their percentage rate increase for 2017 was much lower than the national average, due to the state-based reinsurance program that Alaska implemented in 2016. And they had a sharp premium decrease for 2018, due to the success of the reinsurance program.
Rates continued to drop through 2021, although they climbed slightly for 2021. And the overall average rate increase for 2023 was about 19%. Wyoming and West Virginia still have average rates that are much higher than Alaska’s in 2023, but Alaska’s average premiums are higher than the rest of the state’s average rates.
For 2018, Alaska received approval, via a 1332 waiver, for federal funding that covers the bulk of the cost of the reinsurance program. Federal funding for the reinsurance program will continue through 2027, under the terms of the five-year waiver and subsequent five-year extension.
Somewhat ironically, Alaska’s individual market claims ended up at a ten-year low in 2017, resulting in a $25 million contribution to the state’s reinsurance program from Premera.
By 2018, with decreasing rates in Alaska and steadily increasing rates in most of the rest of the country, Iowa, Tennessee, West Virginia, and Wyoming all had average premiums that were significantly higher than Alaska’s. In 2019, Delaware, Iowa, Nebraska, West Virginia, and Wyoming all had higher average premiums than Alaska.
For 2020, Premera implemented a slight average rate decrease of 0.03%. Nationwide, insurers reduced rates by about 0.16% for 2020, so the slight rate decrease for Alaska’s existing plans was in line with the national trend.
For 2021, Alaska’s overall average rates decreased again, by roughly 6-7%. Several states have higher average premiums than Alaska in 2021.
By 2022, following a small overall average rate increase in Wyoming, four states (Alabama, Louisiana, West Virginia, and Wyoming) had higher average premiums than Alaska.
But by 2023, only Wyoming and West Virginia had higher premiums than Alaska, due to Alaska’s larger-than-average rate increase for 2023.
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 was the only carrier that remained in Alaska’s exchange after the end of 2016, and the expectation was that they were going to have to raise rates by at least 40% for 2017 in order to cover claims costs. Premera made it clear that they could not 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-run 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 most states have not taken this option. Massachusetts has a merged risk pool; Vermont used to but eventually split the pools up; Maine has a merged risk pool as of 2023).
In an effort to address the problem caused by the very small individual market in Alaska, legislation was introduced in March 2016 to create a supplemental reinsurance program for Alaska that would help to cover the individual market’s largest claims (the reinsurance program covers claims that insurers would otherwise face when insureds have one of 33 high-cost medical conditions). The legislation was passed in June 2016 by the Republican-dominated legislature, and Governor Bill Walker signed H.B.374 into law in July 2016. Although it had the effect of shoring up Obamacare in the state, lawmakers were quick to point out that they were still opposed to the 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 utilized an existing 2.7% assessment on all insurers (including home and auto) that was being sent to the general fund, and directed 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 was a temporary program, and was only funded by the state for 2017. For 2017, the reinsurance program received $55 million of the $64 million that was collected by the existing insurance assessment in 2015; in the first quarter of 2017, Alaska’s reinsurance program paid about $5 million in claims. But ironically, 2017 claims ended up being the lowest in a decade in Alaska’s individual market, and Premera agreed in December 2017 to make a one-time deposit of $25 million into the Alaska Reinsurance Program Fund, helping to cover its costs in future years.
In an effort to garner long-term funding from the federal government (as opposed to taxing Alaska insurance companies), the state sent a 1332 waiver proposal to HHS in late December 2016. The waiver requested five years of federal pass-through funding for the Alaska Reinsurance Program, with an option to renew after that.
The state proposed 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 (this is why it’s called “pass-through” funding). They estimate 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 projected that the reinsurance program would result in a $51.6 million reduction in premium subsidy payments from the federal government in 2018, and Alaska sought permission to use that money to fund the state reinsurance program, with supplemental funding appropriated by the state.
Alaska’s 1332 waiver proposal was approved in July 2017, paving the way for Alaska to become the first state with a reinsurance program using federal pass-through funding (numerous other states have since followed suit). The approval was conditioned upon lawmakers passing legislation to fund the state’s portion of the cost of the reinsurance program for 2018. Alaska lawmakers passed H.B.57 in 2017, which provides $55 million in funding for the reinsurance program, to be used over five years.
In 2022, Alaska’s reinsurance program was extended for five more years, keeping it in effect through 2027.
Prior to developing the reinsurance program, 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 (in 2017, the average subsidy in Alaska was $976 per month, compared with an average of $371 per month nationwide; the dramatically higher subsidy amount was necessary in Alaska in order to bring premiums down to the same level as the rest of the country, but it’s noteworthy that in 2018, the average subsidy amount in Alaska was much lower, at $718/month, while the national average premium subsidy had grown to $520/month).
But although Alaska led the way with reinsurance and numerous other states have subsequently followed suit, Erin Mershon, writing at RollCall, has an excellent explanation of how challenging it was to get Alaska’s reinsurance program approved by state lawmakers, and how ongoing state-based funding requirements could present challenges.
Since 2004, Alaska has had a regulation known as the 80th percentile rule, which applies to all individual plans as well as fully-insured large and small group plans (it does not apply to self-insured plans, which is the preferred insurance approach for very large employers).
When out-of-network care is billed to insurers, the insurers are required to pay an amount that is at least as much as the 80th percentile of billed charges for that service in that geographical area. In other words, if you rank all the providers’ charges in a given area for a given service from highest to lowest, the 80th percentile would be an amount that’s higher than 80% of the charges on the list.
The 80th percentile rule was implemented to protect consumers from unaffordable balance billing from out-of-network providers. As an example, let’s consider what would happen without the 80th percentile rule if a provider charges $2,000 for a service, but an insurance company — with which the provider is not in network — says that the usual and customary charge is $300. In that case, the provider can bill the patient for the other $1,700 (balance billing does not happen with in-network providers, because the provider agrees to accept the insurer’s negotiated rates as payment in full; for in-network providers, the patient only has to pay their normal cost-sharing, in terms of copays, deductible, and coinsurance).
So the 80th percentile rule was implemented to ensure that health insurance plans pay out-of-network providers an amount that’s mostly in line with what providers in a given area are charging, and that’s well above the median charge (which would be the 50th percentile when all of the charges are arranged from highest to lowest).
But the problem that arises is that providers can increase their charges over time, and insurance company reimbursements have to keep pace with the cost increases. This serves to disincentivize providers from joining insurance networks, and drives up the cost of insurance. The Alaska Division of Insurance held a public hearing in January 2017 to consider the possibility of changing the 80th percentile rule. But the 80th percentile rule was still referenced in the filing instructions for 2019 coverage (and each year since then).
Notably, Alaska also requires health plans to cover out-of-network care — utilizing the 80th percentile rule for determining payment. Alaska also requires health plans to eliminate the possibility of “surprise” balance billing from out-of-network providers when a patient is at an in-network facility and is treated by an out-of-network provider without being given an option of an in-network provider (including a scenario in which no in-network provider is available).
Although some have argued that the federal No Surprises Act (effective in 2022) eliminates the need for Alaska’s 80th percentile rule, it was also still mentioned in the state’s filing instructions for 2023. And it should be noted that the No Surprises Act only applies to “surprise” balance billing, and not to other instances of balance billing.
The result of the 80th percentile rule and Alaska’s approach to out-of-network care is that providers get paid regardless of whether they contract with insurance companies, but it may be inadvertently driving up the cost of care. And even though the insurance plan pays at the 80th percentile, the remaining balance that’s billed to the patient can still be substantially higher than it would be in other areas of the country.
Short-term health insurance is available in Alaska with up to 364-day policies, and options to renew up to 36 months.
More than 71,000 Alaskans are covered under expanded Medicaid eligibility that took effect in 2015.
Medicare enrollment in Alaska stands at about 110,000 residents – only about 15% of the population, as opposed to 19% nationwide.
Find affordable individual and family plans, small-group, short-term or Medicare plans.
Learn about adult and pediatric dental insurance options in Alaska, including stand-alone dental and coverage through the state's health insurance marketplace.
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