Alaska marketplace health insurance premiums are set to stabilize. But the end of tax credits could still mean higher costs for many

Aug. 12—Thousands of Alaskans who purchase health insurance through the federal individual marketplace could see slight decreases in their premium rates next year, after three years of steep rate hikes that amounted to a 50% increase over three years, according to preliminary federal filings.

But without an act of Congress, the expiration of tax credits is set to cause health care costs for Alaskans insured through the federal marketplace to rise precipitously next year.

The Premera Blue Cross Blue Shield Alaska Standard Plan saw a 16.5% rate hike between 2023 and 2024. It then rose 14.5% between 2024 and 2025. This year, the company requested a 1.75% decrease in the rate for the same plan. The requested rates are currently under review by the Alaska Division of Insurance.

Premera covers nearly 20,000 Alaskans through the individual marketplace, making it the largest insurer in the state. The only other company to offer plans through the individual marketplace is Moda, which proposed virtually unchanged rates for 2026.

"The high cost of care affects everyone in Alaska, and we're really doing our level best to bring that cost down as low as we possibly can," said Jim Grazko, president of Premera Blue Cross Blue Shield of Alaska, in an interview on Monday.

Grazko said that the company took into account the expected elimination of enhanced premium tax credits when calculating rates for 2026.

The premium tax credits were created through the Affordable Care Act and expanded through the Inflation Reduction Act in 2022. The enhanced tax credits are set to expire at the end of the year, and Alaska's insurance rates through the federal marketplace could go up by hundreds of dollars for individuals, and thousands for families, according to the Alaska Division of Insurance.

Premera "factored in that the composition of the pool might change because you may have people at certain income levels that are currently insured that have to drop off because of the loss of a portion of that tax credit," Grazko said. "If only the people that need it most stay on, then the premium rates would be driven up."

If the enhanced premium tax credits are allowed to expire, Grazko said, the company could be compelled to raise premium rates again in 2027.

U.S. Sen. Lisa Murkowski said last week that she was working with a bipartisan group of colleagues to extend the tax credits.

"There is a legislative effort that is underway to hopefully be able to advance something before the end of the year with regards to the premium tax credits," Murkowski said during a press conference in Anchorage.

Murkowski said she was driven to address the extension of the tax credits in part because millions of Americans are projected to lose access to Medicaid — which covers one in three Alaskans — due to newly established work requirements in the budget reconciliation bill signed into law last month.

"If people get pushed off of Medicaid because of — whether it's not being able to meet work requirements, failing to comply with them — the answer will be, 'well, move to the exchange,' but if the exchange is no longer affordable, then it doesn't help people who are either coming off of Medicaid, (or) people ... who have been able to afford this high cost of health care because of the exchange," Murkowski said at the press conference.

U.S. Sen. Dan Sullivan, who also attended the press conference alongside Murkowski and Health Secretary Robert F. Kennedy Jr., did not say whether he was working alongside Murkowski on extending the tax credits.

Sullivan "is aware that the cost of health insurance in Alaska is high, and that many working Alaskans are able to afford health care coverage because of the enhanced tax credits," his spokesperson Amanda Coyne said in a text message Tuesday.

80th percentile rule

Rate changes from year to year are determined by a variety of factors, including the frequency that Alaskans seek care, and the cost of care in the state, Grazko said.

Grazko attributed this year's rate stabilization in Alaska not to a reduction in the cost of delivering health care or how often Alaskans seek care (the frequency is actually going up, Grazko said). Rather, he said the proposed rate reductions were due to the repeal of a longstanding state regulation known as the 80th percentile rule.

Under that regulation, which was repealed in January 2024, insurance companies were required to pay out-of-network providers at least the 80th percentile of the average going rate for a medical service.

The rule prevented Alaska patients from receiving large medical bills for out-of-network care, but the administration of Gov. Mike Dunleavy argued the rule also increased the cost of health care over time.

Grazko said the repeal "had a downward impact on overall claims," meaning that fewer insured Alaskans were able to file claims for out-of-network care.

Fewer claims meant reduced cost to the insurance companies, but it didn't cause the cost of care to go down, according to John Morris, who spearheaded a lawsuit filed by a broad coalition of health care providers against the Dunleavy administration over the repeal of the regulation. The Anchorage Superior Court has yet to rule in the lawsuit.

"Every dollar that they claim is a reduction in premiums ... would represent a dollar that Premera is not paying for some health care, but some patient is. It's really just shifting costs," said Morris. "What it means is, the patient is either not getting the health care, or they're paying out of pocket to see the doctor that they want to see."

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