Alaskans face massive health insurance cost increases unless Congress acts before year end

More than 25,000 Alaskans who buy health insurance through the federal marketplace will face massive and possibly unaffordable cost increases if federal subsidies expire at the end of the year.

"I do think it's important to recognize that we should be seeing thousands of people likely lose coverage from this," said Jared Kosin, president and CEO of the Alaska Hospital and Healthcare Association.

In a panel discussion last month, local experts in Juneau laid out the stark reality for Alaska, which has the highest health care costs in the nation.

Speaking to a room at Juneau's convention center, they said if federal subsidies end, the cost of health insurance would rise so much that many Alaskans will go uninsured, discouraging them from getting checkups that could prevent serious illnesses. Hospitals would see a larger number of emergencies from uninsured people, straining them. It might even lead to an exodus from the state, as people seek alternative options and cheaper places to live.

"I worry about that," said Kim Champney, executive director of the Alaska Association on Developmental Disabilities. "Because I think people will decide to leave Alaska because we have the most expensive health care in the country."

Anton Rieselbach, with the Juneau Economic Development Council provided an analysis of cost estimates for Juneau. In Alaska's capital city alone, 1,389 people receive health care via insurance plans bought through the federal marketplace. Right now, those Juneauites pay an average of $124 per month. If those subsidies expire, that will rise to $1,008 per month, an increase of more than 700%.

The council, a nonpartisan organization devoted to economic growth in the capital city, is worried about what will happen if the subsidies expire.

"We want people to be working and spending money, generating economic activity," Rieselbach said, "but this just places another huge burden on people's ability to spend their money in other arenas besides health insurance."

A PROBLEM YEARS IN THE MAKING

The upcoming problem stems from federal subsidies enacted by Congress in 2021 and extended through the end of 2025. Those subsidies, known as "enhanced premium tax credits," were applied on top of subsidies included in the original Affordable Care Act, which established the federal insurance marketplace.

Now, almost anyone who buys an individual health care plan through the marketplace gets some kind of subsidy.

Generally, that includes people whose employers don't provide health insurance, self-employed people, and people who retired early and aren't yet eligible for Medicare, which insures people with disabilities and people 65 or older.

Subsidies helped expand the number of people on federal marketplace plans from 11.4 million in 2020 to 24.3 million this year, allowing millions of Americans to get regular health care.

They also came at a high cost to the federal treasury: Extending them for another 10 years would cost $335 billion.

But if subsidies end, Alaska would be exceptionally hard-hit. The state has the highest health-care costs in the nation, which means unsubsidized insurance rates are high.

Of the 28,736 Alaskans who have health insurance policies through the federal marketplace, 25,170 receive the enhanced subsidies, according to figures published by the Centers for Medicare and Medicaid Services.

If the enhanced subsidies expire, the poorest Alaskans will still see their plans subsidized. Middle-class Alaskans would be hard hit.

According to estimates published in March by the Alaska Division of Insurance, a single 50-year-old who earns $58,650 per year would see their monthly health insurance cost rise from $282 per month to $407 per month for a "silver" plan. If they have a "bronze" plan, their costs wouldn't change.

But Alaskans who earn more than 400% of the federal poverty line — $78,000 per year for an individual — would see their costs skyrocket.

That same 50-year-old would go from paying $534 per month for a silver plan to $1,415 per month. Under a bronze plan, their cost would go from $9 per month to $890 per month.

Lori Wing-Heier, the director of the Division of Insurance at the time of those estimates, called the increase "pretty horrific" for affected Alaskans.

"It's an insane amount," said Rep. Genevieve Mina, D-Anchorage, talking about the increase.

This spring, Mina sponsored and the Alaska Legislature passed House Joint Resolution 9, a bipartisan letter asking Congress to extend the subsidies.

Across the state this year, the average monthly premium for Alaskans of all ages and all plans was $971.43, but the average subsidy was $866.28, the Division of Insurance said in March.

Kosin, of the hospital and healthcare association, said his group thinks it's "really important" to extend the enhanced subsidies.

Insurance is based on the concept of sharing risks and costs. The more people in an insurance pool, the better it works. Subsidies encourage healthy people to be a part of the health insurance pool, he said. If people drop off, the cost of caring for any individual person is spread among fewer members, and rates go up.

AN EXTENSION RELIES ON CONGRESSIONAL ACTION

For the moment, Alaskans only have estimates of what will happen if the subsidies expire. Open enrollment on the federal insurance marketplace starts Nov. 1. There's a "window shopping" period at the end of October that will give a sneak preview.

People must sign up by Dec. 15 to get insurance coverage that starts with the new year. Miss that deadline, and Jan. 15 is the deadline to get coverage that starts Feb. 1.

Kosin said he's heard the argument that Alaskans could afford health care before the enhanced subsidies came into effect, and so there won't be many people who drop their coverage.

That fails to take into account the way health insurance costs have gone up since 2020, he said.

In 2023, 2024 and 2025, the average cost of a health insurance marketplace plan in Alaska rose by more than 16% each year. In 2023 alone, the cost went up by an average of 18.4%.

"If there truly is a doubling or tripling of premiums, especially at once, I think I would have to guess it would be a higher percentage than a fifth of the population that would consider themselves priced out of the market," he said.

U.S. Sen. Lisa Murkowski knows plenty of those people.

"If you are a 60-year-old couple (earning about) $82,000 in Alaska, you would be looking at a premium increase … without enhancements, of $44,556. My husband and I are over 60. Now, granted, we're not on the exchange, but I have a lot of friends are in that category, and I don't know very many of them that could swallow an additional $44,000 a year to pay for their insurance if they're on the exchange," she said in a Sept. 17 phone call.

Murkowski is among the members of the U.S. Senate who have been trying for months, without success so far, to find enough votes to extend the subsidies.

IMPENDING GOVERNMENT SHUTDOWN

The issue has now gotten entangled with the impending government shutdown. Senate Democrats have demanded — among other things — a permanent extension of the health care subsidies, without changes, in exchange for their votes on keeping the federal government open.

Sen. Dan Sullivan also supports an extension of the subsidies, but "there's no way I would ever vote for that," he said of the Democratic plan.

"I do think there's bipartisan support to get this done. We've just got to power through these different issues," he said by phone.

He identified three hurdles for the subsidies.

"It's how long you extend them; are there pay-fors (budget cuts to compensate for the cost of the extension) … but the most important and complicated — and we just did a deep dive on this, and I do think there's bipartisan support on this, is reforms," Sullivan said.

"We are looking at ways to reform the system to make it work for the people who need it and are using it honestly, but have a disincentive against those who have been abusing it," he said.

"We're getting there. It's complicated. I think the reform piece is going to be the most complicated, but I'm hopeful, and I'm putting a lot of effort into it," Sullivan said.

Murkowski is more interested in a straight extension without changes. She introduced a standalone two-year measure and voted against both Republican and Democratic proposals to keep the government open, saying one of her conditions was an extension of the subsidy.

Speaking by phone this month, Mina noted that an extension has the support of groups as far afield as the Anchorage Chamber of Commerce.

"I think if you're directly on the insurance marketplace, you should be concerned. But also, if you care about economic diversification and startups, you should also be concerned," she said.

If the marketplace doesn't work, she noted, it would increase the costs of health care for everyone in the state because hospitals are required to treat people regardless of their ability to pay. If people can't pay, that means their costs get shifted to people who can, increasing the health insurance rates of everyone, not just those on the marketplace.

"What I fear is that we're regressing to the state that we were in (a decade ago) when we had all of these news articles about people paying like, $800, $1,000 a month for their health insurance, and we were able to stabilize that and find solutions to help people," Mina said. "We're just going backwards in that regard."