State granted waiver to continue reinsurance program

July 11--The 23,000 Alaskans in the individual insurance market are projected to see premiums decrease by as much as 20 percent in 2018 after the state received an innovation waiver under the current Affordable Care Act.

While the U.S. Senate debates changes to the ACA, also known as Obamacare, the State of Alaska was approved for a five-year waiver that will allow it to continue the reinsurance program passed by the Legislature in 2016 using $55 million in premium fees to help the lone individual insurance company left in the state hold rates down.

From 2018 to 2022, Alaska's insurance market will be stabilized with $332 million in federal appropriations, it was announced July 11 by the Centers for Medicare and Medicaid Services and the U.S. Treasury Department.

"Today's approval will temporarily stabilize Alaska's individual insurance market, which only has one carrier and has experienced a 203 percent increase in insurance premiums since the Affordable Care Act began," said CMS Administrator Seema Verma.

Premera Blue Cross-Blue Shield of Alaska is currently the only insurance company offering plans through the Alaska healthcare exchange and had 16,732 customers as of May 31.

Its 2017 rate increase was 7 percent compared to a projected 42 percent thanks to the $55 million reinsurance program. The company has said it lost about $7 million over the first three years under the ACA from 2014-16.

The Alaska Reinsurance Program, or ARP, is a state-operated program that covers claims in the individual market for people with one or more of 33 identified high-cost conditions in order to help stabilize premiums for healthier participants.

The state projects that the ARP will reduce premiums by 20 percent in 2018, and an additional 1,460 households currently uninsured may purchase coverage when it is more affordable.

Section 1332 waivers present an opportunity for states to develop solutions that help bring down costs and increase coverage choices for Americans faced with unaffordable premiums, high deductibles, and reduced competition in the insurance market brought on by the ACA.

Verma acknowledged the national struggle to obtain coverage on the exchanges where providers are seeking significant premium increases and 40 percent of counties are left with one or no insurance provider.

CMS held up Alaska's approach as a creative solution other states could pursue in a national news conference announcing a long-awaited decision after the state applied for it in December.

Division Director Lori Wing-Heier was out of town and was unavailable to comment on the announcement.

Because some 90 percent of Premera's individual market customers qualify for at least some income-based subsidy from the federal government, lower premiums reduce the size of those individual subsidies.

CMS stated that the second-lowest cost silver plan premium will be reduced, resulting in the federal government spending less in premium tax credits.

In its waiver application, the state projected the reinsurance program would save the federal government more than $48 million in 2018 alone.

"Based on these projections, CMS and the U.S. Department of the Treasury are approving the request," CMS said in its announcement.

Randy Pate, deputy administrator of CMS and director of the Center for Consumer Information and Insurance Oversight said the total 2018 outlay will be $59 million, with $11 million of that required to come from the state.

According to the approval letter, the state Legislature must reauthorize the ARP by September and appropriate sufficient funds for the 2018 calendar year. The ARP and the premium fees that funded it were only approved for 2017 when passed last year.

Gov. Bill Walker's office issued a statement lauding the announcement. The waiver stabilizes Alaska's individual health insurance market, bringing in approximately $332 million to the Alaska Reinsurance Program over the next five years, according to the governor's office.

"I thank the Trump Administration, members of the Legislature, and the congressional delegation for their efforts," the governor said. "I especially thank Division of Insurance Director Lori Wing-Heier for proposing this innovation for Alaska, which has also served as a model for other states."

The news comes just as Premera is finalizing 2018 individual rate filings. Rates will be filed with the state before the deadline on July 17, said Melanie Coon, the senior communications manager for public affairs. The state will analyze the proposal prior to approval after rates are submitted.

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(c)2017 the Alaska Journal of Commerce (Anchorage, Alaska)

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