Amid debate over ACA, Alaska offers unique case study

Alaska's individual insurance market, much like its famously dramatic landscape, is unlike anywhere else in the country. (Getty/fon_thachakul)

As policymakers debate the future of the Affordable Care Act, perhaps no state has more on the line than Alaska, which has found a way to patch up its individual market despite steep challenges.

With some of the highest healthcare costs in the country and by one measure, the most expensive insurance premiums, the state has always proved a tough testing ground for healthcare reform, according to the Associated Press.

Those high premiums, combined with a stubborn streak among the state’s residents even though many hold dangerous physical jobs, lead many to decide that buying insurance isn’t worth it, the AP article adds. The state’s uninsured rate as of 2015, 13%, trailed those of only Texas and Georgia.

Further, only about 19,000 of the state’s 740,000 residents get insurance through the individual market, and that small risk pool is served by just one insurer, according to the AP.

That sole insurer, Premera Blue Cross, reported that about a quarter of the $67 million in claims it paid last year for Alaska exchange enrollees came from just 20 high-cost patients, according to Kaiser Health News. As Melanie Coon described it, Alaska is simply ”not like other states.”

The state’s unique challenges, however, have led it to pull its individual market back from the brink. Last year, Alaska officials created a $55 million reinsurance fund paid for through a statewide tax on all types of insurers.

The result was that Premera raised its rates only 7% for 2017, rather than an expected premium increase of more than 40%, according to KHN. For a longer-term solution, Alaska applied for a Section 1332 waiver that asks the federal government to funnel $51.6 million into the reinsurance program that it otherwise would have used to pay for premium subsidies in 2018.  

Given the success of Alaska’s reinsurance approach, and the fact that it is one of the few policies the Trump and Obama administrations agree on, other states like Minnesota are already mulling similar approaches, Vox reports.

Lori Wing-Heier, the state’s insurance commissioner, told the publication that she’s confident the waiver will get approved—and that it was the right move for the state to stabilize its marketplace.

"Do I think it's a perfect solution? No, but it works for us," she said.