Alaska Division of Insurance Director Lori Wing-Heier presented the Senate Health & Social Services Committee an outline of the region’s health insurance market Feb. 17. The agency’s outline found that the state’s enrollment numbers for the individual market have dropped and that not only does Alaska have some of the highest premiums in the country, but the premiums continue to rise.
The Senate requested the agency to prepare the overview in order to gauge whether or not legislative action is needed to address Alaska’s insurance issues.
According to the report, the individual market grew by 5,867 and the group market by 2,972 between 2014 and 2015. The number of insurers, however, had dropped; Aetna and
Assurant had dropped out of the small group market, and the individual market is down to only Premera and Moda.
When open enrollment closed by the end of January, the posted enrollment numbers for the individual market was at 23,029, which is lower than the number of enrollees in 2014. Curiously, the small market performed much better than the others, for reasons the agency has yet to discover.
The overview pointed out that in the individual market, both written premiums and claims are rising. For instance, Premera’s written premiums surged from $40 million in 2013 to 70 million in 2014. In the same period, the overall number of claims increased by 46 million. Wing-Heier pointed out that for every dollar Premera collected in premiums, the insurer paid out $1.05 in claims.
Moda experienced a similar increase of up to $30 million n written premiums, and $32 million in claims. For every dollar the company collected in premiums, it paid $1.04 in claims.
Premera saw a 7.2% rate increase in 2015 and a 38.7% increase in 2016. On the other hand, Moda saw a 27.3% increase in 2015 and 39.6% in 2016.
Data from the Health Care Commission suggests that Alaska’s high health insurance premiums are due to the costs partly based in the actual costs of health care. The HCC’s study also suggests that the high premiums are also the result of how Alaskans are utilizing health care.
Wing-Heier’s overview concludes with a list of possible recommendations to address the issues it had come across. The possible solutions include having Alaska apply for a State Innovation Waiver under Section 1332 of the ACA, letting the Alaska Comprehensive Health Association administer a reinsurance program for both Premera and Moda, creating a Western Region health exchange in partnership with other western states, and combining the individual and small group markets to spread the risk evenly.
