Gov. Bill Walker announced today that health insurance rates for people on the individual marketplace could drop by as much as 20 percent thanks to new federal funding. There are about 23,000 people insured through the marketplace.
Alaska will receive $322 million over the next five years to stabilize the individual marketplace through the Alaska Reinsurance Program. The money comes through the federal 1332 waiver program set up in the Affordable Care Act for state-driven innovation in insurance markets.
The Alaska program was created in the 2016 legislative session. Alaska Division of Insurance Director Lori Wing-Heier warned that without it the individual marketplace could collapse, leaving individuals without any other insurance options.
“I’m pleased that the federal government has worked with the state to pursue innovative solutions for stabilizing our market,” said Alaska Division of Insurance Director Lori Wing-Heier in the announcement today.
The money addresses one of the core problems of Alaska’s marketplace.
Alaska’s marketplace has been challenged because the cost to care for sick Alaskans hasn’t been adequately covered by the number of healthy Alaskans buying insurance. That combined with Alaska’s already high health care costs has lead to steep increases and the marketplace options to dwindle to just Premera.
The new federal money would go to re-insure people with high-cost medical conditions. That means there would be less burden on everyone in the marketplace o pay for the care of the sickest, and the announcement expects rates should drop by about 20 percent across the board.
It’s because of those savings that the waiver is not expected to increase the federal deficit. The $322 million is available because the 20 percent in reduced insurance rates is expected to reduce the need for federal subsidies.
The long-term outlook
The money will be in place over the next five years so it’s considered a short-term reprieve from premium hikes, but it does offer a glimpse into some of the key components of the GOP replacement of Obamacare.
Contained in the Senate bill is tens of billions of dollars for short-term stability and long-term innovation for the marketplaces. These funds haven’t been well-publicized, but the Alaska Reinsurance Program would be a good example of how they could come into play. It’s not clear if these funds would counterbalance the deep cuts to subsidies, but it’s an example of potential changes Congress could make to help states with health care.