As Senate panel pushes ahead on health care, Alaska’s reinsurance program gets high marks

After the demise of Republican hopes for a sweeping repeal of Obamacare, the Senate Health, Education, Labor and Pensions Committee is undertaking its own bipartisan effort to reform and bolster the country’s health care system, and Alaska’s newest insurance program has the attention of a key leader in the renewed process.

Committee chairman Sen. Lamar Alexander, R-Tenn., frequently referenced Alaska’s new reinsurance program—which is credited with a more than 20 percent expected drop in next year’s insurance premiums—in a new interview about the committee’s work. Alaska U.S. Sen. Lisa Murkowski is also a member of the committee.

Alaska’s reinsurance program provides additional insurance for people with high-cost medical expenses to insurance companies operating on the individual marketplace. It’s funded with federal money, but expected to have no net impact on the federal deficit because the corresponding drop in insurance premiums will require less in federal premium tax credits.

The program seeks to solve a problem that’s plagued many state marketplaces where there aren’t enough healthy individuals buying insurance to cover the costs of the few expensive-to-cover individuals. In those situations, premiums tend to skyrocket causing more and more people of the healthy people to drop out of the market, which in turn causes premiums to continue to rise.

A program modeled after Alaska’s reinsurance program could address that problem around the country.

Alexander’s own state Tennessee is also struggling with an insurance market filled with expensive-to-cover individuals.

“Most of the Republican senators I’ve talked to understand the more you deal with the very sickest Americans who consume a huge amount of the health care costs, once their needs are taken care of you then lower the costs for everyone else in the health care market,” he told The Tennessean.

“What Alaska was able to do with the Sect. 1332 waiver that was just approved is to take some of the money that comes from the federal government to Alaska to pay for Obamacare subsidies and move it to reinsurance. When they did that they took, care of the very sickest people in Alaska and were able to reduce premiums for everybody else by about 20 percent.”

He told The Tennessean the main goal of the legislation the committee produces will be to provide stability to marketplaces.

The key purpose of the work will be to ensure states continue to receive cost-sharing reductions—subsidies to help low-income people with out-of-pocket medical expenses—and give states greater flexibility to craft new solutions under Obamacare. Trump has threatened to cut off the monthly cost-sharing reduction subsidies, a move that the Congressional Budget Office predicts will cause premiums to spike about 20 percent around the country.

It appears, however, that a nationwide reinsurance program isn’t on the table for the group.

According to a report by Axios, the group’s main focus is on the cost-sharing subsidies and opening up the waiver program, which is what allowed Alaska to create its reinsurance program. Reinsurance could become more broadly available, but it’ll be a decision left up to individual states.

Murkowski involved

Murkowski will get to have a say in the shaping of the new bill because she has membership on the committee. She said in an interview with the Fairbanks Daily News-Miner that it’s a return to regular committee process on the health care bill, something she called for throughout the rushed, secretive repeal process.

“The committee process, which is something that I had been pounding the drum on for months and months, is underway,” Murkowski said at a Monday interview with the Daily News-Miner editorial board.

She also cheered on the state reinsurance program, but noted that out-of-pocket costs and deductibles are painfully high for many Alaskans.

“Alaska is the only state that at this time has been granted a 1332,” Murkowski said. “It is one of the reasons that we’re seeing Premera come back with recommended (rate) decreases while every other state is seeing increases. … People, who even though they may have insurance, they’re deductibles are so high that they’re deferring care.”

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