Highlight on Alaska: Alaskan fund reminiscent of high risk pools–Will the country follow suit?

In the summer of 2016, Alaska’s Republican legislature passed, and the independent governor signed into law, a bill that established a state health insurance fund to stabilize rates and cover the medical costs incurred by high-usage insured individuals with insurance companies. The fund is reminiscent of high-risk insurance pools that existed prior to the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), when individuals could still be denied coverage for pre-existing conditions and had difficulty obtaining insurance. Although the law was a reaction to rising costs among Alaskans and Alaska’s insurers, other states may follow suit, now that President-Elect Donald Trump has indicated that his administration will “work with both Congress and the states to re-establish high-risk pools.”

Alaska’s small population is subject to high health care costs.  Only 23,000 Alaskans enrolled in the non-group market in 2016.  Average monthly marketplace premiums were $863 pre-advance premium tax credit (APTC) in Alaska, according to an April HHS Assistant Secretary for Planning and Evaluation (ASPE) report, compared to $396 in the rest of the nation. Premiums rose by more than 31 percent in 2016 in Alaska, compared to just over 1 percent nationally, and not all marketplace enrollees qualified for premium tax credits. Only one insurer, Premera Blue Cross, will remain in the marketplace in 2017. Notably, Premera insured 8,500 people in 2015, but nearly one-quarter of its monetary claims arose from only 37 cases.

House Bill (HB) 374, which was signed into law in July 2016, earmarks $55 million accrued through an existing 2.7 percent premium tax on all Alaskan insurers–not only health insurers–for a comprehensive health insurance fund. The fund provides insurers with money to cover the costs of claims incurred by high-risk residents. The bill sunsets in two years, but allows the state to apply for a state innovation waiver under section 1332 of the ACA.

The incoming federal administration, however, has stated its plans to repeal the ACA and replace it with new legislation.  Other states may consider following Alaska’s lead in order to continue to provide insurance to those individuals with the greatest need for it.