Monthly Premiums For Health Insurance On The Federal Marketplace Will Rise 16% In Alaska Next Year

Monthly bills for Alaskans using the federal health insurance marketplace are expected to rise about 16% in 2024, on top of an 18% increase last year, for a total increase in costs of more than a third over two years.

Higher overall health care costs and increased health care volumes post-pandemic are causing Alaskans to increase their monthly insurance premiums, according to interviews with the state's top regulator, an insurance executive and Alaska's chief medical officer.

Insurance company profits are not the reason, they added. Premera Blue Cross Blue Shield, whose 20,000 members make up about 80 percent of Alaska's 24,000-person individual market, posted a $26.5 million operating loss on that coverage last year, according to documents filed with the federal government.

“Nobody in the current administration is happy with these rate increases,” said Laurie Wing-Heer, director of Alaska Insurance, whose office regulates the individual market and is required by law to waive “excessive” premiums. But he added: "We have to be realistic about this."

“We can't say you can't raise rates if we know it's warranted based on the year-end closing date in 2022,” he said. “No matter how much it hurts, you have to face reality.”

Alaska's single market annual growth is the highest in the nation, in a state where health care costs are already among the highest in the country. The period for obtaining insurance coverage for 2024 began on November 1 and will last until January 15.

For a 40-year-old Anchorage customer, the monthly premium for one of Premera's mid-range "silver" plans will increase by $1,106 next year, up from $961 this year, according to a report provided by Wing-Here State analysis. Rates vary by location and age, and other, less comprehensive plans have monthly premiums as low as $306.

Many Alaskans also don't pay the full cost of their plans.

Last year's Inflation Relief Act extended an important federal tax break on premiums through 2025. Depending on the client's income level, the loan may cover the entire premium amount in advance of monthly expenses. (The federal insurance marketplace website Healthcare.gov walks consumers through this process.)

Even for those earning four times the federal poverty level or more, the credit can still cap premiums at 8.5 percent of household income. And Native people can also receive top-notch care through the Alaska Native Health Consortium.

“You may be surprised to learn that you are eligible for a scholarship,” says Dr. Ann Zink, Alaska's chief medical officer. “I think there are a lot of people who don’t even check.”

Most Alaskans obtain health insurance not through the individual insurance market, but through employer-sponsored group insurance or the government-sponsored Medicaid and Medicare programs. Small group insurance premiums continue to rise, but at a slower rate: they will average about 6% in 2024 after increasing 6% between 2022 and 2023, according to government data.

However, Zink said more residents may seek individual health insurance after the recent expiration of a pandemic-related ban that prevented states from disenrolling people from Medicaid.

Experts say the retail market has seen strong growth over the past two years as Alaskans sought health care they had foregone during the pandemic. This trend has spread throughout the country.

“Let's say 5% of the population needs a knee replacement and does not receive it in 2020. In 2021 and 2022, they will still be a little cautious,” Wing-Heer said. "In 2023 we'll all be thinking, 'Covid is over and I'm dealing with it now.'

Greater demand for health care directly translates into higher monthly premiums because 90% of premiums are used to cover health care costs, said Jim Grazzko, president of Premera Alaska.

“People are using more and more services,” Grazzko said. “And the services they use have a higher cost per service.”

Group premiums are more stable in Alaska, Grazzko added, because the market covers a broader group of members who typically require less care: Individual consumers are more likely to buy insurance only when they are sick, even if companies or government agencies do so. Anyone who recruits is healthy.

One change that would help limit future growth of the individual market could be giving state insurers more flexibility in designing their plans, Grazzco said.

Alaska currently requires insurers to cover at least some services even if they are outside the insurer's network, Grazzko said. In Washington, Premera offers a no-benefit plan for out-of-network individuals that is 15% cheaper than an alternative plan with some out-of-network coverage.

“This could be another way for consumers to choose between cheaper premium options in exchange for a narrower network or slightly less provider choice,” he said.

Gratzko and Wing-Heer said the 2024 rate hike will be smaller than it would have been without a major policy move from Republican Alaska Gov. Mike Dunleavy's administration: eliminating what was previously called the "interest rule."

The rule, originally intended to protect consumers, requires private insurers to pay out-of-network services at rates that cover the 80th percentile of all bills for those services in a geographic area. It will be canceled from January 1st.

Some providers oppose the measure, saying it would effectively force them to join insurers' networks, accept unaffordable pay for their work and even leave their state.

But critics, including Premera, say the rule increases health care costs because it allows providers to operate outside insurers' networks and charge increasingly higher rates. An economic study found that the rule increased health care costs in Alaska by 8 to 25 percent between 2005 and 2014.

Gratzko said the average Premera rate in 2024 would have been about 18.5% if the 16.7% increase rule had not been eliminated.

With the law's repeal now in effect, Wing-Hear, its parent agency, the Department of Commerce, is now demanding more complete information about health care costs and payment systems in Alaska.

Earlier this month, the department issued a “written request for comment” on topics including benefit calculations, new payment models that should be considered and “value-based payment methods for care.” It invited “all interested parties and clients” to participate before the March 1 deadline.

“We ask you what you would do or what you would like to see,” Wing-Heer said. Regarding rising costs, he added: “We know taking action is not an easy decision. There are suppliers and there are consumers, and one way or another, working with all of these parties, we need to solve the problem in Alaska.”

Nathaniel Hertz welcomes suggestions at natherz@gmail.com or (907) 793-0312 . This article was originally published in North Journal , a resin newsletter. Subscribe to this link .

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