Division of Insurance approves health plan rate hikes

JUNEAU — The Alaska Division of Insurance has approved rate increases of up to 40 percent for individuals who bought health insurance plans through the federally run online marketplace.
Roughly 10,000 Alaskans receive federal subsidies to help pay their premiums, and increases for those individuals are expected to be largely offset by their subsidies, division director Lori Wing-Heier said Monday.
The greatest impact is expected for roughly 6,000 Alaskans who do not receive subsidies. That figure includes Alaskans who bought insurance outside the marketplace. About 13,000 Alaskans signed up for coverage through the exchange.
There are two providers on the exchange — Premera Blue Cross Blue Shield and Moda Health. Wing-Heier said the filings of insurers outside the marketplace are not yet complete.
Under the law, she said, the filings are considered confidential until their effective date of Jan. 1, 2015.
The division announced the rate increases in a press release last week, blaming the federal health care overhaul sometimes known as “Obamacare.” Wing-Heier cited the relatively small market, which has to support its claims, and claims during the first half of the year that were “quite horrible.” She said it’s not clear if it was really sick people who ended up in the plans or pent-up demand.
U.S. Sen. Mark Begich, a supporter of the health care law, said thousands of Alaskans would have access to care if Gov. Sean Parnell accepted federal funding to expand Medicaid coverage in Alaska. Parnell, a critic of the law, refused to do so last year, citing cost concerns.
Begich has proposed creating a new tier of insurance policies with lower premiums but the odds of that happening this year seem long, with the Republican-controlled U.S. House pushing to have the law repealed. Mike Anderson, a spokesman for Begich’s Republican rival Dan Sullivan, said Begich’s vote for the health care law is “costing Alaskans greatly.”
Tasha Bradley, a spokeswoman for the U.S. Department of Health and Human Services, said the state could offer more affordable market options with a more robust rate review program. Alaska is among several states that did not apply for a rate-review grant from the federal government, according to the Centers for Medicare and Medicaid Services.
“Until the state’s insurance department releases actual rate information, rather than only the maximum possible rate increase, consumers will not be able to tell how their premiums may change in 2015,” she said in an email.
A new open enrollment period is set to begin later this year.
The division, in laying out the rate increases, focused on a 37 percent hike, which would apply to the popular silver plan offered by Premera, Wing-Heier said.
Increases range from 22 percent to 29 percent across all plans for Moda and 35 percent to 40 percent for Premera, she said.
The increases are considered justified, Wing-Heier said, saying there wasn’t a month in which the insurers did not lose significant money. She said the division was working off six months of data, and the increases were the result of factors such as looking at the companies’ financial strength and negotiating. She said Premera initially indicated it would need a rate increase of 70 percent.
Premera, in a statement, said it would need a 71.5 percent average increase to break-even next year but filed for and received a 37 percent average increase. The company noted the actual rates will vary depending on plan types and things such as members’ ages.
From January to June, the company said it had more than $7 million in medical claims from 33 Alaska members.
Premera expects to lose $5 million next year, even with the increase. A Moda spokesman did not return messages seeking comment.
Premera spokesman Eric Earling said the company is urging the state to create a supplemental reinsurance program to help stabilize the market and spread high medical costs across the entire insured market. He said that would help stave off future large increases.