State Strategies: Alaskas Reinsurance Program

Table of Contents

Introduction of the Strategy
The rationale for the Strategy
Adoption
Funding and Impact
References

Introduction of the Strategy

As the Affordable Care Act became effective in 2014, a rule has been established that nobody should be denied health insurance based on their health status and medical conditions (Alaskas individual health insurance market: Reinsurance is a path forward to achieve sustainability, 2016). Before the implementation of the federal health reform, the ACHIA (the Alaska Comprehensive Health Insurance Association) that also overlooks the high-risk pool of that state, provided health coverage to the persons unable to obtain insurance due to the nature of their medical conditions (Alaskas individual health insurance market: Reinsurance is a path forward to achieve sustainability, 2016). After the introduction of the federal health reform, the individuals who accessed insurance through ACHIA, are now able to purchase their health coverage in a private market.

The rationale for the Strategy

Fairly recently, the Obamacare marketplaces located in Alaska were facing many difficulties and seemed to be about to implode; the so-called death spiral involving the rapid and dramatic increase in the cost of premiums for individual health insurance plans; this was caused by the tendency of purchasing the health coverage by the people with the priciest treatments, thus driving the rates up year after year (Kliff, 2017).

The average growth rate was 25%, and it tended to increase and risked to turn into 42% very soon (Kliff, 2017). As a result, a new and innovative initiative was taken by the state officials to introduce changes to the impact of the federal reform and make it more favorable for the states policies. In that way, Alaskas insurance commissioner, Lori Wing-Heier, created a plan according to which the state was to pay back the insurers covering especially high medical bills claimed by the people covered by Obamacare.

Adoption

The bill for the Reinsurance Reform passed the state legislature applying for a waiver for state innovation for health coverage; the first reading of the bill took place in March 2016, and there were three readings in total (The Alaska State Legislature, 2017). The bill was signed into law in November 2016 (The Alaska State Legislature, 2017).

Funding and Impact

The impact of the Reinsurance Reform was quick and significant. In particular, the change affected the finding of the insurance coverage for the Alaskan Obamacare enrollees. A general fund of 55 million dollars was created out of the tax revenue obtained from the insurance plans; with the help of this plan, the states major and only insurer (Premera) was convinced to reduce the cost of premiums it offered by a total of 56 million dollars, thus saving a lot of money for the insurance consumers, as well as the federal government whose role was to subsidize the providers of the highest premiums (Quinn, 2017). However, this arrangement is not a long-lasting one and will expire in just two years. The further plan of the state of Alaska is to ensure the help of the federal government and request that for the next five years the reinsurance program is funded by the Centers for Medicaid and Medicare Services (Quinn, 2017).

The changes introduced by the program lowered the costs of premiums for all the stakeholders and reduced its overall increase to 7% (Kliff, 2017). As a result of the success of the program developed in Alaska, the other states became interested in trying out this strategy in their territories. Currently, Alaskas insurance commissioner is in working with the Administration of President Trump attempting to build the system where the federal government will take over the costs of the initiative replacing the state government (Kliff, 2017).