Approval of Alaska’s state innovation waiver by the Centers for Medicare and Medicaid Services will bring some $332 million in federal funding to the Alaska Reinsurance Program over the next five years.
Gov. Bill Walker announced the decision on July 11, saying it will stabilize the state’s individual health insurance market.
“Health care costs are increasingly unaffordable for a growing number of Alaskans,” Walker said. “The waiver provides relief from large premium hikes for 23,000 Alaskans who are currently insured through the individual market.”
Walker said he credited Division of Insurance Director Lori Wing-Heier for proposing this innovation for Alaska, which has also served a model for other states.
The Alaska Reinsurance Program uses federal dollars to re-insure claims for Alaskans with high cost medical conditions, which reduces premiums for all of the roughly 23,000 residents in the individual market. This, in turn, reduces federal subsidies across the market. The federal innovation waiver passes the savings from reduced federal tax credits back to the state government. Essentially, federal funds offset the price of insuring those with high cost medical conditions, Walker said.
Premiums in the individual market are expected to decrease by about 20 percent as a result of this program. With recent announcements of double-digit premium hikes and insurers exiting individual markets across the country, many states have expressed interest in adopting Alaska’s model to stabilize their individual health insurance markets.