Prepare for first-degree sticker shock if you own health insurance in Alaska, when major changes of Obamacare come into play.
While the act will produce winners and losers, and uncertainty will reign until the changes are in place Jan. 1, the state's largest insurance company already anticipates having to raise premiums on thousands of Alaskans by heart-stopping amounts.
The good news is Premera Blue Cross Blue Shield of Alaska won't seek an increase in 2013, a change from most years in the recent past.
In 2014, watch out. Hardest hit could be many of the 10,000 Alaskans covered by individual insurance policies, and not through an employer, said president Jeff Davis. For individual policies created after Obamacare became law, Premera expects rates will rise, on average, 30 percent to an astounding 88 percent.
"What we're seeing is not pretty," said Davis.
Many of the 15,000 covered under small-group plans -- offered by employers with 50 or less workers -- could also be significantly impacted, but not as substantially.
Finally, while the new rules will largely apply to individual and small-group policies, rates are expected to rise for the 95,000 Alaskans under large-group policies. But the increase will be significantly less than in the other areas.
Premera is still working up early estimates on those employer-covered groups, and did not release those figures.
Some people with Premera will see no change. They'll be grandfathered into their old plans if they've generally had the same policy since before Obama signed the act into law March 23, 2010.
Winners and losers
The changes will generally push costs toward rate-payers who earn good money, especially younger ones, Davis said.
Below are specific examples of how the changes could affect Premera's individual policy holders:
- Say you're a couple in your early 50s with two teenage children. You earn less than four times the poverty rate, or $115,000 for a family of four. Your costs could fall 70 percent in part because you'll be eligible for a new federal health-insurance subsidy, Davis said. But if that same couple makes too much and isn't eligible for that subsidy, their current premium could double, costing them thousands of dollars extra a year.
- If you're a couple in your early 30s with two young children, and you receive the subsidy, your family could see a 42 percent decrease compared to what you pay today. But make too much, and that same young family could see premiums rise an amazing 157 percent.
"Pretty jaw-dropping," said Davis.
The huge increases worry Premera, he said. "It could be significantly destabilizing, and we're trying to do everything we can to offer product lines that keep costs down as much as possible within the parameters of law."
That includes promoting worksite wellness programs and good health to reduce hospital visits, and working with health care providers to reduce bills by reducing duplicate procedures or unnecessary referrals.
Premera, a taxable nonprofit, represents about two-thirds of the individual and small-group market in Alaska. It represents about one-third of the large-group market.
Aetna foresees big increases, too
Officials with Aetna Life Insurance Co., the second largest health-insurance provider in Alaska, did not agree to requests for an interview. But a spokeswoman with the company said in an email that the health care act will "fundamentally restructure the individual and small group health insurance markets."
"The impact of this restructuring on premiums will vary dramatically between policyholders, with many seeing very large premium increases," said Anjie Coplin, Aetna communications director.
"We do anticipate that rates will go up for our small group and even higher for individual customers in Alaska, but we do not yet know how much they will go up," she added.
As for Premera, its numbers are based on preliminary estimates, Davis cautioned. Premera will know more once certain aspects of the law go into effect next year, including guaranteed coverage.
About 100,000 Alaskans, some 14 percent of the state, are currently uninsured, if you don't count Alaska Natives who receive medical care at no cost.
How many of those were refused insurance because they have costly preexisting health conditions, such as leaky heart valves? Unknown, said Davis.
But paying for their care could add massive costs to the system. For one thing, they'll have no waiting period to get insurance. Someone who just got bad news from the heart doctor can walk into an insurance office and order a policy, Davis said.
"It's as if could you go home, see your house on fire, call Allstate and say, 'Cover my home," Davis said.
With medical bills easily reaching into the millions of dollars, a few of those cases could quickly add up, significantly boosting overall rates, at least during the first two years following the changes, he said.
Refuse to get a plan and you'll be hit with a tax penalty.
Another big change will affect what's known as the "age band." Currently, those who are 64 pay about seven times as much for the same policy as a healthy 21-year-old. The new law will limit the difference by a factor of 3-to-1, not 7-to-1.
As a result, rates generally will fall for the 64-year-old, while rising for the 21-year-old, Davis said.
Rising fast already
Proposed rate increases beyond 10 percent will be subject to review and rejection by the state's Division of Insurance. But Alaska is known for rising medical costs that have traditionally outpaced those in other states, a factor that will help justify higher premiums.
And like everything else in Alaska, the changes stemming from the act will likely be more extreme than in other states. That's partly because of the relatively small numbers of insured people in the 49th state, and a range of new services that must be covered under the law that weren't previously offered by Premera.
Alaska's health insurance rates have already been beset with huge increases in recent years. The higher premiums are influenced by the state's high medical costs, according to an analysis presented by Katie Campbell, the state's chief actuary.
Consider the price of knee surgery in Alaska. It costs twice as much or more as the same procedure in Washington, Campbell noted in a statement sent to the federal health department last spring.
And medical treatment in Alaska is not only pricier, it's growing 2 percent faster than the national average, Campbell said in her letter.
The reasons she cited for the high medical costs are numerous, including a lack of health care providers and therefore competition, especially in costly specialty areas such as cardiology. Expenses also rise because Alaska has a small, remote population, and one that's generally less healthy than other states.
Four of the five insurance companies providing individual policies raised insurance premiums yearly between 2008 and 2011, by an average of 17 percent each time. The largest was a 32-percent hike, by Premera in 2008. The state didn't have information for the fifth company.
Premiums have also risen regularly between 2008 and 2011 for three of the six small-group insurance providers for which the state had data. Rates grew by an average of 17 percent per year, with the largest increase at 29 percent, again by Premera in 2008.
Contact Alex DeMarban at alex(at)alaskadispatch.com