With $55 million of state money propping up Alaska's individual health insurance market, the market's only insurance provider says it will raise its rates less than previously anticipated.
Rates on the individual insurance market will increase 7.3 percent for Premera Blue Cross Blue Shield of Alaska, the state's sole insurer on the market. The rates were approved Aug. 22 and go into effect at the start of 2017.
Initially, Premera estimated a nearly 10 percent increase for 2017. With additional time to analyze claims, Premera saw a slight decrease in medical services used by its members, resulting in the lower increase, spokesperson Melanie Coon wrote.
Premera is Alaska's largest insurer. In both 2014 and 2015, Premera's individual rates jumped about 40 percent. In 2015, three insurance companies abandoned the market, followed this year by Moda Health, which will no longer provide individual insurance in 2017. That left Premera as the sole provider in the Alaska market.
In May, state Division of Insurance Director Lori Wing-Heier warned Alaska legislators that the market may "go into a death spiral" without intervention. In July, the state approved using $55 million for the next two years to prop up the market.
The millions come from a premium tax of roughly 2.7 percent levied on every insurance policy in the state, including renters, life, automotive and health insurance. Essentially, the move spread the cost of the most expensive medical claims to all Alaskans, Wing-Heier explained at the time.
Premera has blamed the highest-cost claims and the state's small insurance pool for the big rate increases.
Without the multimillion-dollar cash injection, rates would have risen 43 percent in 2017, Coon wrote Tuesday.
For 2017, the monthly premium for a 40-year-old in Anchorage who purchases a silver plan would be $904 a month, Coon wrote.
About 23,000 Alaskans get their health insurance through the individual market, a component of the Affordable Care Act that went into effect in 2014. About 75 percent of Alaskans receive federal subsidies for their monthly premiums.