No company will ever make a profit selling health insurance to Alaskans stricken with lung cancer, brain cancer, sickle cell anemia, hemophilia, multiple sclerosis, end-stage renal disease, cystic fibrosis, Lou Gehrig's disease, AIDS, leukemia, quadriplegic cerebral palsy, chronic hepatitis, Parkinson's and other torments.
There are 33 costly conditions, now spelled out in state regulation, that make up the tale of horror at the center of the individual health insurance dilemma in Alaska. But an Obamacare improvement is at hand from an unlikely source — the Trump administration.
The underlying problem is that insuring sick people is never going to be profitable in a high-cost state with a small population. "In short, there are not enough healthy members in Alaska's individual market to offset the cost of members with very high medical costs," as Premera put it in 2014.
At one time, the only option for victims of serious diseases who were not on Medicare or did not have decent health care coverage through an employer or a spouse was to spend every dime fighting to stay alive.
There were high-risk insurance pools, including one in Alaska that had about 500 people who paid high premiums, deductibles and faced lifetime limits on total medical expenses. In 2012, a 60-year-old could buy a plan with a $10,000 deductible for $737 a month.
Today, the individual market has morphed into a high-priced pool for those who make too much to qualify for subsidies. A 60-year-old earning about $60,000 a year pays close to $2,000 a month. But a 60-year-old who earns about $55,000 pays $444 a month because of subsidies, according to the Kaiser Family Foundation insurance calculator.
We're in this situation for many reasons. A big one is that under the Affordable Care Act, known as Obamacare, the federal government required insurance policies to meet certain standards and prevented companies from denying coverage to sick people.
In the last few years, hundreds of the sickest people in Alaska bought insurance under Obamacare on the individual market. They paid millions in premiums, but quickly piled up tens of millions in health care costs.
There was a startling discussion a year ago in which Division of Insurance Director Lori Wing-Heier said she had no exact figure, but estimated that about 300 Alaskans out of 23,000 signed up had generated about $55 million in claims, based on a study in late 2015 that identified the 33 most costly conditions.
We hear endless complaints from President Trump, our congressional delegation and the rest of the Republican Party about the "catastrophe of Obamacare." They ignore the Alaskans for whom Obamacare was the only thing that saved them from catastrophe.
With the expansion of Medicaid and the subsidies for buying insurance, the number of uninsured Alaskans has dropped from about 134,000 in 2012 to 100,000, the state estimates.
But the big medical bills faced by ailing Alaskans who bought their own coverage created an untenable situation. The insurance companies have been losing money on this slice of their business, according to the state insurance division, and Premera is the only one selling it now in Alaska.
This crisis led the Legislature to take the first steps a year ago to temporarily bail out the individual insurance market in Alaska with a $55 million infusion from an existing 2.7 percent tax collected on all insurance sold in Alaska — not just health insurance.
The money from that tax had previously gone into the state general fund, but the Walker administration and legislators concluded that the best way to save the insurance market would be to spread the cost of covering some of the sickest Alaskans as broadly as possible.
In the final vote, the only legislators to oppose the bill were Sens. Mike Dunleavy and Charlie Huggins and Rep. Lora Reinbold.
One of the biggest payoffs from that decision a year ago is that insurance premiums climbed by 7 percent this year, after two years in which rates jumped by about 40 percent.
The state insurance division said that without the state bailout the increase this year would have been 42 percent.
Had rates jumped 42 percent, it would have made it even more onerous for people without federal subsidies to buy insurance. And it would have forced the federal government to pay about $50 million more in subsidies to cover the costs of Alaskans buying coverage on the individual exchange. Those numbers would get worse.
The state has asked, and the Trump administration has just approved, a request that this extra money that doesn't have to be spent on subsidies for the next five years be directed to the state instead.
The additional money that won't go to growing subsidies will help cover claims for insurance customers who have one or more of the 33 high-costs conditions. That should help hold down rates for thousands of others who have less expensive medical bills.
Years of simplistic sloganeering have been the biggest obstacle to identifying and fixing real problems with Obamacare. The U.S. Senate continued this bad practice by releasing another secret bill Thursday, hoping to get it passed before anyone has time to sort out the complicated details.
In contrast, the action on the Alaska waiver by the Trump administration was a practical solution that helps fix a problem. The state expects that about 1,460 more people will sign up for health insurance coverage because of this shift and that rates in 2018 will be about 20 percent lower than they otherwise would have been. We could use more solutions of that sort.
Columnist Dermot Cole can be reached at firstname.lastname@example.org.
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