Premera Blue Cross Blue Shield of Alaska, the only individual insurance carrier in the state, announced Friday it is making a one-time $25 million reimbursement to fund high-cost health insurance claims through the Alaska Reinsurance Program as part of an agreement with the Alaska Division of Insurance.
“We believe offering to make a one-time reimbursement to the Alaska Reinsurance Program was the right thing to do, given that our claims this year were much lower than we or the state anticipated,” said Jim Grazko, president and general manager of Premera’s Alaska office. “This reimbursement underscores our continued commitment to Alaska’s individual insurance market, especially to those individuals who are most in need of care, and reinforces our efforts to work with the state to provide all Alaskans with access to high-quality care at an affordable price.”
According to Premera, the agreement specifies the state’s Division of Insurance direct the Alaska Comprehensive Health Insurance Association, which operates the state’s popular reinsurance program, to use the funds “solely for health insurance claims in the individual market.”
The Alaska Division of Insurance manages Premera and keeps a close eye on the finances of the group. The Alaska Reinsurance Program is a state-operated program that covers claims in the individual health care market for those with one or more of the 33 previously identified higher-cost conditions in hopes of stabilizing premiums for all customers.
“We continually look at financials to see how the market is performing, so there’s this constant dynamic,” said Lori Wing-Heier, director of Alaska’s Division of Insurance. “For the last several years they were losing money. We then raised rates to compensate for that, but this year they came to us and said the claims have diminished.”
Premera said it offered to make the reimbursement after finding that health insurance claims filed by Alaska customers during 2017 were nearing the lowest in a decade.
“With that information, we continued to watch Premera to see a change in claims, but there wasn’t a change, the claims were in fact decreasing,” Wing-Heier said.
Wing-Heier said she’s not sure if this trend will continue but she’s hopeful.
“We don’t know if this is an anomaly or if this is an indication, due to the reinsurance program, that we’ve reached a point where premiums will continue to go down,” she said, adding that Premera has experienced a drop in premium costs for fiscal 2018 and that the group is expecting another decrease for 2019.
Alaskans pay some of the highest health care premiums in the country, so this is a welcome trend, Wing-Heier said.
“Things are definitely going in the right direction,” she said. “Alaska used to have the highest health care costs in the country and recently we’ve dropped from number one to number four so that’s definitely a good thing.”
This announcement comes at a pivotal time for Alaska’s health insurance market as a potential repeal of former President Barack Obama’s Affordable Care Act was discussed throughout the summer and as senators currently grapple with the GOP tax overhaul bill, which includes the repeal of the individual mandate that requires citizens to purchase health insurance or face tax penalties.