For some Alaskans, individual health insurance costs more each month than a mortgage

Lori Wing-Heier

Lori Wing-Heier, the director of the Alaska Division of Insurance, discusses the circumstances of Moda Health’s departure from Alaska’s individual health insurance market in January. She said on Tuesday that she’s aiming to reduce future insurance premium increases. (Photo by Skip Gray/360 North)

Alaskans shopping for individual health insurance on the federal exchange will only be able to choose from one insurer when open enrollment starts Nov. 1.

Premera Blue Cross Blue Shield of Alaska is increasing premiums an average of 7.3 percent.

State officials are trying to head off bigger price increases in the future.

Laurie Clark is struggling with $1,500 monthly health insurance premiums. Sept. 21, 2016. (Photo by Andrew Kitchenman/KTOO/APRN)

Laurie Clark is struggling with $1,500 monthly health insurance premiums. (Photo by Andrew Kitchenman/KTOO/APRN)

Juneau Montessori School teacher Laurie Clark loves working with toddlers. But the 61-year-old is not sure how much longer she can afford to do it.

Her job doesn’t provide insurance. And she’s paying $1,500 per month for individual health insurance, three times what she paid last year in New Mexico.

“What choice do I have?” Clark said. “I could be uninsured and take a risk of not being able to afford health care, or hospitalization, or visits to a doctor … You know, I’m not a risk taker. I didn’t want to do that.”

High insurance premiums are a problem in the state.

For example, Premera had increases of 37 percent and 38 percent the last two years. And four companies have dropped out of the insurance exchange, citing an inability to offer competitive premiums that would cover their health costs.

There are two reasons: Health care just costs more in Alaska than in other states, and the other reason is a lot of Alaskans with existing health problems buy plans on the exchange, which is a central feature of the federal Affordable Care Act.

The state government wants to attract more insurers, Alaska Division of Insurance Director Lori Wing-Heier said.

“It’s good for consumers to have a choice, so that they can compare plans, compare services, compare the providers, and elect who they want to basically contract their health care insurance with,” Wing-Heier said. “And at this point in time, consumers in Alaska in the individual market will not be able to do that.”

The first step the state took was a law introduced by Gov. Bill Walker and passed by the legislature.

It provided $55 million in reinsurance to offset Premera’s individual insurance costs in 2017 and 2018.

Premera estimated it helped lessen its premium increase from nearly 10 percent to 7.3 percent.

Some legislators say they don’t want to pay insurers beyond 2018.

So Wing-Heier is looking for a permanent source of funding for individual market reinsurance.

A federal “innovation waiver” could help.

The state plans to apply for the waiver to relax some federal rules regarding reinsurance.

Finding a long-term solution is important, Wing-Heier said.

“I think you will see insurance companies look to come to Alaska, because they know that those large losses are going to go to the reinsurance program, and that there is a way that they can price the insurance where they can at least break even – if not make a small profit,” she said.

Premera is committed to Alaska. But she said it will remain a challenge to control premiums, without a long-term fix, company spokeswoman Melanie Coon said.

“You’re still trying to spread very large costs across a very small population,” she said.

It can be a tough sell.

While most Alaskans qualify for federal tax credits that lower their individual insurance premiums to less than $75 per month, those who don’t qualify face high costs.

Juneau insurance agent Alan Plotnick of Shattuck and Grummett Insurance said his clients are sometimes shocked by the cost of individual insurance.

Some choose to pay a penalty fee of 2.5 percent of their income instead of buying insurance. Others qualify for a federal hardship exemption from the fee.

“I’ve had somebody go to tears before because they just simply can’t afford it, and ended up not being able to get a plan,” Plotnick said. “Sure, they can file for the hardship and get an exemption from the fee, but that doesn’t help them get a plan and have the peace of mind of having good health insurance coverage. And that breaks my heart.”

Laurie Clark is one of Plotnick’s clients.

She said she wants to stay in her teaching job. But she may have to reconsider – she’s paying more for insurance each month than for her home.

“It’s just amazing that all of my life, I had health insurance,” she said. “And I never thought I’d be in this position.”

The Division of Insurance is aiming to file for the innovation waiver by Oct. 31.

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