Premera Blue Cross Blue Shield of Alaska has agreed to pay the state government $25 million, because patients filed fewer claims this year than the company expected.
The payment will offset nearly half the $55 million cost of the Alaska Reinsurance Program, said Lori Wing-Heier, State Division of Insurance director.
“With the claims taking the nosedive that they have – and the reinsurance money that was appropriated by the Legislature – it was right for both parties to come to an agreement.”
State law said that insurance rates can’t be “excessive.”
But by the time Premera projected that insurance claims would be lower than expected, the company had already set its rates.
Premera is the only insurer that remains on the state’s individual insurance market.
Alaskans who earned too much to receive federal subsidies paid the highest individual and family insurance rates in the nation.
More than four out of five Alaskans with marketplace insurance receive the subsidies.
The state started the reinsurance program to make the market more stable. The federal government has agreed to pay the state $322 million in reinsurance over the next five years.
Wing-Heier said the state expected to pay between $11 million and $15 million per year. The money from Premera will help lower that.
Wing-Heier said it’s a mystery why people submitted fewer claims to the company.
“They certainly, right or wrong, were not obligated to do this, but they recognized it and came forward,” she said.
The payment strengthens insurance in Alaska, Premera spokeswoman Melanie Coon said.
“We believe this was the right thing to do, given the importance of the Alaska Reinsurance Program and really for the ongoing stability of the state’s individual health insurance marketplace,” she said.
Premera has lowered its premiums for next year. In 2018, Alaska’s premiums will no longer be the country’s highest.
The deadline to purchase individual and family insurance for next year is Dec. 15.