To combat rocketing premiums on the individual market, America's most sparsely populated state agreed to earmark $55 million to fund healthcare costs for its sickest residents, according to The Wall Street Journal.
Alaska's sickest population is comprised of fewer than 500 people, but medical costs for that small group fuel premium increases — nearly 40 percent annually — for approximately 23,000 customers on the individual exchange market.
Alaska faces the highest individual insurance rates in the country. The average monthly premiums in the state marketplace was $863 in 2016, compared to $396 nationally.
In June, the state government passed legislation to reserve $55 million for at least one year to cover healthcare costs for its sickest residents. A Republican legislature and independent governor passed the plan. The $55 million comes from $64 million collected for 2015 through an existing 2.7 percent premium tax on Alaskan insurers — not just health insurers only but insurers generally, according to Health Affairs.
The costs of high-risk patients will fall on the state program, which will reimburse Premera Blue Cross, the one remaining insurer on the state's exchange. Residents in the high-risk pool won't know the state is covering their bill, according to WSJ.
What Alaska is doing is reminiscent of state-run "high-risk" health insurance pools, which were created for people who could not obtain insurance due to preexisting conditions. The ACA eliminated need for pools, as the law prohibited health insurers from denying coverage because of a pre-existing condition or any other factor.
In addition to statements about repealing and replacing the ACA, the transition website for President-elect Donald Trump endorses cooperation with Congress and states to re-establish high-risk pools and return insurance regulation to states.
"To maximize choice and create a dynamic market for health insurance, the administration will work with Congress to enable people to purchase insurance across state lines," reads the president-elect's website. "The administration also will work with both Congress and the states to re-establish high-risk pools — a proven approach to ensuring access to health insurance coverage for individuals who have significant medical expenses and who have not maintained continuous coverage."
Under Alaska'a program, premiums for individual plans through the Premera exchange will increase 7.3 percent on average next year, instead of the 42 percent Premera initially planned prior to the legislation.
Alaska's model is set to sunset after two years. It is currently in communication with CMS to continue the program through an alternative funding model, according to WSJ.