Already expensive, Alaska health insurance premiums could ...

Alex DeMarban | Jan 14, 2013

Prepare for first-degree sticker shock if you own health insurance in Alaska, when major changes of Obamacare come into play. ?

While the act will produce winners and losers, and uncertainty will reign until the changes are in place Jan. 1, the state's largest insurance company already anticipates having to raise premiums on thousands of Alaskans by heart-stopping amounts.

The good news is Premera Blue Cross Blue Shield of Alaska won't seek an increase in 2013, a change from most years in the recent past.

In 2014, watch out. Hardest hit could be many of the 10,000 Alaskans covered by individual insurance policies, and not through an employer, said president Jeff Davis. For individual policies created after Obamacare became law, Premera expects rates will rise, on average, 30 percent to an astounding 88 percent.?

"What we're seeing is not pretty," said Davis.

Many of the 15,000 covered under small-group plans -- offered by employers with 50 or less workers -- could also be significantly impacted, but not as substantially.

Finally, while the new rules will largely apply to individual and small-group policies, rates are expected to rise for the 95,000 Alaskans under large-group policies. But the increase will be significantly less than in the other areas.?

Premera is still working up early estimates on those employer-covered groups, and did not release those figures.?

Some people with Premera will see no change. They'll be grandfathered into their old plans if they've generally had the same policy since before Obama signed the act into law March 23, 2010.

Winners and losers

The changes will generally push costs toward rate-payers who earn good money, especially younger ones, Davis said.

Below are specific examples of how the changes could affect Premera's individual policy holders:

• Say you're a couple in your early 50s with two teenage children. You earn less than four times the poverty rate, or $115,000 for a family of four. Your costs could fall 70 percent in part because you'll be eligible for a new federal health-insurance subsidy, Davis said. But if that same couple makes too much and isn't eligible for that subsidy, their current premium could double, costing them thousands of dollars extra a year.
• If you're a couple in your early 30s with two young children, and you receive the subsidy, your family could see a 42 percent decrease compared to what you pay today. But make too much, and that same young family could see premiums rise an amazing 157 percent.?

"Pretty jaw-dropping," said Davis.

The huge increases worry Premera, he said. "It could be significantly destabilizing, and we're trying to do everything we can to offer product lines that keep costs down as much as possible within the parameters of law."

That includes promoting worksite wellness programs and good health to reduce hospital visits, and working with health care providers to reduce bills by reducing duplicate procedures or unnecessary referrals.

Premera, a taxable nonprofit, represents about two-thirds of the individual and small-group market in Alaska. It represents about one-third of the large-group market.?

Aetna foresees big increases, too

Officials with Aetna Life Insurance Co., the second largest health-insurance provider in Alaska, did not agree to requests for an interview. But a spokeswoman with the company said in an email that the health care act will "fundamentally restructure the individual and small group health insurance markets."

"The impact of this restructuring on premiums will vary dramatically between policyholders, with many seeing very large premium increases," said Anjie Coplin, Aetna communications director.

"We do anticipate that rates will go up for our small group and even higher for individual customers in Alaska, but we do not yet know how much they will go up," she added.?

As for Premera, its numbers are based on preliminary estimates, Davis cautioned. Premera will know more once certain aspects of the law go into effect next year, including guaranteed coverage.

About 100,000 Alaskans, some 14 percent of the state, are currently uninsured, if you don't count Alaska Natives who receive medical care at no cost.

How many of those were refused insurance because they have costly preexisting health conditions, such as leaky heart valves? Unknown, said Davis.

But paying for their care could add massive costs to the system. For one thing, they'll have no waiting period to get insurance. Someone who just got bad news from the heart doctor can walk into an insurance office and order a policy, Davis said.

"It's as if could you go home, see your house on fire, call Allstate and say, 'Cover my home," Davis said.

With medical bills easily reaching into the millions of dollars, a few of those cases could quickly add up, significantly boosting overall rates, at least during the first two years following the changes, he said.??

Refuse to get a plan and you'll be hit with a tax penalty.

Another big change will affect what's known as the "age band." Currently, those who are 64 pay about seven times as much for the same policy as a healthy 21-year-old. The new law will limit the difference by a factor of 3-to-1, not 7-to-1.

As a result, rates generally will fall for the 64-year-old, while rising for the 21-year-old, Davis said.

Rising fast already

Proposed rate increases beyond 10 percent will be subject to review and rejection by the state's Division of Insurance. But Alaska is known for rising medical costs that have traditionally outpaced those in other states, a factor that will help justify higher premiums.?

And like everything else in Alaska, the changes stemming from the act will likely be more extreme than in other states. That's partly because of the relatively small numbers of insured people in the 49th state, and a range of new services that must be covered under the law that weren't previously offered by Premera.

Alaska's health insurance rates have already been beset with huge increases in recent years. The higher premiums are influenced by the state's high medical costs, according to an analysis presented by Katie Campbell, the state's chief actuary.

Consider the price of knee surgery in Alaska. It costs twice as much or more as the same procedure in Washington, Campbell noted in a statement sent to the federal health department last spring.

And medical treatment in Alaska is not only pricier, it's growing 2 percent faster than the national average, Campbell said in her letter.

The reasons she cited for the high medical costs are numerous, including a lack of health care providers and therefore competition, especially in costly specialty areas such as cardiology. Expenses also rise because Alaska has a small, remote population, and one that's generally less healthy than other states.

Four of the five insurance companies providing individual policies raised insurance premiums yearly between 2008 and 2011, by an average of 17 percent each time. The largest was a 32-percent hike, by Premera in 2008. The state didn't have information for the fifth company.

Premiums have also risen regularly between 2008 and 2011 for three of the six small-group insurance providers for which the state had data. Rates grew by an average of 17 percent per year, with the largest increase at 29 percent, again by Premera in 2008.

Contact Alex DeMarban at alex(at)alaskadispatch.com

I am one of those unlikely individuals who buy my own high deductible health insurance. It has risen from $240/mo to $530/mo in 5 years, not including the most recent increase. I could easily afford paying for my health requirements without insurance except that I want insurance in case of Cancer (which I could not afford). This is why I continue to pay these obscene insurance rates. What I need to find out is when will the federal health care exchange be available? Can anyone steer me to the link regarding this information? Thanks for your help.

by twodux | January 15, 2013 - 5:04pm

Gee they're gouging people now that you are required to buy health insurance because of Obama Care. Who didn't see that coming?

by StElias | January 15, 2013 - 2:32pm

A lot of folks simply don't understand that covering everybody in a unified system creates a powerful political dynamic for managing the cost of health care. Every developed country except the US has designed a health care system that covers every resident. Congress chose not to go that route and the President had no choice but to work with them on alternative concepts. Enter then a lesser but a still good government-run health plan "The Public Option"(ironically, originally proposed by the Congressional GOP before Obama became president)which would serve two essential goals of health care reform. It would provide another choice and needed competition in places where a single or a few private insurers dominate a market, and its national size would give it appropriate clout to drive a better deal with hospitals and drug companies. Unfortunately, those very attributes made it the target of the wrath of the insurance, pharmaceutical, and hospital industries even if it was the most promising vehicle for driving down health care costs.

So today we have segments of the ACA kicking in. ACA places a limit on profits, but does such a limit actually make the health insurance industry work better for both customers and employees? Will getting all medical procedures paid for drive up the cost of insurance? If they deny a claim and you have to pay all of it, they get nothing, but if they pay they get to keep 15% as profit. So, As long as premiums pay for it they can continue to increase the size of their hunk of pie. But what happens if a company that pays out way too much in staff and administrative fees, (check out what the CEOs of these companies are making, gag)? Will they begin to charge super high premiums? From the sound of things, that might be happening. If this is so, it seems fewer people will buy their service. The market is suppose to keep this from happening because there should be insurers that want to get more customers by offering lower rates. So where are they? Admittedly, shareholders want their investment to make unlimited amounts of money but as an investor, I like the idea of a guaranteed 10% return on my retirement investment. Medicare seems to be running fine with less than 5% overhead so this is not unrealistic scenario.

All things considered, I believe Obama should have stuck to his guns on the public option.

by denmermr | January 15, 2013 - 11:12am

To be clear - the scary headline and lede for this article applies only to those in small groups or on individual plans. The majority of Alaskans covered under large plans will see little unusual change.

And even for those most affected, these quotes from the insurance companies will surely be most true for those seeking direct coverage rather than those seeking coverage through an exchange.

I still wince at calling our status quo managed payment scheme "insurance". Insurance is large groups pooling small dollars as protection against something expensive but rare. Should we all get grocery "insurance" so that a company can apply their 20% margin and significant administrative overhead to the payments we make for food every week?

by cybrrcat | January 15, 2013 - 10:53am

Oh, and here's Premera for 2009 among other Washington State insurance millionaires:
Herbert Barlow, Prez n' CEO $2,210,634 (up 5% from 2008).

by cybrrcat | January 15, 2013 - 10:50am

The question here is not about 'Obama Care' it's about the insurance companies who are taking advantage of the situation.

First, look at the compensation schedule for these companies to see how many millions their CEOs get paid. The higher the salary the higher the increase in premiums, sort of like Murphy's Law. Here's the numbers from 2008-the year the act was debated:

Aetna, Ronald A. Williams: $24,300,112
Cigna, H. Edward Hanway: $12,236,740
Coventry, Dale Wolf: $9,047,469
Health Net, Jay Gellert: $4,425,355
Humana, Michael McCallister: $4,764,309
U. Health Group, Stephen J. Hemsley: $3,241,042
Wellpoint, Angela Braly: $9,844,212

(Notice that only woman in the bunch has already hit the glass ceiling....)

Second, in many states, insurance companies must justify their requested rate increases to the state's insurance commission. "The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010. This Act will result in changes to health insurance in Alaska. The Alaska Division of Insurance regulates health insurers writing insurance in Alaska and will enforce these requirements. So if you are thinking your insurance company might be trying to raise your rates, you need to call Bret Kolb, Director of the Division of Insurance at (907) 465-2515. You can also call Toll Free Hotline 1-800-467-8725.

People who are now calling the affordable health care act 'socialism' were once insurance company lobbyists who were drooling in the halls of congress over the new thousands of insureds they could look forward to. Are you going to go down ineffectually whining on a comment thread or are you going to act like an informed citizen and make democracy work? Your choice.

by cybrrcat | January 15, 2013 - 10:44am

The question here is not about 'Obama Care' it's about the insurance companies who are taking advantage of the situation.

First, look at the compensation schedule for these companies to see how many millions their CEOs get paid. The higher the salary the higher the increase in premiums, sort of like Murphy's Law. Here's the numbers from 2008-the year the act was debated:

Aetna, Ronald A. Williams: $24,300,112
Cigna, H. Edward Hanway: $12,236,740
Coventry, Dale Wolf: $9,047,469
Health Net, Jay Gellert: $4,425,355
Humana, Michael McCallister: $4,764,309
U. Health Group, Stephen J. Hemsley: $3,241,042
Wellpoint, Angela Braly: $9,844,212

(Notice that only woman in the bunch has already hit the glass ceiling....)

Second, in many states, insurance companies must justify their requested rate increases to the state's insurance commission. "The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010. This Act will result in changes to health insurance in Alaska. The Alaska Division of Insurance regulates health insurers writing insurance in Alaska and will enforce these requirements. So if you are thinking your insurance company might be trying to raise your rates, you need to call Bret Kolb, Director of the Division of Insurance at (907) 465-2515. You can also call Toll Free Hotline 1-800-467-8725.

People who are now calling the affordable health care act 'socialism' were once insurance company lobbyists who were drooling in the halls of congress over the new thousands of insureds they could look forward to. Are you going to go down ineffectually whining on a comment thread or are you going to act like an informed citizen and make democracy work? Your choice.

Question #2; If Obammmmmmma care is intended to make coverage accessable for everyone, why are insurance companies still able to discriminate against "individual" policy owners? What it amounts to is recovering $$ that they negotiate away with large group plans. Work for yourself or a company that doesn't provide coverage and you get hosed.

Why would it have been so difficult to have had a clause in Obammmmmmma care that placed premium limits for individual policies at a max of 10 or 15% over average group rates?? Oh I know the answer, that would be too logical.

Just a Question, what constitutes a native Alaskan who gets free healh care? If my family tree goes back 4 or 5 generations, do I qualify or do you have to have X% tribal blood?

by rfn | January 15, 2013 - 7:15am

C'mon, folks....you voted in November for bigger government, higher spending, huge medical insurance bills, payment of which policed by The IRS. You got what you wanted so suck it up!

by zidar | January 15, 2013 - 1:02am

Of medical school graduates they say "The top third of the class make the best professors. The middle third of the class make the best doctors, and the bottom third of the class make the most money."

Alaska gets the bottom third of the class.

!! COMING SOON TO HOMES EVERYWHERE !!

THE TRUE COST OF SOCIALISM

A DEMONCRATIC MOVIES PRODUCTION

STARRING: NANCY PELOSI AND HARRY REED AS THE DANGEROUS DUO

Directed by Barak Obama

by lngsd | January 15, 2013 - 7:56am

This is a new movie perhaps whose trailers over-hype the plot and get people who really don't watch the movie a distorted idea of the story.

You should pay close attention to the current release that, while playing everywhere, has received scant attention from viewers who only watch the over-hyped trailers and reviews by people who haven't really seen the movie.

The current movie has the following highlights:

People who can't afford admission or who refuse to pay admission but end up watching the movie anyway eventually. These people end up making other movie goers, who do pay, pay their admission for them or get in free and then force the movie theater to charge other paying customers way more for their tickets.

These people ALSO frequently have to buy tickets from the ER - the MOST expensive tickets you can get.... and then others have to pay for them in outrageously and unfairly higher tickets.

Basically EVERYONE eventually needs to watch the movie over and over again. I would rather that EVERYONE chip in to pay for the tickets. Some people have good reasons for not being able to afford and if EVERYONE has to help pay it'll be less for everyone since a) the cost is spread around fairly (unlike the current movie) and people won't be forced to unnecessarily get the expensive ER tickets if they don't need one... which should help with cost.

Now, about those move theaters that rip you off for popcorn to make obscene profits..... maybe we can get some help with that too..... or with those theaters who refuse to sell tickets to certain viewes... Oh wait.... that's in Pres. Obama's movie too. :-)

by leecris | January 14, 2013 - 9:03pm

If you are on an individual plan now, since the State of Alaska refused federal funds to set up its own, state specific, health insurance exchange, you will be able to go to the federal health care exchange to seek lower-cost health insurance coverage. I would definitely advise Alaskans to avoid buying a high-priced, huge premium increase, individual policy until they have thoroughly investigated the coverage available through the exchange. The purpose of the exchange is to bring the advantages of large-group insurance policies to those people whose employer does not offer coverage.

Source: http://www.alaskadispatch.com/article/already-expensive-alaska-health-insurance-premiums-could-skyrocket-2014

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