Although Alaska is our biggest state, its population is small. Only 23,000 Alaskans enrolled in its nongroup market for 2016.
Alaska also has very high health care costs. For these reasons, marketplace insurance coverage costs far more in Alaska than anywhere else. The average monthly premiums in the marketplace in Alaska in 2016 was $863, compared to $396 nationally.
Marketplace premiums (for a 40-year old non-smoker for the second-lowest cost silver plan) increased 31.4 percent in 2016 and 26.3 percent in 2015, compared to national rate increases of 10.1 percent (2016) and 2 percent (2015).
Even with these increases, Alaska’s insurers lost millions of dollars. Moda, one of the two insurers in the Alaska market, has announced that it will be leaving the market for 2017.
Of course, premiums and premium increases are much lower for the 86 percent of enrollees who receive premium tax credits, for whom premiums are reduced on average by 85 percent to an average of $126. But for many individuals with incomes that are too high qualify for tax credits, health insurance is simply unaffordable. Alaska’s sole remaining insurer, moreover, Premera has been threatening large premium increases again for 2017.
On June 4, 2016, the Alaska legislature passed and sent to Governor Walker for his certain signature a bill to rescue the insurance market. The statute recreates Alaska’s high-risk pool “comprehensive health insurance fund,” as a reinsurance fund. The entity will be funded through an appropriation of $55 million of the $64 million collected (for 2015) through an existing broad-based 2.7 percent premium tax on Alaskan insurers. Under the final bill, unlike earlier versions, the tax will not be collected only from health insurers, but will be collected from insurers generally.
Although the statute does not specify how the money will be allocated, it is intended to reinsure high-cost cases covered by insurers. The specific conditions to be covered will be defined by regulation, but actuarial projections that identify likely cases were considered by the legislature. In the first half of 2015, Premera had $45 million in claims for its 8,500 insureds, but $11 million of that came from just 37 cases. Covering these high-cost cases could dramatically reduce the premium increases that Premera will have to request for 2017 and may attract other insurers into the market.
The legislation is effective June 30 and will sunset after for two years, although the administration and legislature hope to find alternate funding for the program at that time. The legislation also authorizes the state to seek a 1332 state innovation waiver to reform its health insurance market, although no details on this are given.
For 2014, 2015, and 2016, the ACA had a federal reinsurance program. The reinsurance program reduced premiums in the individual market by 10 to 15 percent in 2014, but phased out rapidly during 2015 and 2016 and is no longer available for 2017.
By contrast, the government reinsures 80 percent of the costs of the Medicare Part D drug plans above a catastrophic level, even though the program has been in place for nearly a decade and a half. In 2013, the federal government paid out almost $20 billion in reinsurance subsidies, almost a third of all federal funding of the Part D program.
As marketplace insurance premiums seem to be rising sharply in many states, Congress should consider extending the marketplace reinsurance program. Heavily subsidized reinsurance has worked well at keeping premium growth down in the universally popular Part D program and holds promise for stabilizing insurance rates in Alaska as well. It could work for marketplace plans generally.
New Mexico House v. Burwell Contingency Plan Likely Illegal
One other state note: On May 17, 2016, the New Mexico Department of Insurance issued a bulletin authorizing its insurers to include language in their marketplace insurance policies stating that if the House succeeded in House v. Burwell and cost-sharing reduction payments were no longer available, the insurer would cease allowing cost-sharing reductions. The state department has reportedly been told by CMS that this language would not be legal.
This is correct. The ACA requires insurers to reduce cost-sharing for income-eligible silver-plan marketplace enrollees. The statute also requires the government to reimburse the insurers for these reductions, but the cost-sharing reductions are not conditional on the reimbursement. Insurers could, of course, increase premiums to cover the cost-sharing reductions or sue the government in the Court of Claims, as a number of insurers are now doing to collect the money the government owes them under the risk corridor program, but there is no authority in the ACA for an insurer to simply stop reducing cost sharing. In my opinion, it is likely that the appellate court will hold that the House does not have standing to sue over the cost-sharing reductions, rendering the issue of the obligation of insurers moot.
Reconciling Advance Premium Tax Credits: Incorrect 1095-A Forms
On June 14, 2016, the Internal Revenue Service released further guidance concerning incorrect, corrected, and void form 1095-As for 2014 and 2015. The 1095-A, provided by the marketplace, provides information needed for individuals to reconcile advance premium tax credits (APTC) they have received with the premium tax credits they were actually due. The 1095-A includes, for example, the number of months during which individuals in a taxpayer’s household received APTC and the amount of premium they paid, the cost of the benchmark second-lowest cost silver plan for which they were eligible, and they amount of APTC received.
In early 2015, approximately 800,000 incorrect 1095-As were sent to 2014 enrollees. In February, and again in March 2015, the IRS excused those who had filed their taxes based on an incorrect 1095-A from having to file an amended return once the corrected 1095-A was received. Subsequently, the IRS waived penalties for those who were unable to file an accurate return by the April 15 filing date because of a late 1095-A as long as they filed a return or request for extension by that date.
The new guidance reiterates this relief, but also makes it clear that an individual who received an incorrect 1095-A but would actually qualify for a larger tax credit has up to three years to file an amended return and claim the higher tax credit. The guidance contains information to help individuals determine if they would benefit from filing an amended return. Individuals who filed their taxes based on an incorrect 1095-A but in fact never received APTC or were not entitled to it, and individuals who received APTC but filed their taxes without receiving a 1095-A or reconciling their taxes in light of the APTC received, should file an amended 2014 return with the correct information.
The guidance also addresses incorrect or voided 2015 1095-As. No special relief has been offered for individuals who received incorrect 1095-As in 2016 for 2015 or who received a notice that a 1095-A they received earlier is void. The guidance instructs individuals who are notified that the 1095-A they received was incorrect or void to file amended returns based on the corrected 1095-A when they receive it. Individuals who believe that a 1095-A they have received is incorrect should contact the marketplace for a correction.
Impact Of ACA On Women
Also on June 14, 2016, the HHS Assistant Secretary for Planning and Evaluation released another report on the impact of the ACA, this time on women. Between 2010 and 2015, the uninsured rate among non-elderly women dropped from 19.3 to 10.8 percent, a decrease of 44 percent. Women make up 53.6 percent of individuals covered through the marketplaces, while Medicaid and the Children’s Health Insurance Plan (CHIP) cover 13 percent of nonelderly adult women in the United States.
The proportion of women who have delayed care because of cost has fallen dramatically under the ACA while the proportion of hospital discharges attributable to uninsured women has been cut almost in half in states that have expanded Medicaid. An estimated 55.6 million women with private health insurance have been guaranteed access to preventive services without cost sharing.
One of the most interesting sections of the report discusses the Strong Start for Mothers and Newborns Initiative. The initiative, a cooperative program involving CMS, the Health Resources and Services Administration, and the Administration for Children and Families, is intended to reduce preterm births and improve health outcomes for newborns and for pregnant women on Medicaid and CHIP. It is one of the many smaller ACA programs that receive almost no attention. Early elective births were reduced by 70.4 percent in hospitals participating in the program between 2010 and 2013. As of May, 2014, more than 25,000 early elective deliveries had been prevented.
ACA Planning And Implementation Grants For States Available
As part of the Affordable Care Act Congress appropriated $250 million to be distributed to the states between 2010 and 2014 to assist them in developing insurance rate review programs. The ACA specified that any funds not fully obligated by 2014 would remain available for grants to the states for planning and implementing the ACA‘s insurance reforms and consumer protections.
On June 15, 2016, CMS announced that $22 million remained unobligated from the $250 million and that this money was available for grants to the states for planning and implementation. Specifically the money is available for:
- Improving the state’s ability to identify discriminatory benefit designs and review formularies for discrimination;
- Enhancing insurance policy review to ensure that preventive services are provided without cost sharing;
- Improving medical loss ratio compliance oversight;
- Bringing external review appeals processes up to NAIC standards; and,
- Expanding state review to ensure mental health and substance use disorder treatment parity.
The grants will last for 24 months. Applications must be received by August 15, 2016.
Issuer Innovation Conference Materials
CMS has released materials from its June 9, 2016 issuer innovation forum, including presentation slides, recordings, and the remarks of Secretary Burwell and CMS Acting Administrator Slavitt.