The sometimes not-so Affordable Care Act is focusing national attention on Alaska, the once oil-rich state facing no end of problems due to the global slump in oil prices.
Writing in “The Atlantic” magazine this week, reporter Vann R. Newkirk II warns that “Alaska’s (health care) exchange has perhaps already fallen into the dreaded ‘death spiral.'”
The death spiral he is describing is the one that leaves a state devoid of private health insurers thus forcing who knows what kind of experiment in creation of a state-run health insurance business.
Alaska will be down to just one insurer – Premera Blue Cross – come next year, and that company had to be bribed to stay. The Alaska legislature voted to put up $55 million to convince Premera not to leave.
The money is earmarked to subsidize the costs of ACA enrollees, as Politico reported, but the end result is that the cash flows to the state’s lone insurance company. The subsidies are vital to convince Alaskans to buy federally required health insurance that is so expensive almost no one can afford it sans subsidy.
The average, pre-subsidy premium in the 49th the state this year is $863 per month or a little under $10,500 per year, according to healthinsurance.org.
At that rate, health insurance costs would devour 2015’s record Permanent Fund Dividend (PFD) of a little more than $2,000 in less than two and half months. The PFD is a distribution of the state’s oil wealth Alaska residents annually recieve for sticking it out through another cold, dark winter.
Unforunately, health insurance costs in Alaska are now so high as to make the PFD almost meaningless to anyone needing to obtain their own health insurace. The numbers clearly dictate that anyone forced to go looking for non-subsidized private coverage would be better off moving Outside.
The average monthly payment across all states is $396 per month or about $4,800, according to healthinsurance.org. An individual decamping Alaska in favor of an average state would save themselves more than $5,000 per year – the equivalent of five PFDs at future rates.
Because the PFD is going down. Alaska Gov. Bill Walker capped the payment at $1,000. He said the state needs to use some of the permanent fund earnings to stay afloat in the face of a nearly $4 billion deficit. The state’s fiscal problems are large.
The problems of the Affordable Care Act might be larger.
Griffin suggests Alaska could be the proverbial canary in the coal mine warning of disaster. Residents of the far off, sparsely populated, nothernmost state, he writes, were “precisely the sort of population that the Affordable Care Act was designed to serve by expanding coverage, expanding access to health care, and making health care cheaper.
“But instead of proving the usefulness of health reform, the new health infrastructure in the state is quietly failing.”
He suggests that if Premera uses its monopoly status to boost rates even higher or decides to leave the state because a $55 million per year subsidy still isn’t enough to make it profitable to do business in the north, Alaska could be forced to create its own insurance company.
That, he writes, “would immediately be the largest and most liberal such experiment nationwide. Given the cost difficulties that have already existed for private insurers that have been around in private markets for years, that option would be questionably feasible and unquestionably expensive for Alaska.”
Add one more problem to the growing list of problems facing the state’s political leaders.