Insurance Companies Dropping Out of Alaska's Health Market

by | June 23, 2015

By Laurel Andrews

Three different insurance companies have announced that they are leaving Alaska's individual health insurance plan market in the past two months, leaving more than 5,000 Alaskans to find new health care coverage.

Aetna, State Farm, and Assurant Health have all decided to stop offering individual health insurance plans in Alaska. With those companies out of the market, only Premera Blue Cross and Moda Health remain.

The sudden exodus is "not only unusual, it's somewhat frightening," Division of Insurance Director Lori Wing-Heier said Friday.

The decisions affect only individual health insurance plans -- plans purchased by Alaskans who don't have health care coverage through their employer or other means. Between the three companies, 5,464 Alaskans will lose their health insurance plans.

For Assurant Health, the move was part of a national initiative; the company announced in a press release June 10 that, in order to "to maximize shareholder value," it would be leaving the health insurance market nationwide to focus instead on "housing and lifestyle specialty protection offerings." The company stopped selling insurance plans June 15.

In Alaska, 5,230 Assurant customers will lose their insurance plans, wrote Mary Hinderliter, vice president of communications with the company. Customers will receive letters outlining the date their plans end, and their options going forward, Hinderliter wrote.

Aetna is also leaving the state, as the company has "determined that we can no longer meet the needs of our customers while remaining competitive in the individual market," wrote Anjie Coplin, director of communications for Aetna's West Region. The company began sending out letters to members on May 11, Wing-Heier said.

Alaska is the only state in which Aetna has decided to leave the individual market, Coplin wrote. Members will have coverage through Dec. 31. A total of 192 Alaskans who had individual health care plans through Aetna will lose those plans.

Aetna, which is the third-party provider for the State of Alaska, will continuing selling other insurance plans in Alaska, including small group and dental, Coplin said.

Forty-two State Farm customers in Alaska will lose their plans with that company's departure from the market, announced in a letter sent to members on April 20.

Insurers are leaving because the costs don't pencil out, Wing-Heier said. Insurance providers are looking for markets large enough where the price of their premiums cover the expenses, Wing-Heier wrote. With Alaska's small population and high costs, insurers were failing to cover their costs.

Still, Wing-Heier said she was surprised that three providers had left in the span of several months.

"When you have a very small number of insurance companies to begin with, and you lose two or three ... it hurts," she said.

Competition is key to the health insurance industry, Wing-Heier said. Should another provider leave, Alaskans would be left with only one insurer in the individual market, a scenario "you never want," Wing-Heier said.

Of the more than 5,000 plans being lost, many were grandfathered in and were not in compliance with the new Affordable Care Act requirements, Wing-Heier said. Alaskans losing their plans will need to choose a new one through either Moda Health or Premera Blue Cross.

Like last year, both Premera and Moda have filed for large rate increases for 2016 -- Premera is asking for an average increase of 38.7 percent, and Moda is asking for an average increase of 30.3 percent. Neither rate increase has yet been approved by the Division of Insurance, Wing-Heier said.

Moda Health spokesperson Jason Gootee said the other companies' departures wouldn't affect Moda's operations in Alaska; Premera Blue Cross spokesperson Melanie Coon wrote that Premera was "committed" to Alaska's insurance market.

Now, Alaska is hoping to entice new health insurance providers to the state, Wing-Heier said. In order to do that, "we have to address the cost of health care," she said. That's no small order, as Alaska has the highest health care costs in the nation.

To that end, the division of insurance is looking at models in other states -- such as Massachusetts and Hawaii -- that have "if nothing else ... been able to get (costs) to plateau," Wing-Heier said.

"It'll take some time but we're committed to doing what we can," Wing-Heier said.

(c)2015 the Alaska Dispatch News