The CMS has approved a first of its kind waiver for Alaska that will allow federal money to create a high-risk fund. It will allow the state to continue trying to entice cash-strapped insurance companies to stay on the individual market in the state and not raise premiums.
Under Alaska's 1332 waiver approved Tuesday, the state could use what would have been federal premium tax credits and cost-sharing reductions to fund a reinsurance program.
The approval will temporarily stabilize Alaska's individual insurance market, according to CMS Administrator Seema Verma.
Alaska asked for the funding after insurers projected premium hikes of 42% this year. Early this year, states were given the green light to request waivers for virtually every coverage component of the Affordable Care Act as long as the state's healthcare coverage is consistent with ACA terms and doesn't increase the federal deficit.
The Alaska Reinsurance Program pays claims for individuals with high-cost conditions, removing those claims from the insurance risk pool, thus keeping premiums down. State funds were appropriated to fund the program only for 2017.
As a result of the program, rates increased an average of only 7.3% in 2017. Via the waiver, the state will now draw down federal funding from the savings the federal government accrues in premium tax credits because the reinsurance program has prevented what was projected to be a significant rise in premiums, according to an analysis by the Public Consulting Group.
The CMS believes the waiver will allow more Alaska residents to keep their coverage and see lower premiums. The five-year waiver starts Jan. 1, 2018.