Alaskan Republican lawmakers, who sued Gov. Bill Walker for expanding Medicaid under the health law, swear they remain opposed to Obamacare. | Getty Alaska scrambles to prevent Obamacare collapse

Alaska, one of the reddest states in the country, is essentially bailing out its insurance market to prevent Obamacare from collapsing.

A bill passed by the heavily GOP state Legislature to shore up its lone surviving Obamacare insurer is awaiting the signature of Gov. Bill Walker, a Republican-turned-independent who was endorsed two years ago by former vice presidential candidate Sarah Palin. The legislation, originally proposed by Walker, sets up a $55 million fund — financed through an existing tax on all insurance companies — to subsidize enrollees’ costs as the state struggles with Obamacare price spikes and an exodus by all except one insurance company.


Alaska’s efforts reflect a pragmatic approach to what is arguably the biggest political conundrum facing Obamacare critics: How do you take away people’s benefits or, in this case, sit by while constituents cry foul as insurers flee a failing marketplace? Alaska lawmakers’ efforts also reflect some of the state’s unusually harsh demographic realities — a relatively small population with some of the highest health care costs in the nation.

But even as insurers around the country report major losses from Obamacare customers, no other state is considering such a step to prop up its insurance marketplace.

Republican state lawmakers, who sued Walker for expanding Medicaid under the health law, swear they remain opposed to Obamacare. But they say they're doing what's necessary to prevent health insurance premiums from spiraling out of control and letting thousands of people lose their coverage.

“What I’m getting — and I guarantee what the Alaska Legislature’s getting — is constituents pleading with them for help," Sen. Dan Sullivan (R-Alaska) told POLITICO. “There’s been no state in the union more negatively impacted by Obamacare than Alaska."

The picture became particularly grim in Alaska, where the number of insurers offering plans to individuals is set to drop to one for 2017, and state officials warned that the remaining company couldn't realistically raise rates high enough to cover customers' medical bills. Walker, who is expected to sign the insurance fund into law in the coming days, said it will ensure that the 23,000 Alaskans enrolled in exchange plans won't suddenly lose their insurance.

Moda Health announced last month that it would pull out of the Alaska exchange, leaving Premera Blue Cross Blue Shield as the sole company planning to sell coverage next year. That gave lawmakers heightened urgency to approve the insurance fund, said Lori Wing-Heier, head of the Alaska Division of Insurance.

The $55 million fund, which will come from an industry premium tax, will help cover medical expenses for high-cost enrollees. But the money currently goes into Alaska’s general fund, and redirecting it to bolster Obamacare has spurred criticism from some lawmakers because of the state’s massive budget deficit.

However, Republican state lawmakers said they were left with little choice but to approve the fund as insurers pulled out of the state. Three health insurers have left Alaska since 2015, according to Walker’s office.

State Sen. Cathy Giessel said Alaska would have had to set up its own insurer if no company sold plans on the exchange.

“Rather than leaving these folks out hanging, we had to do something,” Giessel said.

“Are we trying to maintain ACA? I think what we’re trying to do is live within the new reality that’s out there,” said state Rep. Lance Pruitt, a Republican who voted to create the insurance fund. “It really came down to: There’s not much really I think we could do because it’s the law of the land right now.”

Just one House Republican, state Rep. Lora Reinbold, voted against the bill in that chamber.

“My big issue is that failed federal policies continue to take tremendous toll on state budgets,” Reinbold wrote in an email.

The Medicaid expansion lawsuit, meanwhile, was dismissed by one court earlier this year and lawmakers are considering whether to appeal.

Even before Obamacare became law, Alaska historically has had some of the highest health care costs in the country. Physicians and hospitals are paid more compared with those in nearby states . Also, it is difficult to access facilities in the rural state.

Just a few especially sick patients have put a strain on insurers. In the individual market, nearly 500 enrollees with severe medical conditions cost Alaska insurers about $59 million in less than two years, according to state documents.

But state officials say Obamacare's robust coverage requirements have exacerbated those problems.

An analysis of average 2016 Obamacare premiums from Avalere Health, a consulting firm, showed that the lowest-cost “silver” level plan in Alaska cost $956 per month before any subsidies were factored in — the highest rate in the nation. That amount is 40 percent higher than the year before.

Proposed premiums for 2017 will be filed next month.

Rate increases were certainly seen before Obamacare but “not to the degree we’re experiencing now,” Wing-Heier said.

If approved by the governor, the insurance fund would go into effect on June 30. The legislation also authorizes Alaska to apply for an Obamacare waiver that lets states change pieces of the federal law starting in 2017 as long as those reforms meet certain requirements.

“We’re doing something to help Alaskans who need health care,” Giessel said.