A reinsurance program pioneered by Alaska to lower the state’s marketplace insurance rates is on the chopping block, having been identified for scrutiny by the Trump administration, according to Alaska’s insurance director.
If it is eliminated or the funding for it is zeroed out, Alaska would lose up to $140 million in annual federal funding to lower the cost of health insurance, according to Alaska Division of Insurance Director Lori Wing-Heier, who implemented the reinsurance program in 2017 — leading 18 other states to follow suit.
Alaskans insured through the federal marketplace, who number around 25,000, could see a 67% average increase in rates without the reinsurance program, Wing-Heier estimated.
“That’s pretty horrific for sole proprietors, individuals who are working, they have income, but they don’t have employer-sponsored insurance,” Wing-Heier told lawmakers during a hearing on Wednesday.
The reinsurance program helps keep costs in check by identifying high-risk conditions that are paid for by the program, removing the costs from the private insurers.
The program was established through what is called a section 1332 waiver — the funding for which was frozen by President Donald Trump in January, then unfrozen, with the promise of additional scrutiny and potential elimination on the horizon.
“I just don’t see a scenario where we come to the Legislature and say we need $140 million,” Wing-Heier told the Senate Finance Committee. “I don’t have a solution.”
The Alaska Reinsurance Program was developed in response to skyrocketing rate increases that threatened to eliminate Alaska’s marketplace altogether. It has worked better than anticipated, sending the state roughly $700 million in federal funds since its inception to help keep Alaska’s already eye-watering health care costs in check.
Alaska’s reinsurance program is predicated on federal premium tax credits, and its potential elimination comes as those tax credits — expanded through the Inflation Reduction Act — are set to expire at the end of the year.
Without action from Congress, thousands of Alaskans could see skyrocketing premiums for health insurance purchased through the Affordable Care Act, Wing-Heier said.
If the tax credits are not renewed, Alaska’s insurance rates through the Affordable Care Act could go up by hundreds of dollars for individuals, and thousands for families, Wing-Heier said during a Senate Finance Committee hearing.
Without the expanded tax credits, Wing-Heier said that some Alaska families could see health insurance premiums that cost “equal to their house payment, if not greater.”
The overall loss to Alaskans would be more than $287 million in annual tax subsidies.
The prospect of rising costs comes as Alaskans have seen massive increases in the cost of health care — which is already among the most expensive in the nation. Alaska’s premium rates on the federal health care marketplace have gone up by 60% over a three-year period between 2023-2025, according to state data.
Wing-Heier said she has brought the issue to Alaska’s U.S. senators Lisa Murkowski and Dan Sullivan, both of whom were “inquisitive.”
Sullivan has not spoken publicly about whether he supports re-upping the federal tax credits, or working to protect Alaska’s reinsurance program. In an interview earlier this year with Alaska journalist Nat Herz, Murkowski said that she thought “we’re going to need to continue these premium tax credits” — but that it would be difficult to achieve given that the expansion of the subsidies came about through the Inflation Reduction Act, which was vehemently opposed by many Republicans.
It could be months before the fate of the tax credits and the reinsurance program is determined, but Wing-Heier told lawmakers that the state’s timeline conflicts with the federal budget-making process.
Insurance companies must file their annual rates to the state for review — a process that begins in June. By then, Wing-Heier said she needs to provide insurance companies information about the status of Alaska’s reinsurance program. But she said she likely won’t know in time whether the program will be eliminated or defunded, and is considering asking the companies to file two sets of rates — one predicated on the continuation of the program, and another predicated on its elimination.
The looming potential loss of federal subsidies comes as Republicans in Congress have favored a budget resolution that could lead to cuts to Medicaid, which provides health coverage to a third of Alaskans. Wing-Heier said Medicaid and marketplace plans are closely linked, because self-employed Alaskans are often routed to one or the other depending on their income.
As the state faces a looming deficit, Alaska lawmakers have indicated the state would likely be unable to fill a budget gap created by reduced federal funding.
Anchorage Democrat Rep. Genevieve Mina has introduced a joint resolution calling on Congress to extend the insurance subsidies. The resolution, which has yet to be scheduled for a hearing, has so far drawn support from the Alaska Hospital and Healthcare Association; the Alaska Native Tribal Health Consortium; and the Alaska Children’s Trust, among others.
“If Congress does not extend the enhanced tax credits, we are gravely concerned there will be a significant increase in the uninsured population, which will complicate access to care, leave people untreated, and ultimately lead to a greater reliance on emergency rooms,” wrote Jared Kosin, president of the Alaska Hospital and Healthcare Association.
Anna Brawley, an Anchorage Assembly member, described in a letter her personal experience as a self-employed consultant who relies on insurance purchased through the marketplace. She said that the cost of health care for sole proprietors “is a significantly underestimated drag on the state economy, particularly for creation and growth of small businesses.”
Stephanie Bergstrom, an Anchorage resident and finance professional, relied on insurance through the marketplace after she was laid off from her job — days after undergoing emergency eye surgery, she said during a call organized by Protect Our Care, a health care advocacy organization.
“If they do away with the tax credits, people are just not going to be able to afford health care,” she said.