How Alaska fixed Obamacare – Updated by Sarah Kliff Apr 13, 2017, 8:00am EDT

Last year, Alaska’s Obamacare marketplaces seemed on the verge of implosion. Premiums for individual health insurance plans were set to rise 42 percent. State officials worried that they were on the verge of a “death spiral,” where only the sickest people buy coverage and cause rates to skyrocket year after year.

So the state tried something new and different — and it worked. Lori Wing-Heier, Alaska’s insurance commissioner, put together a plan that had the state pay back insurers for especially high medical claims submitted to Obamacare plans. This lowered premiums for everyone. In the end, the premium increase was a mere 7 percent.

“We knew we were facing a death spiral,” says Wing-Heier. “We knew even though it was a federal law, we had to do something.”

Now other states are interested in trying Alaska’s idea, especially because Wing-Heier is working with the Trump administration to have the federal government, not the state, cover those costs.

There are rampant concerns about the future of Obamacare right now. We don’t know whether its marketplaces will remain stable in 2018 or, as the president has predicted, explode as premiums rise and insurers drop out. But Alaska’s experiment is a reminder that the future of Obamacare isn’t entirely up to Republicans in Washington. The work happening 3,000 miles away in Alaska shows that states have the ability to fix Obamacare too — and that the Trump administration might even support those policies.

How Alaska prevented an Obamacare horror story — and is trying to make the federal government pay for it

Premiums in the individual market went up a lot last year. The national average was a 25 percent hike. Alaska was bracing for an even higher 42 percent increase from its one remaining Obamacare insurer, Premera Blue Cross.

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