Tax bill leads to rebates, $50M investment for Premera
Premera Blue Cross Blue Shield of Alaska announced March 12 that the company will make a $50 million investments over five years in Alaska thanks to the tax reform bill passed by Congress in December.
The money will be spent to shore up the individual insurance market, improve access to care in rural areas and support local communities in their efforts to address behavioral health, Premera announced.
The investments came about after the Tax Cuts and Jobs Act of 2017 directed the federal government to refund certain prior tax payments to eligible companies over a four-year period.
Premera President Jim Grazko, who also is manager of Premera’s Alaska’s office, said they “had no idea the tax break would be so large.”
Premera found out the news just two weeks ago.
“We’ve only had time to think about key areas for our investment, then we will be fleshing out our ideas in the next six months,” Grazko said. “We don’t receive the first installment of the refund until early 2019 when we receive 50 percent of the total in that calendar year. We receive the second installment in 2020 of 25 percent, then in the next two years, 12.5 percent each.”
Premera is having a good year after initial economic losses in Alaska’s insurance market that led other insurance companies to fold their losses and move out of state. This tax refund news comes on the heals of a one-time $25 million deposit made in December back into the state’s Alaska Reinsurance Program, or ARP.
That deposit was made possible after lower-than-expected claims came in from Premera’s Alaska insurance policy holders, Grazko said.
Grazko said the $50 million will focus in infrastructure projects in three key areas. First up is making investments to ensure Alaska’s individual market remains stable.
The tax savings are expected to trigger premium rebates for individual and small group customers under the medical loss ratio provision of the Affordable Care Act.
Premera also expects to return about $1.5 million to those covered in large groups or employee-sponsored insurance policies.
A second key area is improved access in rural areas of Alaska.
“We want to explore and see what we can do from an infrastructure standpoint that would make sense,” Grazko said. “We haven’t gotten further down the road to pinpoint whether that’s refurbishing a clinic, establishing a new clinic or making improvements to communication infrastructure of the rural part of the state.”
Communication improvements may include hooking up more remote clinics to telemedicine opportunities or getting involved the infrastructure investments.
A third front are options to invest in behavioral health.
“We’ve been looking at the substance abuse aspect of behavioral health, as well as adverse childhood experience. How they flow into the overall population in terms of the maladies, to try to get at the root cause of some of these,” Grazko said.
There may be opportunities to directly invest in research to find a means to identify root causes of addiction and homelessness.
“Infrastructure, outreach — these are the types of things that we are talking about,” Grazko said.
Naomi Klouda can be reached at naomi.kloud[email protected].