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The Trump administration just saved Obamacare in Alaska

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The Trump administration took a big step Tuesday to make Obamacare work better, potentially lowering premiums and increasing enrollment.

Yes, you read that right. For all the work the White House has done to destabilize the health law — and there is much of it — the Trump administration approved an Alaska plan that will make the law work much better.

The Trump administration will send Alaska $48 million to stabilize its health insurance markets and offset the costs of especially high-cost patients. It expects, however, that the program won't cost the federal government a dime. Instead, the Trump administration will recoup all that money in the form of less spending on Obamacare subsidies because premiums in the market would decline.

This is the rare Affordable Care Act idea that both the Trump and Obama administrations have spoken favorably about. The Obama administration conditionally approved the idea in January, and Trump Medicare administrator Seema Verma gave the final go-ahead on Tuesday.

A bit of background on Alaska is helpful. Like other rural states, Alaska has struggled with Obamacare premium hikes. In 2017, the state expected premiums to rise 42 percent, and regulators worried about a potential death spiral.

The state decided to try something new and different — and it worked. Alaska put together a plan that would have the state pay back insurers for especially high-cost patients. This lowered premiums for everyone (although it did cost the state millions) and premiums only went up 7 percent.

Now, the Trump administration has decided to make it even easier for Alaska to run this program. Alaska's reinsurance scheme saved the federal government millions. The lower premiums meant that the federal government had to spend significantly less on the tax credits that 88 percent of Alaska Obamacare enrollees receive.

The Trump administration will, for 2018, essentially give those savings back to the state — and Alaska will use that $48 million in federal funding to pay back insurance plans with expensive patients (coupled with $9 million of its own state funding).

This approach is an undeniable win for Obamacare enrollees in Alaska, who will have lower premium as a result. The Trump administration expects this to boost enrollment in the state, too. Specifically, the administration expects this policy to boost Alaska Obamacare enrollment by 1,400 people (above the 19,145 Alaskans already signed up).

And it's an approach that other states are interested in, too. Minnesota has submitted a similar application, and officials from New Hampshire and Oregon have also expressed interest in the idea.

By approving the Alaska program, the Trump administration signals that it isn't quite ready to collapse the Affordable Care Act — and, in some cases, is actually willing to make it work better.

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Kliff’s Notes

Your daily top health care reads, with research help from Caitlin Davis

News of the day

  • “Insurers Rip Ted Cruz's Trumpcare Amendment”: “The nation’s largest health insurance companies blasted a health reform proposal by Republican Sen. Ted Cruz of Texas to exempt health policies from consumer protections and allow for the sale of cheaper policies with skimpier benefits.” —Bruce Japsen, Forbes
  • “McConnell warns Senate: Don't block ObamaCare repeal debate”: “Senate Majority Leader Mitch McConnell (R-Ky.) is warning his colleagues to not block the chamber from taking up a bill to repeal and replace ObamaCare as leadership struggles to shore up support for the legislation.” —Jordain Carney, the Hill
  • “Pence pushes repeal in state where health coverage soared”: “While Senate Republicans wrangled behind closed doors over health care Wednesday, Vice President Mike Pence traveled to Kentucky, one of the states with the most at stake as the GOP pushes to repeal and replace President Barack Obama’s signature health care law.” —Bruce Schreiner, Associated Press
  • “Sessions to Unveil Health-Care Fraud Crackdown This Week, Sources Say”: “Attorney General Jeff Sessions is poised to announce a major law enforcement action this week targeting health-care fraud, focusing on opioid treatment programs exploiting Obamacare insurance plans, according to two people familiar with the matter.” —Michael Smith, Anna Edney, Zachary Tracer and Tom Schoenberg, Bloomberg

Analysis and longer reads

  • “Senate's Health Bill Would Make Life Easier For Some Small Businesses”: “Some small-business owners burdened with high health care costs would get a break via an obscure provision in the health bill proposed by the GOP Senate. The provision would offer less regulation, more bargaining power and better prices. But those benefits could come at a cost to others.” —Julie Appleby, NPR
  • “3 Ways Republicans Have Already Sabotaged Obamacare”: “For all their griping about the ways Obamacare isn’t working, Republicans are leaving out one key fact: Many of the law’s troubles can be traced back to opposition and sabotage by Republicans themselves.” —Patrick Caldwell, Mother Jones
  • “Failing or Doing Fine? How Obamacare’s Marketplaces Are Shaping Up for 2018”: “Each year some companies exit, some expand and others stay put. Bloomberg News is analyzing these filings as they’re released and speaking with insurers and state agencies to learn how the marketplaces are shaping up for 2018.” —Hannah Recht, Bloomberg
  • “Drug Prices Under Fire, in the States”: “All eyes are on Washington as the Senate grapples with health care legislation. Investors in drug companies should give some attention to state capitals, where a wave of bills designed to limit drug price increases are under consideration.” —Charley Grant, Wall Street Journal

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