Alaska funded reinsurance from an insurance tax, then asked Washington for the savings

In a 2017 Vox piece, Sarah Kliff reports that Alaska's individual-market insurer Premera Blue Cross was heading for a 42 percent premium increase in 2017. The national average was 25 percent, and insurance commissioner Lori Wing-Heier feared a "death spiral" in which only the sickest buy coverage.

Alaska already taxed insurance plans, including life and property. Rather than send the revenue to the general budget, the state diverted $55 million into a reinsurance program that gives insurers extra money for especially large claims. Premera raised rates only 7 percent in 2017, one of the lowest increases in the country.

That also cost Washington less. With the federal government subsidizing premiums for 86 percent of Alaska's enrollees, subsidy costs fell by $56 million. Wing-Heier asked why the money should not come back to fund the reinsurance. Alaska applied for a waiver in December and got conditional approval in mid-January; Health and Human Services Secretary Tom Price later called the idea an example for other states.

Reinsurance removes the risk of a few very sick patients from the insurer's rate calculation.

The state had a tax stream it could redirect without new legislation on premiums.

Federal subsidies scale with premiums, so cheaper plans mean smaller federal bills.

Both the outgoing and incoming federal administrations were willing to treat it as a model.

If your fix saves someone else money, price in that saving and ask them to fund it.

As of April 2017 the federal waiver was pending, though Wing-Heier said she was confident of approval, and Alaska expected 2018 rates might fall and 1,650 more people might join. Minnesota was exploring a reinsurance fund, and regulators from New York were asking about the approach. Alaska still had only one insurer, and a mid-level plan cost $904 on average in 2017.