The company said there will also be significant increases to the cost of small group health insurance, but filings for rate increases are still pending before the state Division of Insurance.
Premera dominates the Alaska private health insurance market, covering about 60 percent of Alaskans not covered by government health insurance.
Company president Jeff Davis said the increases are being driven by a sharp spike in costs for claims the company has seen over the last 18 months. The spike is being felt across the company's entire health insurance business, not just in policies for individuals, Davis said.
According to Davis, the spike stems from the increased use of medical facilities in Alaska, as well as rising costs for virtually all types of health care.
For example, the company saw an overall 28 percent increase in costs for hospital care in 2007, Davis said. There have also been increases in the number of costs for claims costing more than $50,000.
Between 2005 and 2007, the company experienced a 30 percent increase in the number of large claims filed and a 78 percent increase in the costs for those claims, Davis said.
The bottom line, for the individual policies at least, was an increase of the loss ratio - the amount of money paid out in claims against what is collected in premiums - to 94 percent.
That is up from a customary loss ratio in the health insurance market that is between 70 percent and 80 percent, Davis said. The result is that the company suffered a $1.5 million loss in its policies sold by Premera to individuals last year.
Premera submits its rates annually to the state Division of Insurance for approval. The 32 percent increase for individual policies has been approved by the division, state insurance director Linda Hall said.
Premera's rate increases over the recent past are as follows: 15.7 percent in 2008 (filed in 2007), 2.9 percent in 2006, 5.9 percent in 2005 and 17.5 percent in 2004.
"We attempt to have stable rates over time. We're not a company that likes to have our rates jump around," said Jeff Roe, company vice president for the individual insurance market. "We have to look at the trend and make a fair assessment and file accordingly."
"No one likes to see rate increases of this magnitude, but they are being driven by the extraordinary costs we are seeing," Davis said.
State insurance director Hall said her division examined this year's filing and found no reason not to approve it. Hall said she has also received proposed new rates for small-group health insurance but could not disclose the proposed new rate because it is still under review.
Davis said the increase in health care utilization is one of the major drivers in the increase, but the cause of it is puzzling.
"Utilization trends are often cyclical and we tend to see peaks in 24-month and 36-month cycles, but we really don't have a satisfactory explanation" for the recent spike, Davis said.
But it appears to be supply-driven, meaning that as more health care facilities are built and newer, usually high-cost technology becomes available, people tend to make greater use of them. Overall spending goes up as a result.
The link between a greater supply of health care services, usage and higher costs is well documented in the health care industry nationally, Davis said.
The pattern seems extreme in Alaska due to the small size of its population, but Roe said the same basic trends are being seen in several states. He said Premera is taking a number of steps to try to moderate costs, particularly in working with customers in different kinds of preventative wellness programs.
Davis said it is still too early to point to results of those programs in reducing health insurance costs to businesses. However, Premera has instituted wellness programs for its own employees and is seeing cost reductions, he said.
Tim Bradner can be reached at firstname.lastname@example.org.