August 12, 2019
On July 31, 2019, the Centers for Medicare and Medicaid Services (CMS) approved Section 1332 waiver applications for Colorado and North Dakota to implement state reinsurance programs. Below is a summary of the waivers.
Colorado requested a Section 1332 waiver of the Affordable Care Act’s (ACA) requirement of a single risk pool for a period of two years beginning in the 2020 plan year in order to set up a state reinsurance program. Colorado House Bill 19-1168 (HB19-1168), signed into law on May 17, 2019, authorized a reinsurance program to be administered by the Colorado Division of Insurance (DOI). Colorado estimates the total cost of the program to be approximately $250 million dollars for 2020, which will be partially funded through a special assessment fee on hospitals, as well as with money from the state’s general fund. The remainder of the program will be funded by federal pass-through funds. The reinsurance program will reimburse qualifying individual health insurers for a percentage of an enrollee’s claims between an attachment point of $30,000 and a cap of $400,000. HB19-1168 sets forth a three-tier reimbursement structure designed to encourage insurance carrier participation in the program and provide greater support to areas of the state with higher insurance costs. Co-insurance rates will range from 45 percent to 85 percent with an average of 60 percent in 2020. DOI estimates that the reinsurance program will result in a statewide average premium decrease of 16 percent in 2020.
North Dakota requested a Section 1332 waiver for a period of five years beginning with the 2020 plan year to implement the Reinsurance Association of North Dakota (RAND). North Dakota House Bill 1106 (HB 1106), signed into law on April 18, 2019, created and authorized the RAND to be administered by the North Dakota Insurance Department (NDID). The RAND will be funded with a combination of assessments on the fully insured small and large group health insurance market and federal pass-through dollars. NDID estimates that a 55 percent federal pass-through rate will result in approximately $26 million for 2020 and $27 million for 2021. The rest of the funding will come from state assessments, approximately $21 million for the 2020 plan year and $22 million for the 2021 plan year. HB 1106 also gives the RAND access to a $25 million line of credit from the Bank of North Dakota. The RAND will reimburse qualifying individual health insurers for 75 percent of an enrollee’s claims between an attachment point of $100,000 and a cap of $1 million. The state estimates that the RAND will reduce premiums in the individual market for the 2020 plan year by approximately 20 percent, and increase participation in the market by one percent.
Rhode Island and Delaware have also submitted 1332 waiver applications to create reinsurance programs for 2020, and CMS is currently accepting comments on those proposals. We will continue to follow these developments as they occur.