Estimated Costs of a Reinsurance Program to Stabilize the Individual Health Insurance Market: National- and State-Level Estimates

Abstract

Reinsurance, an insurance product designed to protect health insurers against the financial risk of covering high-cost enrollees, has attracted bipartisan policy interest as a mechanism to stabilize individual health insurance markets. Three states—Alaska, Minnesota, and Oregon—have implemented state-based reinsurance programs under the Affordable Care Act’s 1332 State Innovation Waivers, and reinsurance waivers have been approved though not yet enacted in Maine, Maryland, New Jersey, and Wisconsin. In this article, we estimate the costs of implementing national and state-based reinsurance programs using health spending data from the 2007-2016 Medical Expenditure Panel Survey and state demographic and health insurance coverage data from the 2015-2017 Current Population Survey Annual Social and Economic Supplement. We project that a reinsurance program with an 80% payment rate for expenditures between $40,000 and $250,000 would cost $30.1 billion from 2020-2022. We observed considerable variation in reinsurance programs and estimated costs between the 4 states we examined: California, Florida, Illinois, and Texas. Our projections provide updated estimates of the costs of implementing federal reinsurance programs for the individual health insurance market.

Individual market health plan affordability after cost‐sharing reduction subsidy cuts

“…For each policy approach, there will be costs, perhaps unintended, that are born by enrollees and/or taxpayers. Notable approaches, to date, include California's aggressive active purchaser model, premium relief measures in Minnesota, the creation of reinsurance programs through 1332 State Innovation Waivers, and Medicaid buy‐in programs in New Mexico and Nevada . In the context of our study, we find that the on‐Marketplace only silver loading that was an unintended consequence of CSR subsidy cuts increased affordability for subsidized and unsubsidized enrollees.…”

“…State Innovation Waivers, 38 and Medicaid buy-in programs in New Mexico and Nevada. 39 In the context of our study, we find that the on-Marketplace only silver loading that was an unintended consequence of CSR subsidy cuts increased affordability for subsidized and unsubsidized enrollees.…”

Geographic variation in health insurance coverage : United States, 2019

“…8 Living within a medium and small MSA with a population of less than 1 million. 9 Not living in an MSA. 10 4 Includes all 50 states and the District of Columbia.…”

“…The sample adult and sample child receive a similar set of health insurance questions, so the Sample Adult and Sample Child files can be combined to create a file that contains persons of all ages. Estimates are based on a combined file containing 42,331 persons (9,193 sample children and 33,138 sample adults). For 2019, the response rate for the Sample Child module was 59.1% and for the Sample Adult module was 59.1% (13).…”

“…Previous research based on national surveys has found geographic variation in insurance coverage in the United States by urbanization level, state Medicaid expansion status, region, and state (4)(5)(6). Population estimates of health insurance coverage at the state level are necessary for the development and assessment of federal and state health care coverage programs and policies (7)(8)(9). A recent study found that more than 4 million persons would gain coverage if the remaining non-Medicaid expansion states would fully implement a Medicaid expansion under the provisions of the Affordable Care Act (ACA) (10,11).…”