Rhode Island becomes 12th state to have ACA reinsurance waiver approved;
I noted last month that Rhode Island was the latest state to put in for an ACA Section 1332 reinsurance program waiver:
Governor Raimondo’s proposed FY 2020 budget called for the creation of the Health Insurance Market Integrity Fund, which would make available reinsurance payments to health plans to reduce the burden of high cost claims on individual market premiums. According to insurer filings, the enactment of the Health Insurance Market Integrity Fund would reduce the individual market premium requests from 6.6% to -0.4% for BCBSRI and from 5.4% to 1.7% for NHPRI. These insurers’ pricing assumptions are subject to review and verification by OHIC. Table 1 shows the requested individual market rate increases with and without reinsurance.
On July 15, CMS informed Rhode Island that its application for a state-based reinsurance program under Section 1332 of the ACA was complete. Comments on the application can be made through August 14. As with recent waiver applications in Colorado, North Dakota, and Montana, the review process was very quick: the application was submitted on July 8 and deemed complete on July 15 (just one week later). Following the comment process, CMS and the Department of Treasury will approve or deny the application within 180 days.
...If approved, Rhode Island would have a $14.7 million reinsurance program for 2020 funded through the individual mandate penalty and federal pass-through funding. Rhode Island estimates a federal pass-through rate of 43 percent. Of the $14.7 million, the federal government would contribute less than half of the funds (about $6.4 million), and the state would contribute about $8.3 million.
Like nearly all states with reinsurance programs, Rhode Island chose to use an overall attachment point model with parameters set annually by HSRI. For 2020, the program would be expected to reimburse insurers for 50 percent of claims between $40,000 and $97,000. To ensure program predictability, HSRI would reduce or increase the coinsurance rate as needed to make the program budget-neutral (such that reinsurance payments equal the total available funding for the benefit year).
Sure enough, a couple of days ago, it was approved:
HHS on Monday approved Rhode Island's 1332 waiver application to create an individual market reinsurance fund supported by federal funding.
Rhode Island anticipates the move will lower premiums and expand coverage statewide. The state expects the 1332 waiver will reduce premiums by 5.9% in 2020 compared to what they would be without the waiver, according to HHS. Rhode Island thinks the lower premiums will grow individual market enrollment by about 1% in 2020.
"We are extremely pleased to receive notice of the approval of this waiver. As a result, our state will see an average decrease in the cost of coverage for individuals in 2020 compared with premium costs for 2019. We are grateful to our federal partners, the state legislature and Governor (Gina) Raimondo for their support of this effort," said Rhode Island's Health Insurance Commissioner Marie L. Ganim.
Not much else to add. Rhode Island is the 12th state to have a reinsurance waiver approved. The federal ACA reinsurance program sunsetted at the end of 2016, but the law allows states to apply for standalone versions as long as they're structured in such a way as to not increase federal spending any more than it already would have been without the program in place.