Some good news out of North Dakota as Governor signs reinsurance waiver bill

Last September I noted that North Dakota was considering going one of two ways when it comes to making a major change in their individual insurance market: EIther joining over a half-dozen other states in pushing for a reinsurance program (which I strongly support doing), or going the other way and starting to offer weaker policies without some ACA protections the way states like Idaho, Tennessee, Iowa and Kansas either already do or are in the process of doing.

Fortunately, it looks like they ultimately decided to go the former route after all:

North Dakota Gov. Doug Burgum has signed a bill that allows for establishing a reinsurance pool for the individual health insurance market in that state.

House Bill 1106, backed by the North Dakota Department of Insurance, was passed unanimously by the state House of Representative and received only one negative vote in the Senate.

HB 1106 outlines a plan developed by the department proposing the creation of a reinsurance mechanism called “invisible” reinsurance. The approach of invisible reinsurance allows enrollees to remain in the individual market with their current plan and carrier, while a portion of their claims are reimbursed by the reinsurance pool. The enrollee would not be aware that their claim is being paid via the reinsurance pool meaning there would be no effect on the enrollee as the task of ceding claims to the reinsurance pool is completed on the back end of the process and is without consequence to the enrollee.

In other words, a standard "vanilla" reinsurance program. It looks like it's a pretty robust version as well:

The reinsurance program would cover 75% of paid claims per individual between $100,000 and $1,000,000 for 2020 and 2021.

I don't know exactly how much ND's reinsurance program will lower unsubsidized premiums, but for comparison, New Jersey's version, which ended up reducing 2019 premiums by a whopping 15 percentage points) covers 60% of claims between $40,000 and $250,000. North Dakota's version would cover a higher percent of costs, but would also start higher (although it would also end higher as well).

A study conducted by the department in 2018 shows that the invisible reinsurance pool would reduce premiums and provide a low-cost alternative for healthier individuals. This would result in more individuals with health insurance, a more stable individual market and protection for health insurance companies from unpredictable high cost claims. This would also result in companies being more willing to participate in the North Dakota individual insurance market.

The reinsurance pool would be funded by a combination of federal funds and assessments. The assessments would be placed on insurance companies selling in North Dakota’s health insurance market.

With the passage of HB 1106, the department will now finalize a 1332 waiver under the Affordable Care Act and seek approval from the federal government to implement this reinsurance program. Final approval is expected by the end of Sept. 2019.