Delaware jumping into the ACA Reinsurance Pool; hopes to reduce unsubsidized premiums 20%


via Delaware Business Now:

Legislation calls for reinsurance program to aid people with extremely high health insurance premiums

Lawmakers have introduced legislation this week that would create a reinsurance program to help lower the cost of premiums for Delawareans who do not get insurance through their employers.

House Bill 176, which has no Republican co-sponsors, would stabilize the individual health insurance market and help Delawareans struggling with extremely highhealthcare costs to get relief, a release from House Democrats stated.

The bill, based on Delaware’s Section 1332 Waiver application, is enabling legislation that establishes and funds a reinsurance program to cover the high cost of premiums for individual market plans.

According to the National Conference of State Legislatures, eight states have filed waivers and received approval, while 11 states have 1332 waiver laws in place.

I've added Delaware's bill to my ACA Protection/Improvement spreadsheet and will update it once it either passes, fails, is signed/approved or is vetoed/rejected.

The projected goal is to reduce health insurance premiums for this population by 20 percent, and increase enrollment on the individual market by 3.2 percent.

This reinsurance program would be administered by the Delaware Health Care Commission, and would not impact the state budget. The majority of the program would be funded through federal dollars, but there would be a 2.75-percent tax on insurance carriers, based on the carrier’s premium tax liability, to further support the fund.

Delaware’s 1332 Waiver Application is currently out for public comment. Consumers can submit comments or attend public hearings to voice their thoughts. Once finalized, the application will be submitted to the federal government.

Hmmm...Delaware enrolled 22,562 people in their on-exchange market, although they'll likely only average around 18,000 exchange enrollees per month in 2019. Assuming another 2,000 or so off-exchange gives a total ACA-compliant individual market of around 20,000 people.

The average unsubsidized premium for an ACA policy in Delaware is a whopping $842/month this year, or $10,104/year. That's around $202 million in total premiums paid for 2019.

Assuming flat rates for 2020 (which is a possibility), that means they'd have to come up with $40 million in revenue in order to reduce premiums by 20%. If they structure the reinsurance program so that the federal government saves $30 million in ACA subsidies, the state would only have to come up with another $10 million.