North Dakota to Implement Reinsurance for Health Insurance Market
North Dakota will implement a reinsurance program for the state’s individual health insurance market.
Source: Thinkstock
By Jessica Kent
- North Dakota Governor Doug Burgum has signed a bill that will establish a reinsurance pool for the state’s individual health insurance market.
The North Dakota House of Representatives passed House Bill 1106 with a unanimous vote, while the Senate passed the bill with a vote of 46-1.
The new bill proposes the creation of invisible reinsurance, which will enable enrollees to remain in the individual market with their current plan or carrier while a portion of their claims are reimbursed by the reinsurance pool.
The enrollee would not be aware that their claim was being paid through the reinsurance pool, so there would be no consequence to the enrollee. The reinsurance program would cover 75 percent of paid claims per individual between $100,000 and $1,000,000 for 2020 and 2021.
“I want to applaud the Governor and our Legislature for taking this step to help ease the heavy burdens our health insurance market is facing. Under this legislation, we will be able to provide some necessary health insurance premium relief to the individuals and families who need it most,” said Insurance Commissioner Jon Godfread.
“HB 1106 is the result of a collaboration between the Department, North Dakota insurance companies and our legislative leaders working toward the betterment of our consumers.”
Legislators expect that the new initiative will lead to more people having health insurance, as well as a more stable individual market.
In 2018, the Department of Insurance conducted a study showing that the invisible reinsurance pool would reduce premiums and provide a low-cost alternative for healthier individuals while protecting health insurance companies from unpredictable high-cost claims.
Reinsurance is also likely to increase payer willingness to participate in the North Dakota individual insurance market, the study indicated.
A combination of federal funds and assessments will fund the reinsurance pool, with the assessments placed on insurance companies selling coverage in North Dakota’s health insurance market.
“We commend Commissioner Godfread for his leadership on this bill, which will help to lower costs and provide stability in the insurance marketplace,” said Burgum.
“Building on this legislation, we must continue to find ways to innovate in our health care sector to reduce costs and expand options for consumers.”
North Dakota is joining several other states that have created health reinsurance programs.
In April 2018, Maryland Governor Larry Hogan signed legislation to establish a state reinsurance program to stabilize health plan premium increases. The reinsurance program uses state and federal reinsurance funding to pay claims for members enrolled in Maryland Health Benefit Exchange plans.
Additionally, New Jersey recently received approval from CMS to implement a five-year reinsurance program with the goal of reducing individual plan premiums by 15 percent. The agency also approved a four-year state reinsurance program in Wisconsin to help control the increase of state healthcare spending.
The passage of HB 1106 in North Dakota will enable the Department of Insurance to finalize a 1332 waiver under the Affordable Care Act. The Department will also seek approval from the federal government to implement the program, and final approval is expected by the end of September 2019.
“I want to thank Governor Burgum and the North Dakota Legislature for their overwhelming support of lowering premiums for North Dakotans who purchase their health insurance on the individual market,” Godfread said.
“We look forward to submitting our final waiver application in the coming days and seek prompt federal approval, so we can provide much needed relief to our consumers.”
