Sep 7, 2021 - Health

CMS funnels $452 million for state reinsurance programs

Health and Human Services Secretary Xavier Becerra

Health and Human Services Secretary Xavier Becerra. Photo: Drew Angerer/Getty Images

The federal Centers for Medicare & Medicaid Services will announce Tuesday it plans to send $452 million to more than a dozen states' reinsurance programs.

The big picture: The Biden administration has previously signaled support for these programs, which directly compensate insurance companies for some of their most expensive claims, preventing an increase in premiums.

By the numbers: The additional funds allocated through the American Rescue Plan range from $2.5 million to $139 million per state based on the size of the state’s program.

  • CMS says the funds will result in new individuals enrolled and will cover a portion of the states’ costs for these reinsurance programs.

What's happening: In August, Colorado became the first state to receive approval from CMS and the Treasury Department for a five-year extension of the state’s current section 1332 waiver for a reinsurance program.

  • Colorado's statewide average premium was nearly 20% lower in 2020 than it would have been without the waiver and 20% lower in 2021, so far, due to the reinsurance program.
  • Alaska, Hawaii, Maine, Oregon and Wisconsin also submitted letters signaling their intent to apply for five-year waiver extensions or amendments but no changes to their current programs.
  • Georgia is the only state to have received broader approval which allows restructuring of its individual market and eliminates by 2023. The approval has since been scrutinized and the state on Aug. 26 declined for the second time CMS's requests for updated data regarding the approved waiver.

What to watch: In June, CMS and the Treasury Department issued a proposed rule — which has not yet been finalized — for changes to current section 1332 regulations and to bolster access to marketplace coverage.

  • This is the Biden administration’s first proposed rule on the marketplaces and would reverse several Trump-era regulatory changes under the ACA, according to Health Affairs.

Editor's note: This post has been clarified to note that the reinsurance programs directly compensate insurance companies for expensive claims.

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