Researchers with Avalere found that on average, states using so-called reinsurance programs saw individual market premiums decrease by approximately 17 percent in their first year. The decrease is relative to estimated premiums without the programs.
To date, 12 states have received federal waivers to implement reinsurance programs to help insurers balance potential losses from covering sick individual members on state insurance exchanges. Under reinsurance programs, federal and state funds are given to insurers to stabilize individual markets and address possible premium increases. Premium reductions varied across the 12 states from 6 percent to 43 percent.
Reinsurance programs can come with a high price tag for states, the researchers noted. On average, states spent about $54 million on the programs. Researchers noted the cost may be a barrier for other states thinking about implementing similar programs.
Read the full analysis, including researchers’ methodology, here.
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