Senate Democrats introduce bill to create permanent reinsurance program in individual marketplaces

Sen. Tim Kaine, R-Va., introduced a bill Wednesday that would create a permanent reinsurance program in order to lower premiums and increase competition in the individual insurance marketplaces. (Gage Skidmore / CC BY-SA 2.0)

While their GOP counterparts work on an Affordable Care Act repeal bill, Senate Democrats are hoping to stabilize the law’s shaky individual marketplaces with legislation of their own.

On Wednesday, Virginia’s Tim Kaine and Delaware’s Tom Carper introduced the “Individual Health Insurance Marketplace Improvement Act,” which would create a permanent reinsurance program modeled on a similar program in Medicare Part D.

The program would provide federal funding to cover 80% of insurance claims between $50,000 and $500,000 from 2018 to 2020. Then starting in 2021, federal funding would cover 80% of insurance claims between $100,000 and $500,000.

The ACA had a reinsurance program as part of the law’s “three Rs”—reinsurance, risk corridors and risk adjustment—but only the risk adjustment program was meant to be permanent. The other two programs ended after 2016.

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“By providing insurers with the certainty they need to participate in the individual insurance markets, this bill will increase competition among insurers and lower premiums for consumers,” Carper said in the senators’ joint announcement.

The bill would also provide $500 million a year from 2018 to 2020 to help states improve outreach and enrollment for the health insurance marketplaces.

Though Kaine and Carper’s bill may have dim prospects in the GOP-controlled Congress bent on repealing the ACA, Senate Democrats are not the only ones to embrace reinsurance as a solution to what ails the individual exchanges. Republicans, however, would rather see such programs happen at the state level.

Health and Human Services Secretary sent a letter to state governors in March encouraging them to apply for federal waivers to set up high-risk pools or state-operated reinsurance programs—pointing to Alaska’s success with the latter when its individual market was on the brink of collapse. A handful of other states, meanwhile, are going the legislative route, introducing bills aimed at setting up their own reinsurance programs.