CMS approves waiver for Montana to set up reinsurance program for ACA exchanges

Montana landscape with mountains
Montana became the 10th state to get federal approval to set up a reinsurance program for its Affordable Care Act exchange. (Getty/Srongkrod)

The Centers for Medicare & Medicaid Services (CMS) approved Friday Montana’s request to set up a reinsurance program for its Affordable Care Act (ACA) exchange, becoming the 10th state to do so.

The reinsurance waiver approved under Section 1332 of the ACA is the third the agency has approved in the past three weeks, following approval for reinsurance programs for Colorado and North Dakota. CMS has touted reinsurance to lower premiums for the exchanges.  

The program will run from 2020 through 2024, and CMS expects it to lower premiums by 8%. CMS will allow Montana to use “pass-through” money the federal government would have spent on ACA tax credits to help fund the reinsurance program.

CMS has touted premium declines among other states that implemented reinsurance programs. Administrator Seema Verma tweeted Friday that this year, reinsurance programs have lowered premiums by 30% in Maryland and 15% in New Jersey.

A recent analysis from consulting firm Avalere found state-run reinsurance programs reduce premiums by nearly 20% on average in their first year.

Verma has been pushing states to pursue reinsurance waivers, seeing the programs as a way to combat high premiums on the ACA exchanges. She tweeted earlier this week that the latest report on effectuated enrollment on the exchanges, which represent the people who paid a month’s worth of premiums on the ACA, shows a 1% premium drop in 2019.

“While we’ve seen a 1% premium drop, premiums stabilizing at a high level remain too high,” she tweeted Monday. “That’s why we continue giving states flexibility to address market challenges & have approved reinsurance programs in nine states since 2017.”