HHS approves Colorado's waiver to set up ACA reinsurance program

Colorado road
Colorado got approval for a waiver to set up a reinsurance program to lower premiums for Affordable Care Act plans. (Pixabay)

The Trump administration approved Wednesday a waiver from Colorado to run a reinsurance program for Affordable Care Act (ACA) exchange plans from 2020 to 2021.

The waiver is expected to lower premiums in the state by 16% in 2020, and enrollment could increase by nearly 3% because of the lower premiums, according to the Centers for Medicare & Medicaid Services (CMS).

The waiver is the eighth approved by CMS to adopt reinsurance programs for the exchanges, according to data from the Kaiser Family Foundation.

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“This is another opportunity of states taking the opportunity to improve their markets,” said CMS Administrator Seema Verma in a statement.

Starting next year, Colorado will reimburse insurance claims above $30,000 and with a cap of $400,000. The waiver enables the federal government to use “pass-through” money that it would have spent on ACA tax credits to help fund the reinsurance program.

RELATED: With new legislators and governors, reinsurance programs have a bright future

The arrangement is similar to the other seven states that get “pass-through” money to fund reinsurance.

Reinsurance programs have been successful for the states that have implemented them. An analysis from consulting firm Avalere found that premiums were cut nearly 20% on average in the first year.

Another report from Georgetown University’s Center on Health Insurance Reform found that Alaska, Minnesota and Oregon were able to avoid massive premium spikes in 2017 and 2018 because of reinsurance.

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