HHS approves reinsurance program for North Dakota's ACA exchange

A map of North Dakota with a pin in Bismarck
North Dakota became the ninth state to get approval from the Trump administration to start a reinsurance program for its Affordable Care Act marketplace. (Getty/dk_photos)

The Trump administration approved North Dakota’s application to create a reinsurance program for its Affordable Care Act (ACA) insurance exchange.

North Dakota became the ninth state to get approval for such a program and the second this week after the Department of Health and Human Services greenlighted Colorado’s program. North Dakota estimates the program will reduce premiums on the exchanges by 8% to 20%.

“This program will stabilize our market and benefit our state’s farmers, ranchers and small business owners,” said North Dakota Insurance Commissioner Jon Godfread in a statement Thursday.

The program lasts from 2020 through 2021. It will cover 75% of paid claims between $100,000 and $1 million, and the insurer will cover the remaining 25%, according to the state insurance department.

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A combination of federal funds and state taxes will pay for the program, the state said.

“The state’s portion of the funding will ultimately be in the form of reduced tax revenues for the state and not increased costs for the state’s group health insurance markets,” Godfread said.

North Dakota’s program will be “invisible,” meaning that enrollees will remain in the individual market with their current plan while a part of their claims are reimbursed by the reinsurance pool, the state said.

“The enrollee is not aware that their claim is being paid via the reinsurance pool meaning there is no effect on the enrollee as the task of ceding claims to the reinsurance pool is completed on the back end of the process and is without consequence to the enrollee,” the insurance department said in a release.

Reinsurance has been growing in popularity to handle rising costs on ACA individual marketplaces. Colorado’s program, for example, also extends through 2021 and would lower premiums by 16% next year.