MODEL BILLS

Healthcare Reinsurance Act

Summary: The Healthcare Reinsurance Act creates a reinsurance program to stabilize health plan premium increases on a State Exchange for individual plans by paying catastrophic claims. This requires the state to obtain a 1332 waiver from the federal government.

Based upon Maryland SB 387 (2018). A considerably more detailed reinsurance law is Minnesota HF 5 (2017).

Note: A handful of states have successfully implemented a reinsurance program. For a thoughtful and brief discussion of reinsurance, see NCSL’s Reinsurance Explained.

SECTION 1. SHORT TITLE

This Act shall be called the “Healthcare Reinsurance Act.”

SECTION 2. HEATHCARE REINSURANCE

After section XXX, the following new section XXX shall be inserted:

(A) DEFINITIONS—In this section:

1) “Affordable Care Act” has the same meaning as in [cite code provision].

2) “Carrier” has the same meaning as in [cite code provision].

3) “Exchange” has the same meaning as in [cite code provision].

(B) HEALTH CARE ACCESS PROGRAM

1) The Exchange shall establish and oversee the implementation of a Health Care Access Program in accordance with §1332 of the Affordable Care Act.

2) The Health Care Access Program shall be designed to mitigate the impact of high-risk individuals on rates for health benefit plans in the individual market in the state, both inside and outside the Exchange.

3) Beginning [January 1, 2020], the Health Care Access Program shall provide reinsurance to carriers that issue health benefit plans in the individual market in [State], and premium subsidies to low- to moderate-income individuals as authorized by a waiver approved under §1332 of the Affordable Care Act.

4) The Health Care Access Program is contingent on the Centers for Medicare and Medicaid Services approving a waiver under §1332 of the Affordable Care Act.

5) The Exchange shall adopt regulations implementing the provisions of this section on or before [October 1, 2019].

(C) ASSESSMENT

1) Beginning January 1, 2020, a carrier shall pay an assessment of three percent on the carrier’s new and renewal gross direct premiums if the carrier fails to offer individual health benefit plans in the state in accordance with [cite code provision].

2) The assessment payable by a carrier under this subsection shall be based on the carrier’s premiums in any market segment:

a) Allocable to the state; and

b) Written during the immediately preceding 12 calendar year.

3) The assessment required under this subsection shall be distributed to the [Health Benefit Exchange Fund] for the sole purpose of funding the operation and administration of the Health Care Access Program.

4) The assessment required under this subsection shall be in addition to taxes due from the carrier under any other provision of law, and penalties or actions that the [Commissioner] may take for the carrier’s failure to comply with this section.

(D) FEDERAL WAIVER

1) On or before July 1, 2019, the [Commissioner] shall seek approval from the United States Secretary of Health and Human Services and the United States Secretary of the Treasury for a waiver under §1332 of the Affordable Care Act to implement innovations relating to the provision of health insurance coverage in the state.

2) If the waiver is approved, the [Commissioner] shall implement a state plan meeting the waiver requirements in a manner consistent with state and federal law.

SECTION 3. EFFECTIVE DATE

This law shall become effective on July 1, 20XX.