Bill creates reinsurance program to increase healthcare affordability

Continuing a longstanding effort to make healthcare more affordable, lawmakers introduced legislation this week that would create a reinsurance program to help lower the cost of premiums for Delawareans who do not get insurance through their employers.

The rising costs of health coverage have forced many individuals who purchase private insurance to take gambles with their health - foregoing insurance completely.

House Bill 176 would stabilize the individual health insurance market and help Delawareans struggling with extraordinary healthcare costs feel relief.  The bill, based on Delaware’s Section 1332 Waiver application, is enabling legislation that establishes and funds a reinsurance program to cover the high cost of premiums for individual market plans.

“The high cost of healthcare is all-consuming, forcing our small business owners, seniors and everyday Delawareans to make difficult decisions with their health. It’s a cycle that will continue, but this legislation lays out an action plan to help consumers. I commend the work of the elected officials, Department of Health and Social Services and Department of Insurance for their leadership on these strategies, and hope that we can approve and pass this important measure,” said House Speaker Pete Schwartzkopf, chief sponsor of HB 176.

“The proposed reinsurance program will help to relieve the burden of high premium costs, many of which have increased by double digits, allowing individuals to better budget their life expenses. Health coverage is critical and it’s imperative to improve access and affordability so people can get the care they need whether it’s an emergency, life-altering diagnosis or routine check-up.”

States across the country have pursued such Section 1332 Waivers, which are options within the Affordable Care Act that allow states to modify and address healthcare affordability under the health law.

These waivers require approval from the federal government in order to be enacted. According to the National Conference of State Legislatures, eight states have filed waivers and received approval, while 11 states have 1,332 waiver laws in place.  

Delaware’s waiver application supports the creation of the Delaware Health Insurance Individual Market Stabilization Reinsurance Program & Fund to reinsure expensive claims. Authorized by HB 176, this initiative would impact individuals and families who do not qualify for Medicaid or tax credits through the ACA marketplace, meaning those who purchase insurance through the marketplace, through a broker or from an insurance carrier directly. 

The projected goal is to reduce health insurance premiums for this population by 20 percent, and increase enrollment on the individual market by 3.2 percent.

“As elected officials, we hear from constituents every day about the high costs of health insurance premiums,” said Senate Health and Social Services Committee Chairman Sen. Bryan Townsend, D-Newark/Bear. “In the absence of federal leadership, we have been working incredibly hard in Delaware to address the issue in whatever ways we can. After co-chairing a task force on this issue, I strongly believe legislation to seek a 1332 waiver is one of the best steps we can take to help make health insurance more affordable for Delawareans.”

This reinsurance program would be administered by the Delaware Health Care Commission, and would not impact the state budget. The majority of the program would be funded through federal dollars, but there would be a 2.75-percent tax on insurance carriers, based on the carrier’s premium tax liability, to further support the fund. These costs can sometimes be passed on to consumers.

Delaware’s 1332 Waiver Application is currently out for public comment. Consumers can submit comments or attend public hearings to voice their thoughts. Once finalized, the application will be submitted to the federal government.