Insurance Department Releases Health Insurance Reform Study Findings and Approved ACA Health Insurance Rates

BISMARCK, N.D. – Insurance Commissioner Jon Godfread today presented the findings from a study performed to better understand the options available and potential impact of attempting to stabilize the individual health insurance market in North Dakota to the interim Health Care Reform Review Committee. The goals of the study were to attempt to increase affordability, competition and consumer choice in both the short and long term as early as the 2020 health insurance plan year. The health insurance premium rates for Affordable Care Act (ACA)-compliant individual and group plans offered in North Dakota beginning Jan. 1, 2019 were also included in the study.

“The heavy burdens created by the ACA continue to cause an increase in premiums which requires us to look at alternative ways in which North Dakota consumers can purchase more affordable plans,” Godfread said. “We do, however, remain fortunate to have competition in our individual and group markets in North Dakota giving our consumers some opportunity to shop around. This year, consumers can expect to see three major carriers operating on the exchange, along with an increased presence in our small group market from UnitedHealthcare. As the open enrollment period approaches, it is important for consumers to do their research and find health insurance that best fits their needs at the best price.”

Section 1332 of the ACA permits a state to apply for a State Innovation Waiver to pursue strategies for providing its residents with access to high quality, affordable health insurance while retaining the basic protections of the ACA.

The study initiated by the Department was conducted to access the feasibility and desirability of a North Dakota 1332 waiver by exploring the following options:

• The modification of North Dakota’s current high-risk pool, the Comprehensive Health Association of North Dakota (CHAND), to allow a greater number of high-risk North Dakotans to obtain their health insurance from CHAND, along with an analysis of the corresponding insurance company assessments necessary for CHAND to successfully operate with an increased high-risk membership.
• The modification of CHAND into an invisible high-risk pool where high-risk North Dakotans can obtain their health insurance.
• The creation of an invisible reinsurance program independent of CHAND. An invisible reinsurance program would limit the amount of risk insurance companies would take on for the high-risk North Dakotans they insure.

The study also analyzed Idaho’s state-based plan initiative and how a similar state-based plan allowance could operate in North Dakota. The state-based plan initiative would allow insurance carriers to offer health insurance plans, outside of the existing ACA exchange, that would be more flexible in how they are underwritten and designed. These state-based plans would still be required to offer all ACA mandated essential health benefits, be guaranteed issue, but would allow for credits for healthy behavior or other health-related factors. The state-based plans would also be a part of the single risk pool for the general marketplace, which could incentivize young and healthy membership into the risk pool and help stabilize the rates.

Upon completion of the study, two main options were presented as the best options for North Dakota: (1) the creation of an invisible reinsurance pool and (2) the creation of a state-based plan to be sold by insurance companies.

The study shows that an invisible reinsurance pool has the ability to reduce individual health insurance premiums between an estimated 10-20 percent in 2020, compared to the baseline premium depending on the attachment point chosen. Due to the reduced premium, membership in the 2020 individual market is estimated to increase 1 percent compared to the baseline without the waiver.

The reinsurance mechanism would be what has been referred to as “invisible” reinsurance. The approach of invisible reinsurance allows enrollees to remain in the individual market with their current plan and carrier, but a portion of their claims are reimbursed by the reinsurance pool. 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.

For 2020, the proposed reinsurance program would cover 75 percent of paid claims between the attachment point and $1,000,000. The attachment points being considered are $100,000 and $200,000. This level of reinsurance was assumed in projections but North Dakota could have the flexibility to change the parameters in the future.

The intent of the North Dakota Plan offering a state-specific plan similar to the one proposed in Idaho is to have an affordable option for healthier individuals who have foregone purchasing health insurance in the past and to inject healthier risk into the single risk pool. Healthier individuals would pay a reduced premium.

The North Dakota plan would cover all essential health benefits but would allow a higher cost sharing compared to the ACA metal level plans. The plans are still guaranteed issue, but in the event of a coverage lapse, carriers would be allowed to implement a waiting period that is consistent with the provisions of the ACA before pre-existing conditions would be covered.

The study shows the invisible reinsurance pool would reduce premiums and that the North Dakota Plan would provide a low-cost alternative to healthier individuals. This would result in more individuals with health insurance and a more stable individual market, protecting carriers from unpredictable high cost claims. This would also result in carriers being more willing to participate in the North Dakota individual insurance market.

The reinsurance pool would be funded by a combination of federal funds and assessments. The assessments would be placed on insurance companies selling in the state’s health insurance market.

In addition to the waiver, the lower premium charged to healthy individuals under the North Dakota Plan would provide an alternative when rate increases result in individuals and families dropping coverage. We expect this could lead to a larger insured population and a more stable market.

“We believe the study has provided useful insight into two good options that would provide some relief to our consumers who are on the individual market but do not qualify for the subsidies. Our small business owners, farmers and ranchers, and anyone who earns too much to qualify for the ACA subsidies, have been deeply hurt by the ACA and many have been priced out of the market and are going without health insurance,” Godfread said.

The next step for the Department is to develop potential legislative proposals to bring to the 2019 legislative session with hopes of implementing changes for the 2020 health insurance plan year.

The 2019 individual and small group market health insurance premium rates were also included in the study. The average rate increases based on market and company are outlined below:

**United Health Care will be offering plans on the small group market starting in 2019, as this is their first year offering a plan in North Dakota, there is no rate increase requested.

“The 2019 rates further illustrate the need for a comprehensive overhaul of the health insurance market at the federal level,” Godfread said. “Congress must work together to provide common sense reforms for this broken market.”

Approximately 84 percent of North Dakotans are covered by health insurance plans offered through employers that self-insure, participate in “grandfathered” plans purchased before March 2010 or receive benefits from government plans (such as Medicaid, Medicare, Tricare or federal employee plans). Today’s announcement will not affect the rates for these consumers.

The 2019 open enrollment period runs from Nov. 1, 2018 through Dec. 15, 2018. North Dakotans are encouraged to use this time to compare rates and sign up for new plans or renew existing plans during this period.

Please see the North Dakota Insurance Department Proposed 1332 Waiver Analysis Report for more information.