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Health Insurance

BISMARCK, N.D. – Insurance Department proposed legislation, HB 1106 relating to the establishment of an invisible reinsurance pool for the individual health insurance market, passed the North Dakota House of Representatives on Tuesday with a unanimous do pass vote. The bill also received a unanimous do pass vote from the House Industry, Business and Labor Committee and House Appropriations Committee.

“The heavy burdens created by the ACA continue to cause an increase in premiums which requires us to look at what we can do at the state level, within the constraints of the ACA, to help our consumers,” Godfread said. “HB 1106 is the result of working with our insurance companies and our legislative leaders for the betterment of North Dakota consumers.”

HB 1106 outlines a plan developed by the Department proposing the creation of a reinsurance mechanism that 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 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 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.

A study conducted by the Department in 2018 shows the invisible reinsurance pool would reduce premiums and that the North Dakota Plan would provide a low-cost alternative for 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.

HB 1106 will now move to the Senate Chamber and will be heard and acted upon following the crossover recess.

“I want to thank the North Dakota House of Representatives for their overwhelming support of lowering premiums for North Dakotans who purchase their health insurance on the individual market. HB 1106 now moves to the Senate and we look forward to working with Senators from across our state to provide much-needed relief to consumers on our individual market,” Godfread said.

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