HHS on Monday approved Rhode Island's 1332 waiver application to create an individual market reinsurance fund supported by federal funding.
Rhode Island anticipates the move will lower premiums and expand coverage statewide. The state expects the 1332 waiver will reduce premiums by 5.9% in 2020 compared to what they would be without the waiver, according to HHS. Rhode Island thinks the lower premiums will grow individual market enrollment by about 1% in 2020.
"We are extremely pleased to receive notice of the approval of this waiver. As a result, our state will see an average decrease in the cost of coverage for individuals in 2020 compared with premium costs for 2019. We are grateful to our federal partners, the state legislature and Governor (Gina) Raimondo for their support of this effort," said Rhode Island's Health Insurance Commissioner Marie L. Ganim.
HHS will provide the state with federal funds using pass-through savings. Rhode Island will receive the additional funds because the expected lower premiums will save the federal government money by reducing the amount it spends on tax credits in the state. HHS said the pass-through funds could be reduced to ensure that Rhode Island's approved 1332 waiver remains budget neutral, as required by federal law.
Rhode Island's reinsurance fund in 2020 will reimburse insurers for 50% of a beneficiaries' claims between $40,000 and $97,000. The state's exchange, HealthSource RI is empowered by state law to adjust the reinsurance parameters each year, as needed.
The CMS and the Department of the Treasury last October made it easier for states to get a state innovation waiver, which Congress created under the ACA to allow states to provide alternative options for health coverage. And earlier this year, the CMS and the U.S. Department of the Treasury issued a joint request for information because they want to develop new waiver concepts. But of the 13 waivers approved so far, 12 of them focus on reinsurance programs like Rhode Island's.
Utah's waiver request for a partial Medicaid expansion was recently denied by the CMS, while nearly 20 states are working toward some kind of public-option health plan.