Effects of state reinsurance programs on health insurance exchange premiums and insurer participation

ObjectiveThe aim of the study was to estimate the effect of the state-based reinsurance programs through the section 1332 State Innovation Waivers on health insurance marketplace premiums and insurer participation. Data Source2015 to 2022 Robert Wood Johnson Foundation Health Insurance Exchange Compare Datasets. Study DesignAn event study difference-in-differences (DD) model separately for each year of implementation and a synthetic control method (SCM) are used to estimate year-by-year effects following program implementation. Data Collection/Extraction MethodsNot applicable. Principal FindingsReinsurance programs were associated with a decline in premiums in the first year of implementation by 10%-13%, 5%-19%, and 11%-17% for bronze, silver, and gold plans (p < 0.05). There is a trend of sustained declines especially for states that implemented their programs in 2019 and 2020. The SCM analyses suggest some effect heterogeneity across states but also premium declines across most states. There is no evidence that reinsurance programs affected insurer participation. ConclusionState-based reinsurance programs have the potential to improve the affordability of health insurance coverage. However, reinsurance programs do not appear to have had an effect on insurer participation, highlighting the need for policy makers to consider complementary strategies to encourage insurer participation.

Automated summary

The study aimed to estimate the impact of state-based reinsurance programs on health insurance marketplace premiums and insurer participation. Using event study difference-in-differences model and synthetic control method, it was found that reinsurance programs led to a decline in premiums of 10%-13%, 5%-19%, and 11%-17% for bronze, silver, and gold plans in the first year of implementation, with sustained declines in states that implemented the programs in 2019 and 2020. The analyses also showed some heterogeneity in the effect across states, but most states experienced premium declines and there was no evidence of an impact on insurer participation.