Aided by a better-than-expected claims experience, federal regulators are boosting reimbursements provided to insurers under a program created by the health care reform law.
Under the first year of the three-year Transitional Reinsurance Program — intended to encourage insurers to provide coverage in the individual market — health insurers writing coverage in the individual market are reimbursed by the government for 2014 claims between a $45,000 attachment point and a $250,000 ceiling.
The revenue for the $10 billion in reimbursement money the program was supposed to generate in the first year comes from a $63 per-participant fee paid by self-insured employers and other health plan sponsors. The 2015 fee is scheduled to decrease to $44 per participant, while the 2016 fee is scheduled to decline to $27 per participant.
Earlier, government regulators said they expected to collect $9.7 billion in first-year fee payments, close to the statutory $10 billion set amount for claims reimbursement.
However, insurers' claims experience has been better than expected. As a result, insurers will be reimbursed for 100% of claims between the $45,000 attachment point and $250,000 ceiling, up from an earlier 80% reinsurance limit, the U.S. Department of Health and Human Services said in an announcement Wednesday.
“If reinsurance contributions exceed the total requests for reinsurance payments for a benefit year, HHS will increase the coinsurance rate on reinsurance payments for that benefit year, up to a maximum of 100%. For the 2014 benefit year, reinsurance contributions exceeded the requests for reinsurance payments; therefore we have increased the coinsurance rate to 100%.” HHS said.
The state of Ohio and several Ohio public entities, including universities, filed suit Monday in federal court challenging as unconstitutional a health care reform law-authorized program that requires employers to pay billions of dollars to the federal government.