California Insurers Received $1.2B Under ACA Reinsurance Program

California insurers have received nearly $1.2 billion through the Affordable Care Act’s reinsurance program, according to a Covered California analysis of a recent CMS report, Business Insurance reports (Geisel, Business Insurance, 7/6).


The program requires insurers that offer exchange coverage to pay into a pool that can be used to reimburse them if they incur claims that exceed a certain threshold.

In June, HHS said it will reimburse 100% of such costs between $45,000 and $250,000, up from 80% previously (California Healthline, 6/18).
Details of Payments

Of the $8.7 billion collected by insurers nationwide during the 2014 benefit year, California insurers received $1.17 billion.

The insurers that received the largest reinsurance payments in the state were:

Anthem Blue Cross of California, with $401.1 million;
Blue Shield of California, with $363 million; and
Kaiser Permanente, with $240 million (Business Insurance, 7/6).

Meanwhile, California insurers also received more than $600 million in risk adjustment payments. Like the reinsurance system, the risk adjustment program is designed to keep rates consistent by allowing insurers to increase their enrollee pools without concern of incurring higher medical costs or enrolling sicker consumers.
Covered California’s Comments

Covered California Executive Director Peter Lee in a release said the two programs are critical to protecting consumers from high costs.

He said the California exchange “enrolled more than one million people in our first year, which led to a rate increase for 2015 that was a fraction of what we saw prior to the Affordable Care Act,” adding, “Covered California is now firmly established in a pattern where good rates lead to good enrollment” (Covered California release, 7/6).

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