An Overview of State-Based Reinsurance Programs

With Donald Trump set to be the 47th president and Republicans in complete control of Congress, the fate of enhanced subsidies for Affordable Care Act exchange enrollees hangs in the balance. If these subsidies expire, there may be renewed talk of state-based reinsurance programs.

States can apply for and implement reinsurance programs via Section 1332 waivers of the ACA, which allow them to waive normal rating rules in order to pursue marketplace innovations. The programs work by subsidizing insurers’ highest-cost claims, allowing them to charge lower premiums overall. Between 2017 and 2024, 20 states have had Section 1332 waivers approved, according to CMS. Among them, 17 states operated state-based individual market reinsurance programs during the 2023 plan year.