Reinsurance, an insurance product designed to protect health insurers against the financial risk of covering high-cost enrollees, has attracted bipartisan policy interest as a mechanism to stabilize individual health insurance markets. Three states—Alaska, Minnesota, and Oregon—have implemented state-based reinsurance programs under the Affordable Care Act’s 1332 State Innovation Waivers. Reinsurance waivers have also been approved (and given funding estimates) to begin this year in Maine, Maryland, New Jersey, and Wisconsin.

In a new article for INQUIRY: The Journal of Health Care Organization, Provision, and Financing, SHADAC researchers Lynn A. Blewett, PhD, and Brett Fried, MS, with former UMN Health Services Research, Policy and Administration graduate student Coleman Drake, PhD, estimate the costs of implementing both a national and state-based reinsurance programs. Using health spending data from the 2007-2016 Medical Expenditure Panel Survey (MEPS) and state demographic and health insurance coverage data from the 2015-2017 Current Population Survey Annual Social and Economic Supplement (CPS-ASEC), the article projects that a federal reinsurance program would cost $30.1 billion in 2020-2022. The article also examines the potential for, and estimated costs of, state-based resinsurance programs in four states—California, Florida, Illinois, and Texas.