Reinsurance in the ACA context is currently a state waiver program that is enacted at state discretion. Sixteen states have a reinsurance waiver. These waivers introduce state funds to pay some portion of claims. Using non-premium funds to pay some claims means premiums go down. This is important and valuable for individuals who don’t get subsidies (more on folks who get subsidies in a few months once that manuscript is published!)
However, the question stuck in my head is the cost of a new enrollee? I had to look at waiver applications last night for a few slides that I need to build today. The cost per new enrollee is not cheap. Below is New Jersey’s actuarial analysis:
The key thing for today in this summary is the 2020 projection of an 8,000 person enrollment gain at a total cost of $349 million dollars. This works out to be $43,600 dollars in funds per new enrollee. This is not an unusual number. Georgia projects a higher cost per new enrollee. Most of this is because reinsurance in the ACA acts as an inframarginal transfer to people who already would have bought insurance. Each additional dollar of affordability that might increase enrollment of a single person has dozens of dollars going to currently enrolled folks.