Gov. Steve Bullock has signed legislation meant to lower premiums for Montana customers who receive health insurance through the Affordable Care Act's individual marketplace.
Bullock signed the bill Tuesday creating a reinsurance program to help reimburse insurers for high-cost claims so those costs aren't included in determining individual marketplace premiums for the following year.
U.S. health officials also must approve the plan, which is estimated to offset 2020 premium increases by 10% to 20%.
"This is one of the most important mechanisms that Montana as a state can deploy to not only make health care more affordable for the 55,000 people who are purchasing an insurance plan in this market, but also to stabilize this market," said John Doran, divisional vice president of external affairs for Blue Cross and Blue Shield of Montana.
Blue Cross sells policies on the individual exchange along with PacificSource Health Plans and the Montana Health CO-OP.
"Typically a very few people contribute the majority of costs of any given (insurance) pool," Doran said. "Those high cost claims drive up premiums for everybody else."
Under the legislation, sponsored by Republican Sen. Steve Fitzpatrick, the state will assess a 1.2 percent premium tax on all major medical policies sold in Montana, which will raise an estimated $15 million. The tax does not apply to self-funded group insurance plans.
The reinsurance program also will receive about $60 million in federal money that would have otherwise been used as premium tax credits under the Affordable Care Act. A five-member board of directors will oversee distribution of that estimated $75 million to the insurance companies for high cost claims, likely ranging from $40,000 to $1 million. The board will include one member representing each of the three companies that sell policies on the exchange. It is scheduled to hold its first meeting next Wednesday.
Bullock vetoed a reinsurance bill passed by the 2017 Legislature, saying his administration was concerned that bill did not meet the requirements to apply for a federal waiver.
Bullock and the Department of Administration created a work group to study the issue in September and it drafted the reinsurance bill for the 2019 Legislature.
Alaska, Oregon, Hawaii, Minnesota and Wisconsin are among the states that have reinsurance pools, according to the Kaiser Family Foundation.