Transitional Reinsurance Program fee to go down after first year

WASHINGTON — A fee to fund a program established by the health care reform law to partially reimburse commercial insurers covering individuals with high health care costs will decrease significantly after the first year, a regulator said Thursday.

The fee, which is $63 per plan participant in 2014, will be paid by self-funded employers and other health care plan sponsors.

Fees charged by the Transitional Reinsurance Program are intended to generate $25 billion in revenue over three years.

The fee is supposed to generate $12 billion in 2014, of which $10 billion is to be used to reimburse insurers and $2 billion to partially cover the cost of a separate reform law program that partially reimbursed early retiree health care plan sponsors for plan participant claims.

Earlier, the U.S. Department of Health and Human Services said the reinsurance fee will be $63 per plan participant — the amount regulators calculated will be needed to generate the $12 billion in 2014.

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While the 2015 and 2016 reinsurance fees have not yet been set, they will be “significantly lower” than the $63 fee for 2014, an HHS regulator said.

There are two reasons for the future reduction in the fee, said the regulator, who spoke at a Self-Insurance Institute of America conference in Washington but asked not to be identified.

One reason noted is that the revenue requirements in 2015 and 2016 set by the Patient Protection and Affordable Care Act will be much less than 2014. The fee is to generate a total of $8 billion in revenue in 2015 and $5 billion in 2016.

In addition, with the health care reform law expanding coverage to millions of previously uninsured U.S. residents, the base of participants on which the fee is assessed will increase significantly, allowing the per participant fee to be reduced, the regulator said.