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California health insurers get $1.1 billion from reinsurance program

Posted On: Jul. 6, 2015 12:00 AM CST

Insurers writing coverage in California will receive more than $1.1 billion in federal payments under a reinsurance program created by the health care reform law, according to an analysis released Monday by Covered California, the state’s health insurance exchange.

Under the first year of the three-year Transitional Reinsurance Program — intended to encourage insurers to provide coverage in the individual market — health insurers writing coverage in the individual market are reimbursed by the government for 2014 claims between a $45,000 attachment point and a $250,000 ceiling.

The biggest payments to California-based insurers will go to Anthem Blue Cross of California, $401.1 million; Blue Shield of California, $363 million; and Kaiser Permanente, $240 million, according to Covered California, which drew its analysis from a report issued earlier by the U.S. Centers for Medicare and Medicaid Services.

The $1.172 billion that California insurers will collect under the reinsurance program compares with the nearly $8 billion health insurers will receive nationwide.

First-year revenue for the three-year program comes from a $63-per-participant fee paid by self-insured employers and other health plan sponsors. The 2015 fee is scheduled to decrease to $44 per participant, while the 2016 fee is scheduled to decline to $27 per participant.

Covered California is the largest state insurance exchange program, with 1.365 million enrollees who have paid premiums as of March 31, according to an earlier CMS report.