On Anniversary of Affordable Care Act Signing, Health Care Experts Confirm Rep. Craig's State Health Care Premium Reduction Act Would Lower the Cost of Health Care in Energy & Commerce Hearing

Press Release

Today, U.S. Representative Angie Craig questioned health care experts on the effectiveness of reinsurance programs at bringing down the cost of health care premiums for enrollees. Earlier this year, Craig reintroduced the State Health Care Premium Reduction Act, which would help states create their own reinsurance programs. In response to Craig's questions, Katie Keith, an Associate Research Professor at Georgetown University, confirmed that reinsurance programs had been widely successful in lowering the cost of premiums for customers.

On this date 11 years ago, the Patient Protection and Affordable Care Act, became law. The ACA was a landmark piece of legislation aimed at ensuring that every American had access to quality, affordable health care. Craig's legislation aims to shore up the individual market and stabilize that health care system by bringing down the cost of premiums for hardworking Minnesotans.

"Over 100,000 Minnesotans enrolled in health coverage through the ACA marketplace in 2020 and 59,000 Minnesotans received tax subsidies to make their health care more affordable. Those Minnesotans include hard working small business owners like Ali Hatoum, owner of Morning Glory Bakery in Rosemount. The ACA enabled Ali to secure affordable coverage for himself and his family and to put the resulting savings back into his business," said Representative Craig. "Today, we are building on that work to further lower health care costs and expand coverage for my constituents and all Americans."

"Reinsurance can be designed in a number of ways, but at its core it's about providing funding to help offset high claims" said Professor Keith. "This is really a way of giving insurance companies stability so that they're not all raising premiums and pricing expecting to get the people with the highest, most costly preexisting conditions. Once insurance companies know that they will have some of those claims offset, they can drop premiums for everyone, so they're not all pricing like they're going to get someone who is really, really sick. It just provides that market stability."

The State Health Care Premium Reduction Act would provide $10 billion in federal funding for states to establish reinsurance programs to lower health care premiums -- or to provide financial assistance to reduce out-of-pocket costs including premiums for individuals enrolled in qualified health plans. By establishing reinsurance programs, states would be using federal dollars to help offset the cost of insuring high-risk patients -- allowing them to lower the cost of premiums for all customers. Existing state-run reinsurance programs have been effective in reducing premiums for all enrollees.

Craig's bipartisan legislation also includes a provision correcting a flaw in federal law that has cost the State of Minnesota hundreds of millions of dollars since approving its own reinsurance program. In 2017, Minnesota lawmakers established a state-run program to stabilize costs on the individual marketplace which incidentally triggered sharp cuts elsewhere in the state's health care budget. Craig's bill would ensure that savings created by the establishment of a reinsurance program would be directed towards the state's budget, rather than returned to the federal government as has been done previously.

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