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Montana Program Leads to Lower Premiums

Montanans buying individual health plans are about to get a price cut. 

That’s because a new statewide pool will help pay for unusually expensive medical needs of a small number of plan members — across all insurance companies in the market.   

Blue Cross and Blue Shield of Montana projects its premiums for individual plans will fall an average of 14.1% this year. Half of that drop stems from the state’s new reinsurance program.   

The program drives down premiums for all consumers in the individual market by softening the financial risk of enrolling high-cost members. Federal regulators recently approved the new program for 2020 coverage. 

“As we continue to try to make care more accessible and affordable, this is a way in Montana to help achieve both,” says John Doran, divisional vice president of external affairs for Blue Cross and Blue Shield of Montana. 

The Affordable Care Act included a similar program to help establish a new insurance marketplace for people who don’t have access to health coverage at work or qualify for a government program like Medicare or Medicaid. 

"We were focused on finding the right solution for Montana."

But the end of that federal program in 2017, combined with other factors, fueled a spike in premiums. With costs rising, fewer Montanans signed up for individual coverage. 

In response, Montana lawmakers began working on legislation to create a state-based reinsurance pool to bring down premiums.  

Finding the right plan for Montana 

Montana is the 13th state to have its reinsurance innovation waiver approved by the federal government, following in the footsteps of Alaska, Colorado, Delaware, Hawaii, Maine, Maryland, Minnesota, New Jersey, North Dakota, Oregon, Rhode Island and Wisconsin. 

Each state’s program is a little different. For instance, Alaska’s pool pays 100% of claims for any member who has one of 33 high-cost conditions, including hemophilia and certain types of cancer.  

Other state programs pay a certain percentage of claims within a certain dollar amount. 

Montana Gov. Steve Bullock convened a working group to decide which approach would be right for the state. The group included representatives from Blue Cross and Blue Shield of Montana and the other two insurers selling individual plans in the state. Representatives from Insurance Commissioner Matt Rosendale’s office, which supported reinsurance legislation, also participated.  

“We were focused on finding the right solution for Montana,” says Doran, who represented BCBSMT on the working group. 

The group arrived at a claim-based program. For the first year, Montana’s reinsurance pool will reimburse insurers for 60% of any claim costing between $40,000 and $101,750. 

The pool for 2020 consists of a combination of state and federal funds totaling $35.4 million. The federal share comes from savings — the lower premiums mean the government will pay less in subsidies for people who qualify for financial assistance.  

The state also established a bipartisan board to govern the reinsurance program moving forward. Each of the three insurers gets one board representative, and the governor and the state auditor each get an appointee. 

“Health care is a bipartisan issue, and we all need to find ways to make it more accessible and affordable,” Doran says. 

A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association