1332 Waivers and Their Impact on Health Plan Premiums

As of April 2024, 20 states have leveraged 1332 waivers to set up state-specific health insurance innovations.(13) Even though 1332 waivers can be used for a variety of programs, a significant majority – 17 out of 20 – of the 1332 waiver proposals that have been approved by Centers for Medicare and Medicaid Services (CMS) have been for the purpose of establishing reinsurance programs to help lower monthly premiums.(13) At a high level, these programs provide payments to health insurers to help offset the costs of certain medical claims. These savings, in turn, are passed down to the consumer in the form of lower premiums, leading to greater health care accessibility for many. 

Through 1332 waivers, states have been able to ensure that part of their reinsurance funding comes from federal government pass-through funds. Federal pass-through funds are monies given by the federal government to a state or local government, or sometimes an organization, which are then passed on to other entities to carry out specific programs or projects. Pass-through dollars have the potential to be considerably higher than the state’s investment, setting up a significant reinsurance pool and making meaningfully lower premiums a possibility.(10) States are also responsible for self-sourcing some of the funds for their reinsurance programs, and currently these funds are primarily collected via assessment fees.(13) However, several states have taken other approaches to funding their reinsurance programs – using state general funds, user fees, or penalty fees, for example. Most of these state programs utilize a cost claims model of reinsurance, but several use alternative or hybrid models. (13)

So far, 1332 reinsurance programs have been overwhelmingly successful at meeting the estimated premium rate reductions that states calculate in their waiver applications. Out of 17 states, 11 have met or exceeded estimated rate reductions in their program’s first year of operation, and many continue to do so year after year. An additional four states have been able to meet their estimates in years following the first, and only two states have not yet met the premium reductions estimated in their application materials, reporting gaps of only 2–4%.(13)

Between the years 2018 and 2023, the states with approved Section 1332 reinsurance programs were able to offer second-lowest-cost silver plan (SLCSP) premium rates that were, on average, 13–18% lower than they would have been otherwise.(13) These reductions are especially important because they help to offset recent rate increases that pose hurdles to health care accessibility. In some states, SLCSP premium savings of up to 30–40% are being observed due to reinsurance programs. (13)

Following are more specific details about how state-specific reinsurance programs have impacted SLCSP premium rates across the nation since their enactment in 2017:

Alaska was the first state to launch its own reinsurance program in 2017 and is currently the only state to use a conditions-based model for its program.(13) From 2018 to 2023, Alaska saw a 37% average reduction in SLCSP premium rates – the largest average percent decrease of any state.(13)

Colorado’s program was approved in 2019.(8) Due to the Colorado Option alongside its reinsurance program, monthly SLCSP premiums were reduced by an average of 21% from 2020 to 2023,(13) and in 2024, Colorado will receive over $275 million in pass-through funding for this program.(10)

Delaware’s reinsurance program, which took effect in 2020, is also helping lower premiums.(2) Between 2020 and 2023, SLCSP premiums in Delaware were an average of 15% less than they would have been without a reinsurance program.(13)

Georgia had their reinsurance program approved in 2020 and was able to offer 18% lower SLCSP premiums on average in 2022 and 2023.(13)

Idaho is among the more recent states to have a 1332 reinsurance waiver approved. In 2023, this led to premium reductions of almost 13%.(13)

Maine previously used an attachment point and conditions-based hybrid reinsurance model but switched to a cost claims model in 2022. From 2019 to 2023, Maine’s reinsurance program has corresponded with an 11% average reduction in SLCSP premiums offered to residents.(13)

Maryland’s reinsurance program took effect in 2019. As a result, Maryland saw the average SLCSP premium decreased by 40% in 2019 and by 30–36% from 2020 to 2023 – one of the most significant rate reductions seen across the country.(13)

Minnesota‘s reinsurance program took effect in 2018, and the state has seen steadily lower premiums year over year, ranging from 14–21% lower than they would have been without the reinsurance program.

In Montana, SLCSP premiums from 2020 to 2023 were reduced by an average of 9% following the enactment of the state’s reinsurance program.(13)

As a result of New Hampshire’s reinsurance program, rates  were an average of 13–14% lower in the years 2021 to 2023.(13)

The New Jersey Health Insurance Premium Security Plan took effect in 2019. Since then, the average SLCSP premium cost in New Jersey has been reduced by about 16%.(13)

North Dakota implemented its reinsurance program in 2020, which decreased premiums by 20% in the first year and between 8–12% in the years 2021 to 2023.(13) North Dakota also saw record high enrollments in 2022 and 2023.(5)

Oregon’s program took effect in 2018. SLCSP premiums each year since have been 7–9% lower than they would have been without the program.(13)

Pennsylvania’s SLCSP rates decreased by a statewide average of 4–6% from 2021 to 2023 as a result of their 1332 waiver.(13)

Rates in Rhode Island  were an average of 5% lower from 2020 to 2023 because of the Rhode Island reinsurance program.(13)

Virginia is operating one of the newer 1332 reinsurance programs and saw an average of 17% lower SLCSP premiums in 2023.(13)

The Wisconsin Healthcare Stability Plan (WIHSP) took effect in 2019, and since then, the state has experienced a related drop in average SLCSP premiums ranging from 10–13%.

The CMS Section 1332: State Innovation Waivers page has more information on 1332 Waiver regulations and guidance, frequently asked questions, and application tools and resources.

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