CU White Paper on using reinsurance to develop affordable health insurance options in California

SUMMARY:  This white paper describes one tool for improving health coverage affordability that other states have used: reinsurance. Reinsurance is credited for addressing premium affordability, insurer participation, and health insurance market stability. This paper discusses how reinsurance works and the population in California that could be helped by it, and evaluates whether some form of reinsurance could offer a workable solution in this state in the coming health insurance plan year, 2019.

Consumers Union supports reinsurance as a tool for providing premium relief for those who do not receive premium tax subsidies, but it must be backed by an adequate and reliable funding stream. The paper concludes that, without a stable and long-term avenue for financing a reinsurance program, reinsurance is likely an unworkable solution for California in 2019.