BISMARCK — The federal government has approved a state-based reinsurance program developed by the North Dakota Insurance Department for the individual health insurance market, Insurance Commissioner Jon Godfread said Thursday, Aug. 1.

The program, established under the Affordable Care Act, will be in place for the 2020 health insurance plan year. Godfread, a Republican, said the plan will reduce health insurance costs for North Dakotans who buy health insurance on the individual market.

Godfread's office said estimated rate reductions could average as much as 20% for plans purchased on the individual market.

"This program will stabilize our market and benefit our state’s farmers, ranchers and small business owners," he said in a statement. "These groups form the backbone of our economy and have felt the full effects of the tremendous ACA rate increases over the years."

The program uses an invisible reinsurance approach to allow enrollees to remain in the individual market with their current plan and carrier while a portion of their claims are reimbursed by a reinsurance pool. The program will be funded by federal funds and tax-deductible state assessments placed on insurance companies.

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Gov. Doug Burgum approved legislation earlier this year establishing an invisible reinsurance pool.

For 2020 and 2021, the proposed reinsurance program will cover 75% of paid claims between $100,000 and $1 million, and the enrollee's health insurer will cover the remainder.