Oregon's Reinsurance Program Cuts 10.7 Points From 2027 Health Rates

Oregon's approved 2027 individual health insurance rates rose 21.6% on average, and the state's 1332 reinsurance waiver subtracted 10.7 percentage points from that filing (Oregon Division of Financial Regulation, August 18, 2026). A state reinsurance program never touches a carrier's claims experience directly. It reroutes the highest-cost claims into a separately funded pool before that experience reaches index-rate development, which is how the credit and the increase coexist in one rate order.

Key Takeaways

• Strip the credit out and gross cost pressure runs near 32 points, made up of medical trend, pharmacy and tariff-driven equipment cost growth, and a morbidity load from a shrinking, sicker-skewing pool.
• One full point of the credit was bought by $15 million in new state funding for 2027, a rare public link between a marginal reinsurance dollar and a marginal rate effect.
• Federal 1332 pass-through funding fell from $86.0 million in 2025 to $65.4 million in 2026, and for the first time in nine years of reducing filed rates, Oregon backfilled the shortfall with state assessment dollars.
• The program's CMS authorization ends after plan year 2027, so 2028 indications must carry an explicit renewal-risk assumption on a credit worth nearly half the net increase.

The Gross-to-Net Bridge Behind 21.6%

Individual market carriers requested a weighted average increase of 17.5% in May. The requests spanned a wide range.

Carrier	Requested 2027 increase
BridgeSpan Health	11.7%
Regence BlueCross BlueShield	12.2%
Moda Health	25%

Moda attributed 4 of its 25 points directly to the expiration of enhanced federal premium tax credits. By the time the Division finalized rates three months later, the approved average had climbed past every carrier's original ask to 21.6%, landing 4.1 points above the request on a near-13% enrollment decline and the exits of Providence Health Plan and PacificSource. Small-group plans landed at 15.5% (Oregon DFR, August 18, 2026).

Read the two headline figures together and they describe a gross-to-net bridge. Before the credit reaches the index rate, underlying cost pressure runs closer to 32 points. That is a materially larger credit than the programs operating in most of the other thirteen 1332 states and the District of Columbia reviewed for 2027, where the median proposed increase came to 14%.

Oregon's carriers were asking for more than that median before reinsurance entered the calculation, and the final approved number, net of a double-digit credit, still landed well above it. The program is not making Oregon's 2027 market look normal. It is preventing an outlier gross number from becoming an outlier net one.

What the Marginal $15 Million Bought

The most granular detail in the rate order ties a dollar figure to a rate effect. Of the 10.7-point credit, a full percentage point came from an additional $15 million the state added to the 2027 program budget on top of what was already funded.

That is a rare piece of public rate-filing data. Roughly $15 million of marginal reinsurance funding bought roughly one point of statewide individual-market premium relief. Most coverage of these programs reports only the aggregate percentage; Oregon's filing lets a reader back out the marginal rate of return on the state's last dollar of funding.

That elasticity did not appear in a vacuum. Oregon's federal 1332 pass-through funding, the money CMS returns because lower gross premiums reduce federal premium tax credit outlays, has been sliding: $86.0 million in 2025 against $65.4 million in 2026. As enhanced subsidies expired and enrollment thinned, the formula has less subsidy spending to redirect back to the state.

The $15 million top-up is a direct response, reaching for state insurance-assessment dollars to hold the credit near its historical size. The program is in its ninth consecutive year of reducing filed rates, and this is the first time officials have had to backfill a declining federal input with new state money.

The mechanism explains why a reinsurance dollar and a subsidy dollar do not have the same effect on a filed premium. Oregon's waiver is one of seventeen state 1332 reinsurance waivers CMS has approved, and it permits the state to exclude expected reinsurance payments from the ACA's single risk pool requirement, which otherwise forces insurers to price as if bearing the full cost of their highest-severity claims (CMS).

Most state programs, Oregon's included, are claims-cost models. Once an enrollee's covered claims exceed a defined attachment point, the pool reimburses a set coinsurance percentage above that threshold, up to a ceiling. Inside the Unified Rate Review Template, the carrier's actuary builds base period experience and applies trend and morbidity, then nets expected recoveries out as a negative adjustment to projected allowed costs, the same cell where risk adjustment transfers land.

The credit is therefore baked into the index rate before plan-level factors, network differentials or age curves apply, so its effect scales proportionally across every plan a carrier sells on and off the exchange. That is also why it appears as a flat percentage rather than a dollar figure per enrollee. It is a rate-level adjustment, not a per-claim subsidy any individual policyholder sees.

2027 Is the Last Authorized Year

Oregon's current extension, approved by CMS for plan years 2023 through 2027, makes 2027 the final year of the existing five-year authorization. Renewal is not automatic. It requires a new state application and a new CMS approval.

That is the exposure sitting underneath the 21.6%. A credit worth 10.7 points is close to half the net increase, and it rests on an authorization with a defined end date and a funding base that has already started failing to renew itself. The shrinking pass-through forced Oregon to substitute state dollars for federal ones a year before the extension cycle even opens, so the next negotiation starts from a materially different baseline than the one the program launched under.

For a 2028 rate indication the practical consequence is that the credit can no longer be carried forward as a stable adjustment. An actuary building a 2028 index rate has to state an explicit assumption about whether the waiver is renewed, at what funding level, and whether the state legislature repeats a discretionary top-up that was itself a response to a federal shortfall. Each of those is a separate conditional, and none is inside the carrier's control.

The asymmetry is what makes it awkward. If the waiver renews at current funding, the 2028 filing looks much like this one. If it lapses or renews smaller, roughly ten points of rate that never appeared in any carrier's experience data reappear in the index rate at once, in a market that has already lost two carriers and near 13% of its enrollment.