The federal government has approved a five-year extension to Minnesota's "reinsurance" program to control premiums on health plans sold through the MNsure exchange.

In its approval application, the state Commerce Department said the program between 2018 and 2022 met its goal of a 15 to 20% average statewide reduction in premiums from what they would have been without reinsurance.

The Minnesota Premium Security Plan works by giving health insurers state-funded reimbursement for claims ranging from $50,000 to $250,000, which can stem from high-cost cases such as cancer treatments, intensive care, premature babies and severe cases of COVID-19.

"Reinsurance has been an important tool for the state of Minnesota to help keep health insurance accessible for Minnesota consumers who buy their own insurance," Commerce Commissioner Grace Arnold said in a statement.

The plan applies only to the individual market, where about 163,000 people — roughly 3% of state residents — currently buy coverage. It's the health insurance market that underwent significant changes in 2014 under the federal Affordable Care Act, which launched MNsure and other government-run marketplaces where individuals can buy coverage.

Individual market coverage primarily is an option for people under age 65 who are self-employed or don't get health insurance through their job.

Minnesota created the reinsurance program in 2017 after individual market premiums skyrocketed amid fears that carriers might abandon the market altogether.

Three of Minnesota's biggest health plans in the individual market are seeking premium increases for next year, although at a lower rate than what they sought for 2022. For 2023, three large carriers in the market are seeking average increases of between 2 and 6%, while a fourth large insurer has proposed lowering premiums by an average of 2%.

When the proposals were released last month, the trade group for Minnesota's nonprofit health plans credited the reinsurance program with helping keep the proposed premium increases at a moderate level.

Reinsurance applies to polices sold via MNsure as well as individual market coverage that consumers buy directly from carriers or through brokers in the "off-exchange" market.