Minnesota Passes Healthcare Reinsurance Bill

Minnesota Passes Healthcare Reinsurance Bill

Governor Mark Dayton won’t sign but will allow a healthcare reinsurance bill to become law in Minnesota. The bill was a top priority for Republicans in the statehouse during this session.

The new law effectively subsidizes health insurance companies that are operating in the individual market – the health insurance exchanges that allow individuals to purchase health insurance policies for themselves and their families if health insurance isn’t offered through their employer. The subsidy is intended to cover some of the claims costs health insurers incur from providing policies through the individual market.

Republicans in Minnesota’s legislature say they hope the bill will bring insurance costs down for consumers. Democrats, which largely opposed the bill, wanted to advance Medicaid expansion and questioned the wisdom of subsidizing profitable companies.

In a letter to the House Speaker obtained by Fox9 News, the Governor laid out his concerns over the $542 million subsidy –

Unfortunately, two of my main concerns about the bill were not addressed in the final Conference Report. The first was the source of funding for the insurance subsidies. In my March 29th letter to the two of you, I reiterated what I had been saying during previous weeks: “The conference report uses the Health Care Access Fund and the General Fund to cover the state responsibility for reinsurance. I believe reinsurance should be funded by a tax on the industry itself, as was the Minnesota Comprehensive Health Association. The General Fund and Health Care Access Fund dollars should be used for statewide priorities like schools, early childhood education and health care for low-income Minnesotans. Furthermore, it is unwise to use Health Care Access Fund dollars without repealing the sunset of the two percent provider tax that sustains the fund.”

My proposal was ignored, because of, I am told, opposition by the insurance industry. Thus, the bill not only provides insurers with up to $542 million of taxpayers’ dollars, as direct subsidies to their businesses, but also allows them both to dictate where that money shall come from and to evade any financial responsibility for their own aid program.

Secondly, my proposal to include a MinnesotaCare Buy-In option for Minnesotans purchasing health insurance on the Individual Market was rejected. As a result, private insurance companies will decide our citizens’ options, including the extent of coverage, the composition of the provider networks, and the cost of their insurance.

The MinnesotaCare Buy-In would have added some much-needed competition into the Individual Market. It could have offered many Minnesotans more comprehensive health care coverage, through more accessible provider networks, at lower insurance costs, than will be available to them under this bill’s limitations. Why would the insurance companies’ preferences and profits be placed ahead of the people’s best interests?

The subsidy will move forward without any commitments on the part of insurers to remain in local health insurance exchanges. The governor is also calling on insurers to lower coverage costs for individual policyholders. In his letter, Governor Dayton notes that he has reached out CEOs at several insurance companies asking them for commitments to both of these issues and has yet to receive a reply from any of them.

Several states are currently working on plans to shore up the individual market for health insurance. Consistent premium hikes have become problematic for many policyholders but democrats and republicans remain at odds about how to lower them. Some large insurers have already made the decision to leave certain state exchanges. In Tennessee, Humana’s decision to leave has left some 16 counties without an insurance provider. According to a report in Axios, if Anthem leaves, more than 800,000 people would be left without an insurer. Risk transfer programs like the reinsurance subsidy in Minnesota have emerged as an option to at least entice insurers to stay, however, it is unclear yet how effective those policies will be.