House Approves $400M Reinsurance Program
ST. PAUL, Minn. (AP) — The Minnesota House on Monday approved plowing hundreds of millions dollars into a new program meant to tamp down health insurance costs and ensure plans are offered after years of instability and skyrocketing premiums.
The state has grappled with some of the largest rate increases in the nation, driven by higher-than-expected medical costs from a small, severely sick population in the individual market — where residents who aren't covered through employers or by public programs like Medical Assistance get insurance. After every insurer nearly exited the market entirely this year, state officials have been scrambling to stabilize a clearly fragile market.
Even as Republicans in Washington, D.C., forge ahead with broader plans to replace the health care law championed by President Barack Obama, Minnesota is one of several states wrestling with how to improve their current systems amid major price hikes.
Minnesota lawmakers already stepped in once this year, tapping into more than $300 million of rainy day funds to help residents buy down premium increases for 2017 that ranged from 50 percent to 67 percent or more. But even then, all sides agreed more action was needed for 2018 and beyond.
Minnesota's Republican-controlled House took its second step Monday by voting to create a reinsurance program, using nearly $400 million every two years to help insurers cover expensive claims that have driven up premiums. It passed on a 78-53 vote, over nearly unanimous Democratic objections that the cost was too steep and offered no guarantee of reduced costs.
Leaders from the Republican-controlled House said their plan could reduce insurance rates for the roughly 190,000 who buy insurance on their own — either on the state's exchange or directly from the companies — by 17 to 18 percent. And it would serve as an important signal that help is on the way to insurers wary of losing big bucks by entering the market again in 2018.
"It collapsed in 2017. We have to do what we can to bring that private market back," said Rep. Greg Davids, a Preston Republican.
The bill would redirect more than $384 million from the state's dedicate health care account to a new fund to help health plans' high costs for covering patients — a kind of insurance for the insurance companies themselves. Alaska created a similar program last year, and the Affordable Care Act included similar safety nets nationwide in the first several years of signups to help protect insurers against heavy losses.
But Gov. Mark Dayton and fellow Democrats have drastically different ideas. Democrats have coalesced around Dayton's proposal to create a public health care option, allowing all Minnesota residents to buy into the low-income program called MinnesotaCare.
Rep. Tina Liebling, DFL-Rochester, said that's a far better route to ensure residents can buy coverage at a decent price. Even with nearly $400 million in state help, there's no guarantee insurers will offer solid plans at a discount next year, she said.
"This solution that you've brought to the table is a big fat subsidy for insurance companies," she said.
It could mesh well as Congress moves to replace the Affordable Care Act. Congressional Republicans' current plan would offset part of Minnesota's cost by sending states grants to create and fund their own individual reinsurance programs.
The Senate is expected to take up a similar bill later this week as lawmakers bump up against an April deadline to get firm plans in place. That's when insurance companies will begin setting their rates for 2018.
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