Sen. Hoffman stands up against insurance companies in Reinsurance Bill vote

ST. PAUL, MINN – On Wednesday the Minnesota Senate voted and passed the $600 million health care Reinsurance Bill on a 37-29 vote. Sen. John Hoffman (DFL-Champlin) voted against the bill – saying he questioned both the extreme cost for a temporary solution (the bill only funds this program for two years) – and the payment to insurance companies with no guarantee that the legislation will lower costs for Minnesotans.

“My vote against the bill this week was about standing up for the little guy and putting my foot down against what amounts to a government bailout of wealthy insurance companies. The Republicans Reinsurance Bill takes money from our budget reserves and from the Health Care Access Fund, which is intended to support health care for low-income Minnesotans. Rather than making real changes to lower costs, this bill gives away hundreds of millions of dollars to insurance companies – with literally NO guarantee that premiums will be lower as a result. This is a real missed opportunity to do right by Minnesotans,” said Sen. Hoffman.

BACKGROUND:

This is another Republican “fix” which costs $600 million and only provides temporary relief for two years. While the goal of the legislation is well-intentioned, this proposal takes funding from the Health Care Access Fund (HCAF) that is intended to be spent on health care for low income Minnesotans to help insurance companies.

Under the bill, when an enrollee reaches $45,000 in insurance claims, 80% of claims would be paid by the Minnesota Premium Security Plan until those claims hit $250,000. So health insurance companies would cover all claims up to $45,000, 20% of claims from $45,000 to $250,000, and all claims over $250,000.

The bill establishes the Minnesota Comprehensive Health Association (MCHA) as the entity to administer the state reinsurance program.

Under the bill, insurance companies get paid for high cost claims, but there is no assurance from insurance companies that they will make their rates more affordable or expand their provider networks and there is nothing in the bill that prevents them from offering the same expensive and limited plans.

Since the funding mechanism is from the HCAF and the budget reserves for only two years, a funding source would need to be found going forward – either continue state funding, apply an assessment to MCHA members, or seek federal funding.

The state legislature must have something in law by the end of the month of March to be meaningful and have an effect on the 2018 insurance market. Health plans are making decisions about whether or not to stay in the market now, and the deadline for rate filings is later this spring.

Senator John Hoffman
John Hoffman represents District 36, which includes portions of Anoka and Hennepin County.

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