ST. PAUL, MINN – On Wednesday, the Minnesota Senate voted and passed the $600 million Health Care Reinsurance Bill on a 37-31 vote. Sen. Dan Schoen voted against the bill – citing the extreme cost for a temporary solution (the bill only funds this program for two years), the structural budget problems regarding the funding mechanisms of the program, and the huge payment to insurance companies with no guarantee that the legislation will lower costs for Minnesotans.
“The bill takes money from the Health Care Access Fund, which we use to help fund programs like MinnesotaCare, to fund health insurance for the sickest and the poorest, and sends it to insurance companies with no assurance premiums will decrease or access to health care will increase. There is simply no accountability. I offered a sensible amendment to guarantee a 20 percent decrease in premiums for health insurance companies to be eligible for any money. Unfortunately, my amendment was voted down. The truth of the matter is, this bill does not assure us premiums will decrease, takes money from lower income people to provide millions for insurance companies, doesn’t provide more health care options for all areas of the state, and places our budget in structural danger,” said Senator Schoen.
This action costs $600 million and only provides temporary relief for two years.
- The bill takes $360 million from the Health Care Access Fund (HCAF)
- It takes another $240 million from the budget reserves.
- This is all one-time money, which means that any future spending for this program at this point is unfunded.
- When this is coupled with the over $300 million from the budget reserves to fund the premium relief already passed by the Senate, the budget reserves are further drained.
- This amount does not even consider the flawed way the bill is written regarding a federal waiver, without which Minnesota could lose $287 to $315 million in federal money for MinnesotaCare.
Under the bill, the first $45,000 dollars in insurance claims would be paid by health insurance companies. From $45,000 to $250,000, the State of Minnesota would pick up 80 percent of claims through the Minnesota Premium Security Plan, leaving health insurance companies to pay the remaining 20 percent of claims. All this financial help to relieve premium pressures is without any assurance that premiums will decline, which is what Senator Schoen’s amendment would have secured.
The bill establishes the Minnesota Comprehensive Health Association (MCHA) as the entity to administer the state reinsurance program. Unlike the previous incarnation of MCHA, the funding for this high-risk pool of enrollees will not come from an assessment on health insurance companies. It will instead come from taxpayer dollars.
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.