Expensive reinsurance bill moves to the Senate floor

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This week, a bill to establish a reinsurance program in Minnesota was heard in the Health and Human Services Committee and the Finance Committee and was sent to the Senate floor.

Reinsurance is similar to what Minnesota used to do with the Minnesota Comprehensive Health Association (MCHA) with the goal of removing high-cost, high-risk enrollees from the individual market to keep rates low for the remaining individual market enrollees.

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. 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.

To pay for the reinsurance program, the bill takes $180 million a year from the Health Care Access Fund for two years—taking funding that would fund MinnesotaCare and using it to fund the reinsurance program. The Finance Committee also adopted an amendment that would take funding from the state’s budget reserve to provide additional money in the event the state doesn’t receive expected federal funding for the program.

This is another GOP “fix” that will only last two years. The HCAF is intended to be spent on health care for low income Minnesotans – not to help insurance companies. Paying for a reinsurance program should not be at the expense of low income Minnesotans. Despite two committee hearings this week, there are still several unanswered questions about the proposal and it is unclear whether or not this approach would help stabilize Minnesota’s individual health insurance market. 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. (SF 720)