This week, on a near party-line vote, the Senate approved a $600 million reinsurance bill. Rather than making real changes to lower costs for people who buy their insurance on the individual market, this bill gives away hundreds of millions of dollars to insurance companies with no guarantee that premiums will be lower as a result.
With the implementation of the ACA and guaranteed coverage to individuals regardless of their medical history, MCHA, the state’s former high-risk health insurance pool, was phased out in 2014 and over 25,000 members of the program entered Minnesota’s individual market. Reinsurance has the same goal as the MCHA program to remove high-cost, high-risk enrollees from the individual market to keep rates low for the remaining individual market enrollees. The major difference with a reinsurance program is that high-cost enrollees remain in the individual market, with a portion of their high-cost claims covered by the reinsurance program.
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.
Minnesotans need health insurance reforms that will offer the state long-term stability. 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, 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.
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. The bill will now move to conference committee to work out the differences with a similar bill in the House. (SF 720)