Senate considers extending health insurance company subsidies

The Senate Commerce Committee and Health and Human Services Committee heard a bill this week that would spend $1.1 billion to extend Minnesota’s reinsurance plan – the Minnesota Premium Security Plan – for five additional years.

The Legislature created this plan in 2017 when the individual health insurance marketplace was new. It initially provided $542 million to insurance companies to subsidize high-cost enrollees, hoping it would encourage insurance companies offering plans on the individual market to hold down their premiums. That funding and the federal approval needed to run the program has now expired, meaning the legislature must decide whether to continue the program and how to pay for it.

Reinsurance has mostly worked, with annual premiums being about 20 percent lower than they would be without the program in place. However, the lower rates have come at more than $542 million in taxpayer expense and about $100 million per-year reduction in federal funds that support MinnesotaCare. Additionally, reinsurance subsidizes high health care costs, which some say discourages insurance companies from doing anything to improve the cost of care or health outcomes in general.

Senate DFLers offered one amendment to reduce the extension to just two years, and another that would provide direct premium tax credits to enrollees rather than insurance companies as a way to lower consumer costs. Neither were added to the bill. Senate DFLers will continue exploring long-term solutions that address not just insurance premiums, but health care costs and health outcomes as this bill moves through the process. (SF 3472)