Minnesota’s reinsurance plan – the Minnesota Premium Security Plan – originally passed in 2017 when the individual marketplace was new. It provided state money to insurance companies to subsidize high-cost enrollees to incentivize those companies to lower their advertised premiums. The program was supported with $542 million in taxpayer dollars. It encourages – but does not require – insurance companies offering plans on the individual market to hold down their rates.
The MPSP was originally a two-year program, meant to be a bridge between the ACA implementation and a sustainable individual marketplace. The Legislature extended it for two years in 2019 and this week, the Senate Commerce, Health and Human Services Finance, and Finance committees all considered a bill to extend the program one additional year.
Reinsurance has more or less achieved its goal, holding down annual average health insurance rates about 20% from where they would have been without the program. 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. In addition, reinsurance subsidizes high health care costs, which some argue discourages insurance companies from doing anything to improve the cost of care or health outcomes in general.
The federal waiver required to run the program expires next year. If this temporary and costly fix passes, the Legislature will soon be required to find a more permanent solution to lower premiums. Senate DFLers argued that taxpayer dollars would be better spent exploring long-term solutions that address not just insurance premiums, but health care costs and health outcomes. The bill was sent to the Senate Floor. (SF 694)