Dayton: Minn. won't extend insurance plans made extinct by health law

Gov. Mark Dayton
Minnesota Gov. Mark Dayton, seen here in a file photo, decided Monday that Minnesotans cannot keep health plans that are going away because of the Affordable Care Act.
MPR File Photo/Tim Nelson

Gov. Mark Dayton has decided Minnesotans cannot keep health plans that are going away because of the Affordable Care Act.

The Dayton administration today sided with the state's health insurers and others in rejecting a proposal from President Barack Obama to allow cancelled health plans to remain in effect next year. More than 140,000 Minnesotans have received letters saying their old plan is no longer available.

Read Dayton's letter

Last week, Dayton said he believed that people should be able to keep their plans if they wanted to. But insurers convinced him that it was a bad idea.

"Making the program changes offered by the President last week would be unworkable for your members and would likely cause more expensive health coverage for Minnesotans," Dayton said in response to a letter written Monday by the Minnesota Council of Health Plans.

"I have acceded to [the insurance companies'] request and directed Commerce Commissioner Mike Rothman to continue the implementation of MNsure, as it is presently designed," he said.

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The decision comes after a tense few days as Minnesota's insurance companies grappled with how to handle the president's proposal. The White House lacks the authority to make the change because insurance is regulated at the state level.

Obama made the decision amid complaints that people who buy their plans on the individual market were receiving cancellation letters. In Minnesota, health care plans can't be cancelled by law, but the insurers were notifying customers that they'd be paying more in 2014 because the Affordable Care Act requires insurance to meet minimum coverage standards.

Earlier in the day, the Minnesota Council of Health plans wrote to Dayton and Commerce Department Secretary Mike Rothman saying they strongly opposed going along with Obama's decision.

"As a state we are ready for reform," wrote Julie Brunner, the council's executive director. "We are concerned that President Obama's offer to allow the resale of non-ACA compliant policies cannot be implemented fairly for Minnesota consumers, and if allowed, would threaten out state's ability to successfully implement the ACA."

The industry raised numerous concerns.

Insurance companies said a last-minute change would confuse consumers already trying to figure out the rules of the new law. They also contend that the old plans couldn't be reapproved by the Commerce Department in time to take effect Jan. 1. The companies also said that 2013 policies no longer exist within the health plans' IT systems and would have to be rebuilt.

Insurance companies also stressed that prices would eventually rise for everyone, not just the 140,000 losing their current plans, in 2015.

Brunner said insurance companies priced their products on the assumption that lots of young and healthy people would be buying insurance in 2014.

The companies set rates based on that expected revenue. But letting people stay on their old, non-compliant plans would mean less money coming in.

"When you start to take people out of that pool, you being to get imbalance in the way rates were established," Bruner said. "Our concern going forward is that it will have a negative impact on everyone in the market starting in 2015."

In the early going, states have split on whether to take up the president's proposal. Minnesota is joining Washington, Vermont, Rhode Island and Washington, D.C. in refusing to allow old, non-compliant plans. But Colorado, Florida, South Carolina, Ohio and Oregon are allowing people to keep what they have next year.

EDITOR'S NOTE: This story has been modified from the original to reflect that California has not decided whether to allow renewal of health plans that were canceled because they do not comply with requirements in the Affordable Care Act.