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Senate passes health insurance rebate plan

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The Minnesota Senate moved quickly Thursday to pass a $450 million bill responding to sharp spikes in premiums for people who buy health insurance on the individual market. 

"We are in a health care crisis in Minnesota," said the bill's chief author, Sen. Michelle Benson, R-Ham Lake.

That crisis has played out in the way about 5 percent of the state's residents buy their health insurance. They don't get it through an employer or a government program — they buy directly from insurers or through the state-run marketplace, called MNsure.

Health insurers have been pulling back from that individual market. That means monthly rates have gone way up and choices have gone down. Some people have lost access to their regular doctors.

The bill's main feature is a 25 percent rebate on monthly premiums for more than 100,000 insurance buyers that adds up to about $300 million. But Benson said stopping there would be a big mistake.

"I don't want to come back next year and have to ask for more premium relief because we failed to make changes for the 2018 market," she said.

Sen. Melisa Franzen, DFL-Edina, was the only Democrat to side with Republicans on the 35-31 vote. The House expects to vote next week on a slightly different proposal, meaning additional negotiations will be needed before a bill reaches Gov. Mark Dayton.

Benson's bill would create a pool of money for people in acute situations — for example, far along in pregnancy or coping with a terminal illness — to cover out-of-network care costs. Democrats are generally on board with that.

But they're leery of other changes. One would allow for-profit insurers into a market that has long been the exclusive domain of nonprofit health plans. Another would establish what's called a reinsurance program to set up a secondary coverage system to shield insurers from carrying the full burden of very expensive claims. 

The reinsurance program would consume $150 million of Minnesota's surplus. 

Dayton isn't yet ready to sign off on such a program. And Senate Democrats, including Tony Lourey of Kerrick, say its inclusion in the rebate bill will put that relief in jeopardy at a time consumers are trying to beat a 2017 coverage signup deadline.

"These things take time," Lourey said. "We owe it to the people of Minnesota to put the premium subsidy out in a way that they understand and a way they can make their choices in the next couple of weeks so we can stabilize the 2017 marketplace."

The premium plan Republicans have devised also differs from Dayton's plan. The governor would route the money through insurers and provide it to anybody who doesn't qualify for federal tax subsidies.

Republicans want the rebates to be income-based, so relief wouldn't go to people earning a certain amount. Their argument is those people can afford more expensive plans and the rebate money should go to people with less money. In their bill, a state agency would have the job of writing the checks.

Administration officials say it would cost up to $20 million to devise a system to verify income and possibly delay aid for up to a year.

Sen. Ron Latz, DFL-St. Louis Park, said that's unacceptable.

"It is raining on Minnesotans, the 5 percent who are part of the individual market," Latz said. "And I don't think those persons want to wait until next January or February to stop the rain and pump out the basements that are flooding."

Sen. Scott Jensen, R-Chaska, a doctor, touted the GOP plan as going beyond a simple fix to start rescuing an ailing insurance system.

"I don't think the urgency is to specifically get checks into people's hands, whether it's three months, six months or nine months," he said. "If we don't elevate the problem to the level of our interest and all we do is throw money at it, that's just a Band Aid. And that's not what I'm hearing from my patients."