The Minnesota House has approved a bill that would shield health insurance companies from some of the risk involved in paying for medical care.
The so-called reinsurance plan would have the state share in the costliest claims. In passing the bill Monday mostly along party lines, the Republican-led House also voted down DFL Gov. Mark Dayton's plan to expand a public option.
It's the second major bill to advance this year aimed at shoring up a beleaguered individual insurance market. The first one provided direct premium rebates to buyers who lacked other public subsidies.
Republican House Speaker Kurt Daudt says the market needed rescuing.
"It's a bill that is a great second step now to healing the wounds to the individual marketplace that were brought on by Democrats by jumping into the deep end of the pool on Obamacare and MNsure here in Minnesota," he said.
There's a rush to get a reinsurance law in place by April 1. Insurance companies are working out what they want to charge for policies next year. They'll deliver estimates to state regulators around May.
It works like this: Insurance companies that incur a subscriber's claims exceeding $50,000 and up to $250,000 would have a portion of those costs covered by a new state fund. A board would determine what percentage each payer shoulders.
The theory is that cost-sharing will improve premium rates for everyone because the risk tied to those sickest patients wouldn't be borne as much by the healthier subscribers.
Rep. Greg Davids, R-Preston, said his bill should provide comfort to companies teetering between offering individual policies and pulling out of the market. "This thing called competition has been pretty good the last 200 years. Let's get some competition, let's get a robust market back," Davids said. "I'm not saying 2018 is going to be robust, but we want to head that way."
The federal health law rewrite by Republicans in Washington contemplates these state-based risk pools.
The congressional plan seeks $80 billion for a new Patient and State Stability Fund that would be used for grants to states, beginning next year. That money would be available from 2018 to 2026. States would have to provide matching money that starts at 7 percent of their federal allocation and gradually rises to 50 percent by 2020. Davids said Minnesota should be ready to take immediate advantage.
"The way it's going here is you don't get that money unless you get a reinsurance pool or if you don't have a reinsurance pool the feds will set one up for you," he said. "Well, let's get ours in place."
But Democrats argued the way the Minnesota bill is structured makes it little more than a giveaway to insurance companies.
The bill carries a $200 million price tag in year one and a combined $700 million over the first four, with the money coming from redirected premium taxes and transfers from other special health accounts.
Dayton wants assurances about the plan's effect on rates and their willingness to keep offering individual market insurance. It can't be just a blank check to the insurance industry, he said.
Rep. Erin Murphy, DFL-St. Paul, has been frustrated by how few answers lawmakers have gotten so far as the reinsurance plan has moved along.
"We asked them repeatedly if we did this mechanism of reinsurance ... would those premium rates come down? They can't answer that question," she said. "Would people have more choices in the market? They don't have the answer for that."
For their part, Democrats pushed Dayton's proposal to expand access to MinnesotaCare, which is now a subsidized care program for the working poor.
They favor allowing anyone to be able to buy into the program and says their monthly premiums would cover the cost. Rep. Clark Johnson, DFL-North Mankato, led the charge.
"It's a popular choice because we know it," Johnson said. "It's been around for 25 years. It's got very strong networks. It's offered in every county."
The proposal was offered as an amendment and failed on a party-line vote.
Republicans argued it unnecessarily pits a government-sponsored plan against private policies. They also said it would hurt hospitals because reimbursement rates for MinnesotaCare are lower than what insurance companies provide.
The Senate has a different reinsurance proposal, which relies on rainy-day reserves to pay for part of it. That bill is due for a floor vote on Wednesday.