Health insurers' safety net is at risk. Here's why that matters

DFL Gov. Mark Dayton
DFL Gov. Mark Dayton speaks at a press conference on Oct. 26, 2016.
Tim Pugmire | MPR News 2016

There has been a lot of hand-wringing at the state Capitol as Gov. Mark Dayton and Minnesota lawmakers await a federal waiver to implement a reinsurance plan.

With about 170,000 Minnesotans expected to buy insurance on the individual market next year and premium costs for 2018 being posted in early October, time is of the essence.

Here's a look at what the reinsurance plan is and how it affects Minnesotans and their health care.

What is a reinsurance plan?

Reinsurance is a safety net for health insurers. Under the program, if an insurance company has to cover people with high medical expenses, the state would help cover part of the cost.

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With the state government footing part of the bill premium increases — which have been hitting Minnesotans on the individual market particularly hard the past few years — would slow. In fact, insurers say rates with the reinsurance program will average 20 percent less than without it.

Under Minnesota's plan reinsurance becomes available after an individual's claims exceed $50,000. After that point the state would pay at least 50 percent of the costs — though once claims exceed $250,000 primary insurers would no longer be able to use the backup insurance.

Reinsurance in Minnesota only helps insurers selling to people on the individual health insurance market, meaning people who don't get coverage from an employer or government program.

How is reinsurance funded?

Funding the program would cost about $200 million each year for the next two years. The Legislature has devoted $542 million for setting up the reinsurance pool, on top of $300 million that was previously devoted to easing the rising premiums for 2017.

What's the conflict in D.C.?

Gov. Dayton wrote on Sept. 19, that the Trump administration would only approve the reinsurance program after cutting $369 million from MinnesotaCare funding — as a consequence.

MinnesotaCare is a state program that helps provide the working poor with health care, many of them living in rural areas.

If funding is cut, 100,000 enrollees should still have care until 2019 as financial reserves support the program — but it would put the long-term sustainability of MinnesotaCare in jeopardy.

What comes next?

Dayton has written to Department of Health and Human Services Secretary Tom Price, urging the administration to reverse the "very destructive financial penalty." But on Wednesday Dayton expressed frustration over not being able to reach Price on the phone to discuss the issue.

The concerns over MinnesotaCare will grow more complex if Congress repeals the Affordable Care Act next week, which as it stands would cut more federal funding from state programs.

Republican committee chairs in the House and Senate have sent a letter to the secretaries of Health & Human Services and the Treasury asking for immediate approval of the waiver.

In the meantime, Minnesotans wait to see what will become of the individual market and state funded health programs.