Feds could slash $100 million from reinsurance program

Minnesota could lose nearly $100 million in federal funding for a state program designed to rein in costs on the state’s individual health insurance marketplace.

State Sen. Tony Lourey, DFL-Kerrick,  said state officials received a letter from the federal government this week stating Minnesota’s reinsurance program will receive $84 million in 2019, or $99.1 million less than originally anticipated.

Lourey broke the news at a Senate hearing Wednesday called to talk about the cost of a potential MinnesotaCare buy-in option, as well as the loss of the state's reinsurance program, which is set to expire in 2020.

"We, literally, lost about $100 million of federal support for the reinsurance program and that needs to be understood as we work through this, and that it is not incorporated," Lourey said.

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Lawmakers struck a deal last year to prop up the individual insurance market by helping insurers cover expensive medical claims through reinsurance.

Commerce Department Assistant Commissioner Peter Brickwedde said he expects further conversations with federal regulators but isn't aware of a formal appeals process.

"This is obviously a dramatic change," he said. 

This isn't the first time the state has run into trouble with federal funding for reinsurance. In 2017, the federal government did not approve funding for another piece passed as part of the reinsurance deal, and the state is losing roughly $90 million each year as a result, Lourey said.

"The federal government can do this to Minnesota's insurance program because we turned over our nation-leading health care to the federal government," said Senate Health and Human Services Finance and Policy Committee Chair Michelle Benson, R-Ham Lake.