Minnesota Lawmakers Renew Health Reinsurance Program For Just 1 Year

Jul. 20—The state program that provides insurance for health insurers was renewed for one year by Minnesota legislators, and some lawmakers worry that's not enough to keep premiums down in coming years.

"Folks who buy their insurance on the individual market should expect some price increases as a result of not fully funding the reinsurance program," said Sartell Republican Rep. Tim O'Driscoll, who worked to extend the program.

"They may not look as bad, because they're going to get a federal credit," O'Driscoll said. "The problem is the premium increase is permanent, the credit is temporary."

The end of the reinsurance program could cause an estimated 25% to 30% increase in health insurance costs in coming years, wrote St. Cloud Republican Rep. Tama Theis in a July 1 newsletter, just after the budget became law. And she blamed DFLers for not fully reauthorizing the program.

It wasn't fully reauthorized because it's an expensive program, said Assistant Majority Leader and St. Cloud DFL Rep. Dan Wolgamott in a text message to the St. Cloud Times. "The large influx of federal funds we received this year is not something that can be relied on when we craft future budgets."

Minnesota launched the reinsurance program, also called the Minnesota Premium Security Plan, in 2017. It ran for two years and was reauthorized for another two.

The program works by reimbursing health insurers for 80% of individuals' claims that cost between $50,000 and $250,000 in a single year. The insurance companies cover individuals for costs under $50,000 and over $250,000. That created savings for insured people of about 20%, according to the Department of Human Services.

But decreasing premiums on the individual market caused a decrease in federal funding to the state's MinnesotaCare program, because the amount of federal funding is based on individual market premiums.

"The state has lost out on over $100 million annually," according to a DHS document about the history and phase-out of the reinsurance program. "While the program did stabilize the market in the initial years and make premiums more affordable across the board, it did not (and was never intended to) bend the trajectory of health care costs, nor did it improve Minnesotans' health."

Funding for the reinsurance program will come first from federal aid and special state funds before the state taps into the general fund, according to language in the budget. Lawmakers transferred $85 million for MinnesotaCare program costs as part of the reinsurance appropriation.

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