Lawmakers finalize bill to stabilize health insurance market; will Mark Dayton veto?

March 30--Minnesota lawmakers have adopted a plan to try to stabilize the state's individual health insurance market -- but it's uncertain whether Gov. Mark Dayton will sign it.

The measure, called "reinsurance," would spend $542 million in state money over two years to try to lower premiums in the individual market. That covers roughly 4 percent of Minnesotans who have neither employer-sponsored insurance nor a government health plan such as Medicare or Medical Assistance.

If implemented, the $271 million per year would pay for some high-cost claims borne by the state's HMOs. Since they base their premiums on their expected costs, this could let them offer lower premiums than they otherwise would. Commerce Commissioner Mike Rothman predicted that the measure would lead to 2018 premiums being 20 percent lower than they would be without a reinsurance program.

Dayton has promised in general to sign a reinsurance bill. But he's consistently objected to several key components in the measure that the Republican-controlled House and Senate are poised to send him.

Republican lawmakers rejected Dayton's call to pair reinsurance with letting Minnesotans on the individual market buy into the state-run MinnesotaCare program. They also stuck to a plan to take the $542 million out of the state's savings, instead of collecting it via a new tax on the insurance market as Dayton wanted.

"I continue to have serious concerns about this legislation," Dayton wrote in a letter to lawmakers delivered minutes before a committee adopted the reinsurance bill.

Before Dayton can sign or veto the reinsurance program, it still needs to pass the full House and Senate. It'll likely come up for a vote as early as Thursday. Previous versions of the program have already passed both houses despite opposition among some legislative Democrats to the very idea of reinsurance as a giveaway to insurers.

Republicans defended the final proposal on Wednesday, saying it wasn't perfect but was necessary to prevent the complete death of the individual health insurance market, as insurers pull out to avoid paying ever-higher costs.

"It's a good bill," said Rep. Greg Davids, R-Preston. "I really believe that if this bill isn't signed by the governor, I don't think we have a market. I think it's that serious."

Though Dayton lost on most of his biggest objections, he did win the final major battle over the bill's language.

Reinsurance could have cost Minnesota's government and taxpayers hundreds of millions of dollars, because of federal payments that get bigger as premiums in a state go up. That means if reinsurance successfully lowered premiums, Minnesota would get less federal money -- significantly increasing the total cost to the state.

Now, under language Dayton successfully pushed for, the entire reinsurance program requires the federal government to promise not to penalize Minnesota for it. If that approval doesn't come, reinsurance won't happen -- preventing the possible losses.

That leaves the program up in the air even if Dayton signs it.

"We're all kind of walking through murky waters with this," said Senate Majority Leader Paul Gazelka, R-Nisswa. "We don't know what the feds are going to do."

The more immediate question is what Dayton is going to do. Despite criticizing the measure in his letter, Dayton has stopped short of an outright veto threat.

"We have an independent-minded governor," said Rep. Laurie Halverson, DFL-Eagan. "What the governor will do is I think a question mark at this point."

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