Any such package, which will likely cost hundreds of millions of dollars but could lower premiums by more than 20 percent, has to be passed by
"I'm carrying a bill (that) I want to be very clear on, there's a lot of things we have no idea what we're doing," said Rep.
GOALS: STABILIZE MARKET, LOWER PREMIUMS
Less than 5 percent of Minnesotans get their health insurance through the state's individual insurance market, but those roughly 190,000 people have been through a lot in recent years. Premiums have skyrocketed even as options have narrowed, and there's a very real chance that the market could go away altogether.
Preventing that collapse is one of three major goals
* Stabilize the state's health insurance market.
* Keep premiums as low as possible.
* Get as much impact as possible for any taxpayer dollars invested.
To accomplish that, lawmakers have to make big choices in two different areas: how to structure their plan, and how to pay for it.
THREE MAJOR PROPOSALS
The fundamental problem is that
In 2015, the 2 percent of the market with claims above
"We have an individual member whose drug spend alone is worth
Lawmakers are considering three major approaches to address this.
OPTION 1: REINSURANCE
One solution is to create a program called "reinsurance" that subsidizes high-cost claims borne by insurers.
Under this type of program, insurance companies pay costs up to a certain dollar amount per year -- for example,
Such a program can be made more or less generous by shifting the dollar thresholds and the share paid for by the state. A more expansive program lowers premiums more but costs more money.
This system is relatively easy to administer, since it's based on a pretty simple math formula. It's also proven: the federal government operated a nationwide reinsurance program along these lines for several years that kept premiums down. (That program's expiration is one reason why premiums went up so much this year.)
Most Republican lawmakers are backing this approach, as are the state's insurance plans.
OPTION 2: VIRTUAL HIGH RISK POOL
Another approach would try to be more targeted: paying not for all high-cost claims, but rather for certain expensive medical conditions.
Under this model, people with serious conditions such as cancer would buy health insurance normally. But behind the scenes, the state would pick up the cost of people with one of a list of expensive conditions, while leaving more normal medical bills to the insurance companies to support.
Such a model has also already been approved by the federal government for a state when
A downside that has insurers and some lawmakers skeptical is that such a program is more administratively complex than a reinsurance system based on dollars, and could be harder to implement in time for 2018.
OPTION 3: MINNESOTACARE BUY-IN
A third proposal is different because its primary goal isn't to stabilize insurance companies, but rather to offer a competing product.
His staff says the product would be cheaper than many private insurance plans with much better benefits.
Supporters say it could also help the insurance companies, since it'd be a better deal for sicker (and thus more expensive) Minnesotans trying to avoid the high deductibles and narrow networks offered by private plans.
"If we drive down costs in that individual market by getting sicker people out of it or sicker people better insured, we have more room in the marketplace for those costs to get driven down," said Rep.
This system could be combined with either of the two reinsurance models, or could stand alone.
Whatever tool lawmakers choose to try to fix
This money could come from a few different sources.
The simplest is to just take it from the state's reserves.
Another potential source is the state's
Lawmakers could also just spend part of the state's
If lawmakers don't want to draw down the state's reserves, they could also fund reinsurance with a new tax. One proposal would put a tax of up to 1 percent on all health insurance premiums in the state -- including plans through employers as well as the individual market.
The logic here is to spread the cost of stabilizing the individual market around the much larger commercial insurance market: Everyone pays a little bit more to bring bigger discounts to the least stable part of the market.
But the state's business community, among others, is opposed to seeing employer-provided plans taxed to benefit the individual market.
A 'CATCH-22' COMPLICATION
Lowering premiums could have a double cost if the federal government doesn't play along.
That's because under the Affordable Care Act, states get bigger federal subsidies if their premiums are higher. Lowering premiums means the state could get hundreds of millions of dollars less.
This could be avoided if the federal
"It is an awkward Catch-22," Benson said. "If we put something in here that makes the whole thing contingent on a federal waiver... nobody will be able to plan for anything. It is an awful situation."
ANSWERS COMING QUICKLY
Lawmakers don't have a lot of time to resolve these questions. With their
Currently both chambers are considering bills with traditional reinsurance bills based on medical costs, though they differ in what portion of medical bills they cover. But final decisions are likely to be made in a conference committee of both chambers, when differences between the
Dayton has promised he'll sign a reinsurance bill, but he's expressed serious concerns about the funding structure of the bills moving through the Republican-controlled Legislature. The governor also hopes to get
Any such measure has to be passed by
(c)2017 the Pioneer Press (St. Paul, Minn.)
Visit the Pioneer Press (St. Paul, Minn.) at www.twincities.com
Distributed by Tribune Content Agency, LLC.