Minnesota Reinsurance Bills Draws Criticism From Governor, Farmers

A bill will provide over half a billion in state funds to insurance companies over two years, potentially dropping insurance premiums.

The bill passed into law after Gov. Mark Dayton chose not to veto or sign the legislation. However, he did voice concerns that have been echoed by agricultural groups locally and statewide.

The program, called "reinsurance," will absorb up to $271 million per year in expensive medical claims for Minnesotans over the next two years. Those costs would ordinarily have to be paid for by insurers and passed on to their customers in the form of higher premiums.

However, the Land Stewardship Project, a group dedicated to promoting interests of farmers in Minnesota has spoken out against the bill, citing that it doesn't do enough to make sure insurance rates drop.

Tom Neussmeier is a local farmer as well as a federal farm policy organizer with LSP who works with local farmers to help shape policy goals. When meeting with other farmers, he said, insurance and healthcare concerns are often on the tip of farmers' tongues.

"I'm not convinced there is going to be the accountability to get what we really need," he said, adding that he and other farmers generally are looking for reliability and predictability in the insurance market.

If a farmer is unconnected to an employer who could provide insurance, Nuessmeier said insurance can be a huge cost; a problem exacerbated by falling profit margins and increased insurance premiums.

LSP president Mark Schultz on March 31, called on Dayton to veto the bill. Schultz said the bill provides too much leeway for insurance providers while not ensuring that the providers will stay in the Minnesota market or that they will use the funds to reduce premiums.

Premiums in the individual market could be lower by 20 percent in 2018 than they would be without reinsurance, the state Department of Commerce estimated.

Funds from the project come from the state's general fund as well as the Health Care Access Fund, a fund used to help supply medical care for some low income individuals.

Feeling the bill was both necessary and problematic, Dayton took a third route allowed him by the Minnesota Constitution: he neither signed nor vetoed the bill. This means it becomes law without Dayton acting.

"If I vetoed it and this measure did not exist, that would provide a pretext or a justification for the health insurance companies to pull out of the individual market entirely," the governor said.

The "individual market" affected by this measure covers around 4 percent of Minnesotans who buy insurance directly, rather than getting it through an employer-sponsored plan or as part of a government program such as Medicare or Medical Assistance.

There's no certainty that the reinsurance program will take effect in 2018 as intended, even with Dayton letting the bill become law. That's because the entire measure only begins if the federal government approves Minnesota's program.

This contingency was added because without federal approval, reinsurance could have cost Minnesota hundreds of millions of dollars in federal subsidies.

Now that the bill has passed, Paul Sobocinski from LSP said the group plans to push to make sure insurance rates go down.

"We certainly hope there will be a substantial drop in rates," he said amid concerns that the state's projected drop may not hold true.