Suspended ACA payments could impact MinnesotaCare funding

Oct. 13--The Trump administration's decision to end "cost-sharing reduction" payments under the federal health law would have a relatively small impact on Minnesota's individual market, but could rip a much larger hole in the state's budget for the MinnesotaCare program.

Under the federal Affordable Care Act (ACA), most in Minnesota with incomes that make them eligible for the subsidies enroll in MinnesotaCare, a state health insurance program that covers people who are sometimes described as the "working poor."

The ACA lets the state tap the value of forgone cost-sharing reduction (CSR) payments to fund MinnesotaCare, to the tune of more than $100 million per year, according to a legal filing earlier this year from state Attorney General Lori Swanson.

An HHS spokesman told the Star Tribune via e-mail that the administration's decision would impact funding for what the ACA calls a "Basic Health Program" (BHP). The MinnesotaCare program is one of two BHPs in the country.

"The Obama Administration unfortunately went ahead and made CSR payments to insurance companies after requesting -- but never ultimately receiving -- an appropriation from Congress as required by law," officials with the U.S. Department of Health and Human Services said Thursday in a statement.

"We believe that the last Administration overstepped the legal boundaries drawn by our Constitution," they said. "Congress has not appropriated money for CSRs, and we will discontinue these payments immediately."

Officials with the state Department of Human Services, which runs the MinnesotaCare program, said Friday they were working on a response.

Some who buy individual health insurance policies through the state's MNsure exchange also benefit from the payments. Through the first six months of the year, CSR payments were worth a combined $1.67 million, a MNsure official said earlier this year, adding that the payments in June were helping 11,661 people with individual coverage.

For 2018, the state Commerce Department approved individual market rates in which health plans assumed the CSR payments were going away. The government makes the payments directly to health plans, which pass along the value to consumers in the form of lower deductibles and out-of-pocket spending requirements.

The payments benefited people who buy individual policies, a group comprised primarily of people under age 65 who are self-employed or don't get coverage from an employer.

Minnetonka-based Medica has been unusual among health insurers by sticking with expansion plans in the individual market, despite uncertainty over the future of the health law. On Friday, Medica said the administration's decision to end CSR payments wouldn't impact the insurer's plan to sell individual market coverage next year in Minnesota and several other states.

"Our premiums for 2018 anticipated this action and were increased previously to account for it," said Geoff Bartsh, a Medica vice president, in a statement. "Federal subsidies are not going away and, as a result of this action, will go up resulting in lower cost options for many consumers."

Most insurers and regulators figured the administration would suspend the payments, and have done what we can to plan for it, said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for health insurers.

"Locally, the damage is different than the rest of the country," Schowalter said.

"Here, it means legislators don't really know how much money in the future will be available to fund MinnesotaCare," Schowalter said. "And it means another broken federal promise to people to who buy their own insurance."

Twitter: @chrissnowbeck

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