Reinsurance Approval Costly for Minnesota

Minnesota Gov. Mark Dayton addresses the media where he discussed pending bills as the 2017 Legislature continues its duties at the State Capitol Friday, April 7, 2017, in St. Paul, Minn. Photo: AP/Jim Mone
Minnesota Gov. Mark Dayton addresses the media where he discussed pending bills as the 2017 Legislature continues its duties at the State Capitol Friday, April 7, 2017, in St. Paul, Minn.

September 19, 2017 03:36 PM

Minnesota is at risk of losing hundreds of millions of dollars in federal funding for the state's health care program for the working poor as it pursues a waiver aimed at lowering premiums for people buying insurance through the state exchange.

Gov. Mark Dayton wrote Tuesday to Department of Health and Human Services Secretary Tom Price urging President Donald Trump's administration to "reverse this very destructive financial penalty" to MinnesotaCare, the state's program that covers those who make too much to qualify for Medicaid but can't afford private coverage.

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Dayton said the state had been told it would see $369 million in cuts to MinnesotaCare funding as a consequence of creating a reinsurance program.

RELATED: Minnesota Reaching Deadline to Get Insurance Rate Approval

"Essentially, we are being penalized for doing exactly what the President and you have been encouraging us to do: take new reform initiatives," the Democratic governor wrote.

State officials have been anxiously awaiting the federal government's signoff on a reinsurance program designed to control costs in the individual market after years of double-digit premium hikes.

State lawmakers stepped up this year to stabilize a shaky individual insurance market. After devoting $300 million to ease skyrocketing premiums for 2017, the Legislature spent another $542 million to set up a reinsurance pool for the next two years that will lower rates by helping insurers cover large claims.

RELATED: With 'Reinsurance,' Minnesotans Who Buy Own Health Coverage Could See Rate Decreases

Preliminary rates released over the summer showed that approach should work: Insurers proposed slight premium hikes and even some modest price drops for 2018 with reinsurance dollars in effect. The rates are to be finalized in early October, and open enrollment begins Nov. 1 for shoppers who buy coverage on their own.

But those efforts may come at a steep cost to MinnesotaCare, one of just two so-called Basic Health Programs in the country that are paid for largely by the federal government. More than 90,000 Minnesota residents are covered on MinnesotaCare.

It's unclear exactly why Minnesota may lose out on federal funding. Officials with the Department of Health and Human Services did not immediately respond to a request for comment. But funding for basic health programs is tied to the tax credits those residents would receive if buying coverage on a health care exchange. Those subsidies would decrease if Minnesota implements its reinsurance plan.

And the blow to Minnesota's budget would be large: The program costs more than $500 million a year, and the federal government's share has surged past 50 percent as premiums have spiked in Minnesota in recent years.
 

Credits

The Associated Press

(Copyright 2017 by The Associated Press. All Rights Reserved.)

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