Minnesota Gov. Mark Dayton will allow a rescue plan for the state’s individual insurance market to become law despite having “serious concerns” about how Republican lawmakers wrote the bill.
The program, called “reinsurance,” will absorb up to $271 million per year in expensive medical claims 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. 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.
The $542 million bill will be paid for out of the state’s general fund and a special fund intended to provide health care to low-income Minnesotans.But Dayton objects to how this plan is paid for, how it’s structured, and to Republicans’ rejection of his preferred fix. HMOs also refused his request for assurances that they would offer plans next year if reinsurance were passed.
“I think it’s unwise to commit $542 million of taxpayer money to people who aren’t willing to step up and promise that they’re going to fulfill what they received the money for,” Dayton said Monday.
He had previously said he wouldn’t sign reinsurance without those assurances. But Dayton also said he felt that reinsurance was necessary despite his concerns.
“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.
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.
House Speaker Kurt Daudt said he was “disappointed” Dayton chose this third route.
“Unfortunately, I think the governor is trying to play politics here,” said Daudt, R-Crown. “Ultimately the governor has done some things here that make this more difficult.”
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 at midnight. 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.
MOVING FORWARD
Dayton’s decision not to sign or veto the “reinsurance” package means it will become law at midnight on Monday. Here is what happens next:
- Department of Commerce to ask federal government for a waiver to allow Minnesota to set up reinsurance plan without losing federal funding. If the waiver is not granted, reinsurance doesn’t go forward. The department has to post its request for public review no later than May 15, and file it no later than June 15; Dayton wants the application filed as soon as possible.
- Meanwhile the state’s HMOs will submit their rate proposals for 2018. Normally this happens in May, but this year Commerce hasn’t yet set a date because the federal government has yet to give states guidance. In the past these proposals were private, but under a January law, they’ll be public this year. These rate proposals must say what the rates would be in the absence of reinsurance.
- The rate proposals can be revised after being initially filed. This may be necessary if insurers have to propose rates before knowing whether reinsurance is approved.
- If and when the federal government approves Minnesota’s reinsurance program, $200 million will be appropriated from the state’s Health Care Access Fund and $71 million from the state’s general fund. This money won’t be appropriated if Minnesota doesn’t get federal approval.
- Final rates for 2018 are typically announced around Oct. 1.
- Open enrollment for 2018 plans usually begins Nov. 1.
- In 2018, insurers can submit health claims to the Minnesota Comprehensive Health Association. If an individual’s total medical costs exceed $50,000, then the association will use state dollars to reimburse insurers 80 percent of that individual’s costs between $50,000 and $250,000. Insurers are responsible for all costs above $250,000.
- Throughout 2018, the association’s board will meet to set parameters for reinsurance in 2019.