Reinsurance signoff sparks fight to save MinnesotaCare

Published 10:30 pm Monday, September 25, 2017

ST. PAUL — State officials aren’t sure how they’ll cope with hundreds of millions of dollars in federal funding cuts to Minnesota’s health care program for the working poor.

Good news from Washington, D.C., last week put Minnesota policymakers in a bind: While the federal government finally approved a new reinsurance program to lower insurance premiums for shoppers who buy coverage on their own, it comes at the cost of an estimated $369 million funding cut for MinnesotaCare, a heavily subsidized program that covers roughly 90,000 low-income residents.

A look at what’s at stake:

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What’s happening?

State lawmakers stepped up earlier this year to stabilize a shaky individual insurance market, devoting $549 million over the next two years to help insurers lower rates after years of double-digit hikes. The so-called reinsurance program required federal approval, which the state finally secured Friday, just over a month before open enrollment begins.

Democratic Gov. Mark Dayton’s administration was repeatedly assured by federal officials throughout the winter and spring that approval wouldn’t be paired with cuts to MinnesotaCare funding, according to emails obtained by The Associated Press. Jeff Wu, a top official at the Department of Health and Human Services, emailed Minnesota state Sen. Michelle Benson in March, saying the state would get additional money through its reinsurance waiver to offset any direct cuts to MinnesotaCare funding.

But the federal government reversed course. Dayton’s administration estimates Minnesota will lose $369 million in MinnesotaCare funding over the next two years while gaining just $338 million in federal assistance to help lower premiums for shoppers buying coverage through the state exchange.

The reasons behind the cut are unclear: Officials at the Department of Health and Human Services have not responded to requests for comment. But funding for basic health programs such as MinnesotaCare is tied to the tax credits participants would receive if buying coverage on a health care exchange. With lower premiums due to reinsurance, those subsidies would decrease.

Minnesota depends on the federal government to pay for the program, one of the nation’s two basic health plans ushered in by the Affordable Care Act. The federal government will pick up 86 percent of its $420 million budget for 2017, making a federal reversal of funding damaging for Minnesota.

“We kind of went all in on the ACA,” said Benson, R-Ham Lake. “It’s put us at risk, and it’s taken us out of control.”

What can they do?

Low-income residents on MinnesotaCare plans won’t feel the cuts anytime soon. State Department of Human Services Commissioner Emily Piper said last week that Minnesota has enough in reserves to pay for the program in 2018.

But several Democratic lawmakers have called on Dayton to back away from the reinsurance plan and instead use the state’s money to directly buy down insurance premiums, the same approach Minnesota used earlier this year for 2017 insurance rates.

“The governor and Republican leadership should agree to a special session to repeal the costly insurance subsidies and continue the premium discount program through 2018. We must move quickly if people are to find affordable insurance options for 2018,” said Rep. Tina Liebling, a Democratic candidate for governor in 2018.

But Dayton said it may be too late to scrap reinsurance. He believes that the program took hold once the federal government approved the waiver.

For now, his administration is focusing on trying to get the federal government to relent and restore MinnesotaCare’s full funding. Any long-term solutions for MinnesotaCare funding may have to wait until the latest congressional push to repeal and replace former President Barack Obama’s health law shakes out.

“We’re still sorting through this,” Dayton said. “It’s clear what the administration and the Republican congress wants to do to public health care.”

More problems

The projected cuts to MinnesotaCare add to a mounting list of problems for financing Minnesota’s health care system.

Lawmakers will soon need to work out MinnesotaCare’s other primary funding source: The state’s tax on health care providers, which furnishes a dedicated health care fund, is slated to expire at the start of 2020. Lawmakers will eventually have to replace hundreds of millions of dollars in temporary health care funding after using a budget gimmick to help pass a balanced spending package.