ST. PAUL — Despite calling it a "bailout" that benefits insurers at the expense of taxpayers, Gov. Mark Dayton announced Monday he will let a $542 million reinsurance plan become law.
The DFL governor said he has serious problems with the bill. For starters, it gives insurance companies money without requiring them to commit to lowering health insurance premiums for consumers.
"It's unwise to commit $542 million in taxpayer money to people who aren't willing to step up and promise they are going to fulfill what they are receiving the money for," Dayton said.
Nonetheless, the governor said he decided not to veto the measure. Instead, he would let it become law without his signature. The governor said he didn't want to risk more health insurers deciding to pull out of the individual insurance market if the measure didn't become law. The state's HMOs had set a deadline of April 1 for a reinsurance bill to pass so they could factor it in when setting 2018 rates.
"Without this legislation, we give the insurance companies the pretext to pull out of the individual market entirely," Dayton said.
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Supporters of the reinsurance bill say it is critical to help stabilize the individual insurance market. Rep. Greg Davids, R-Preston, sponsored the bill. Without it passing, he said the state's individual insurance market was at risk of collapsing next year.
"This is a bill to fix part of the disaster of the (Affordable Care Act), and I think people deserve that. And if it takes some taxpayer dollars, then that's what we have to do at this point," Davids said.
Approximately 5 percent of Minnesotans — or roughly 250,000 people — purchase health insurance on the state's individual market. In recent years, these consumers have been faced with soaring premium rates and fewer choices. No area of the state has been harder hit than southeast Minnesota, which has the highest health insurance rates in the state.
The reinsurance law helps insurance company with the cost of some expensive health insurance claims. The state dollars could be used to offset the cost of insurance claims between $50,000 to $250,000. State funding could cover between 50 percent to 80 percent of those costs, depending on what a state board decides.
The majority of the reinsurance law's funding will come from the Health Care Access Fund, which primarily funds MinnesotaCare — a health care program for low-income Minnesotans. The rest of the money comes from the state's general fund. Dayton said he disagrees with using those state dollars. He would rather have seen the program funded by a tax on the health insurance industry.
The governor is also dismayed that lawmakers were unwilling to consider his proposal for a MinnesotaCare buy-in. That would have allowed people regardless of income to buy into MinnesotaCare via MNsure, the state's health-insurance exchange. He said that would have gone a long way toward providing consumers with more options.
"I am concerned that people — especially in greater Minnesota — will only have one or two provider plans to chose from for their coverage next year," he said.
Davids said that the governor's MinnesotaCare buy-in was a "nonstarter." It would hurt health care providers because MinnesotaCare has very low reimbursement rates. He added that the bill does try to improve access for consumers. It does that by requiring health insurance companies that sell policies in a county to offer at least one plan that provides in-network access to more than one healthcare provider system.
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Davids said those plans "could cost more money, but at least it would be available so you could keep your doctor, you could keep your hospital, you could keep your clinic."
Jim Schowalter, president of the Minnesota Council of Health Plans, said he understands the governor is frustrated that insurers can't offer guarantees about 2018 premium rates. But he said the reinsurance law means insurers will be able to offer lower rates than they would have been able to without the law.
"This is a big step for everyone who gets insurance on their own — especially if they are in high-cost areas or areas that have limited options," Schowalter said.
Rep. Tina Lieblng, DFL-Rochester, said she would have liked to have seen Dayton veto the reinsurance bill. She said it would have made more sense to use those dollars for premium subsidy relief that would directly benefit consumers. She said the reinsurance bill is essentially a subsidy for insurers.
Liebling added, "It's a very bad use of $542 million because it doesn't guarantee any help for any Minnesotans other than the ones that work for insurance companies."
