Listen to Minnesota consumers on health care aid

With Minnesota lawmakers increasingly at odds over a critical health care decision — how best to help consumers who buy health insurance on their own — it's critical to include in the debate the voices of those whose lives will be affected by the outcome at the Capitol.

Diane Hanson of Rochester has an important message for the Legislature and Gov. Tim Walz: As a consumer, she's not sold on either of the immediate approaches championed by Republicans and Democrats. Her concerns are valid and should serve as a midsession warning flare. The work on this is far from complete. Cooperation and an openness to new ideas is essential in the weeks ahead, even as both sides dig in.

The GOP is pushing an extension of the "reinsurance" program that reduced 2018 premiums an average of 20 percent by paying health plans with taxpayer dollars for the cost of certain high-expense enrollees. Walz and his party would instead offer direct aid to many but not all consumers, wielding public dollars to discount premiums by 20 percent.

Hanson, 61, and her husband Brad, 63, offer a timely reminder of why aid is needed and why it must be crafted carefully. They are retired but too young to qualify for Medicare, the federally run health care program for those 65 and older. Nor do they qualify financially for other public programs. That leaves the individual marketplace, which is expensive due in part to the small number of people it serves — about 162,000 in Minnesota.

Rates have long been volatile in this market, and the changes introduced by the Affordable Care Act contributed to that. The ACA addressed this by making tax credits available, but not all consumers qualify financially, leaving them with high coverage costs. That's why Minnesota passed a direct discount program in 2017 (like Walz is calling for), then implemented a reinsurance program that ends this year.

Both were meant to be short-term fixes, but a divided state government couldn't achieve consensus on more permanent reform. Walz, to his credit, has proposed a longer-term plan, which would provide additional consumer aid beginning in 2021 and eventually allow consumers to buy into the MinnesotaCare program even if they exceed its financial eligibility limits. That plan, however, has yet to be implemented, which means legislators are again looking at direct subsidies or reinsurance.

The Hansons offer a real-world perspective that's often missing in the debate. Reinsurance may have reduced consumer costs on average, but it still didn't make coverage affordable for them. They would have faced monthly premiums totaling $27,000 a year, with $6,000-per-person deductibles, under the program, Diane Hanson said. Fortunately, they qualified for ACA tax credits to deeply cut their costs.

Going with Walz's subsidy strategy would stop the federal cuts. But there are drawbacks to this approach, too. It's also not cheap, costing $116 million in 2020. Consumers would have to use MNsure, the state's marketplace, in order to qualify for the 20 percent discount. Not everyone can or wants to use the website. There are also concerns that insurers would try to hike rates, making it politically difficult for policymakers to ever try to end reinsurance, the industry's preferred program.

Neither consumers nor the state are well-served by the current "either-or" approach. Health policy experts such as the University of Minnesota's Lynn Blewett are also raising red flags. Blewett has pointed out that insurers, not taxpayers, have historically borne most or all of a reinsurance program's price. Why isn't the industry being asked to shoulder more of Minnesota's costs? An industry assessment also would free up several hundred million in state dollars currently set aside to pay for the reinsurance program in the future. Those dollars could be used to provide additional aid to consumers like the Hansons to further discount coverage.