Minnesota's reinsurance program should be renewed

What do farmers working their barns and freelancers at laptops in downtown coffee shops have in common? They and other self-employed Minnesotans who buy their own health insurance get a break on their premiums every month thanks to the Minnesota Premium Security Plan.

This year and last, premium security, also known as reinsurance, lowered premiums by 20 percent on average for these Minnesotans, according to the Minnesota Department of Commerce. That reduction was just what lawmakers had planned.

The only surprise is that it looks as if it will cost about half as much as expected. Numbers presented to the group overseeing reinsurance showed that through December 2018, less than 50 percent of the available money was needed for medical bills.

Policymakers should use any leftover money to continue to help people who buy their own insurance. Here's how it works and why policymakers need to keep it for now:

Every spring, health insurers ask the state to approve premiums based on expected medical bills for the coming year. But premiums for 2018 and 2019 didn't include all expected medical bills for people who buy their own insurance. That's because when a person's medical bills are between $50,000 and $250,000, the state will pay at least half of the expense using reinsurance funds.

For 2018 medical expenses, the insurer paid the entire bill from doctors, hospitals, clinics and pharmacies. By August 2019, the state will review all expenses and pay those eligible for reinsurance. After that, the Legislative Auditor takes a look at all the spending and payments to ensure that the money was used as the law allows. The same process is set for 2019.

This approach is almost the same as having the state directly pay part of the premiums. It's just simpler, because you don't have to wait to find out if you're eligible or rely on the state computer systems to process and approve the help you need. Minnesota was the first state to try this approach, and other states — including Oregon, Colorado and Maryland — are following our lead.

• No new money is needed. The legislature appropriated $271 million per year to fund reinsurance in 2018 and 2019. Lower enrollment than projected means there is a funding surplus that could be used to help people 2020 and 2021. Knowing that just $138.9 million is needed for 2018 should relieve policy makers' concerns about how to fund the help in 2020 and 2021.

• It brings federal money to Minnesota. The federal government helps pay the medical bills, contributing $131 million in 2018 and an estimated $84 million in 2019.

• It's already approved by the federal government. Minnesota has federal approval through 2022 — but state approval only through this year. If Minnesota lawmakers don't act quickly to keep reinsurance, state insurance regulators say premiums will increase for people who buy health insurance on their own, starting in 2020.

It may seem like open enrollment for 2020 is a long way off. But work is already underway to figure out the price of premiums for 2020. The people at health insurance companies who put together rates are getting ready to submit 2020 requests to the state this spring. They need to know whether the state will help pay part of expensive medical bills or if people who buy their own insurance have to foot the entire bill.