The state shouldn't be penalized for innovation.
Expanding coverage for the uninsured wasn’t the only part of the sales pitch for the 2010 Affordable Care Act. President Obama and other health reform proponents also touted reforms that would reward innovation and quality as states, providers and insurers tackled the task of overhauling our expensive health care system without compromising care.
A looming shortfall in expected federal aid for the next-generation version of MinnesotaCare — the state-run program providing subsidized health insurance for the working poor — raises troubling questions about whether more promises won’t be honored as the ACA rolls out.
Obama inspired nationwide ire last fall when his “if you like your plan, you can keep it” promise proved ill-advised. The botched rollout of healthcare.gov also belied claims that buying coverage online would be easy.
The administration can ill afford more questions about the law’s rollout, particularly in states such as Minnesota, where the health care community has embraced the ACA’s potential. That’s why it’s critical that the administration move quickly to prevent federal payment policies from penalizing Minnesota for modernizing its pioneering MinnesotaCare program and having some of the nation’s most affordable insurance premiums on its new MNsure marketplace. The decline in expected federal revenue is a key reason why the net state cost of MinnesotaCare is expected to increase by $517 million for 2016-17, compared with estimates from the last legislative session.
The federal government has long helped pay for MinnesotaCare, which covers more than 140,000 people and is expected to cost $545 million this year. Enrollees typically make too much to qualify for medical assistance but struggle to buy insurance on their own. In addition to federal dollars, a state tax on medical providers and modest premiums from enrollees funds the program, launched in 1992.
The ACA offered states an opportunity, beginning in 2015, to take advantage of newly available federal dollars to improve coverage for low-income, working families. Minnesota lawmakers last year seized on this to not only continue but to improve MinnesotaCare under the law’s new “Basic Health Plan” option. This allows states to utilize 95 percent of the federal tax subsidies that would have been available to people within certain income ranges to buy coverage on the new health marketplaces. States can instead use the money to build a more affordable plan for this group — which benefits providers and privately insured consumers by helping hold down uncompensated care costs. In Minnesota, that plan is the next-generation MinnesotaCare, which typically offers lower premiums than plans available on MNsure to low-income workers.
There would have been a healthy stream of federal dollars into the state had Minnesota’s new health insurance marketplace offered high-priced plans. The reason: The federal government uses the second-lowest “silver” plan offered on the state’s new MNsure marketplace to calculate the amount of the state’s Basic Health Plan dollars. Higher premiums would have equaled more aid.
Instead, the state had the nation’s lowest monthly premiums. Among the reasons: a competitive insurance market and efficient medical care. Premiums are also low because more-expensive-to-insure populations were kept out of the new MNsure marketplace — by continuing MinnesotaCare and temporarily keeping its high-risk pool open for people with pre-existing conditions.
The state should be rewarded, not penalized, for its affordable premiums and willingness to pioneer the Basic Health Plan. But there’s time and leeway for federal officials to adjust.
The Legislature may also need to act. Lawmakers lowered overall MNsure premiums by more than 50 percent in the 2013 session. Benefits were also improved. Those decisions were based in part on federal aid projections that missed the mark by a mile. Even if federal officials favorably adjust payments, lawmakers need to revisit MinnesotaCare premiums and benefits and ensure that they’re sustainable. The sooner they start this difficult assignment, the better.
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