After state officials said Wednesday that rates on the MNsure health insurance exchange will increase an average of 4.5 percent, Democrats praised what they called a modest rise while Republicans seized on the figure, calling it "bogus" and "deceptive."
In a short address with reporters, Gov. Mark Dayton said the rise in the average rate was "predominately good news," praising Minnesota for having among the lowest insurance premiums in the country, according to state officials.
State Senate Minority Leader David Hann, R- Eden Prairie, and Rep. Joe Hoppe, R-Chaska, delivered the response for Republicans. Hann attacked the 4.5 percent figure, arguing that it masks what are larger rate increases for certain plans, participants and regions.
The MNsure rates releases comes hours before Gov. Dayton and GOP challenger Jeff Johnson are set to square off the first gubernatorial debate of the election cycle. In statement, Johnson criticized Dayton for what he called a failure to deliver on a promise that MNsure would decrease the cost of health insurance for middle-class Minnesotans.
"Time and time again, Mark Dayton has failed to deliver on his promises to middle-class Minnesotans," Johnson said. "In fact, the only promises he's kept are the ones he's made to the special interest groups who fund his campaign."
Wednesday's rise in the average rate was no surprise, according to analysts. That's partly because PreferredOne, the Golden Valley-based insurer, announced last month it would leave MNsure and not sell policies for 2015, according to Commerce Commissioner Mike Rothman. PreferredOne currently offers the lowest-cost options on MNsure.
Prior to Wednesday’s announcement, health insurance experts pointed to other factors also could be driving premium increases. MNsure will withhold a larger share of premiums next year to cover the cost of the exchange. Health costs are growing, in general, and more patients with costly health problems likely will move from a state safety net program to MNsure.
U.S. Senate candidate Mike McFadden on Friday laid out a proposal to do away with the Affordable Care Act in favor of optional state exchanges with the opportunity to buy insurance across borders.
The proposal is part of a six-page detailed outline by McFadden, a Republican businessman who is challenging U.S. Sen. Al Franken. McFadden has long advocated for repealing the ACA.
“I fundamentally believe that healthcare should not be done at the federal level, but should be state-based and market-centered,” McFadden told reporters Friday. “I think if it continues to be run and administered at the federal level, it will ultimately look like the (Veterans Administration) and that’s not acceptable and that’s not what Minnesotans want.”
McFadden’s proposed system includes a six-point plan to lower costs by expanding Health Savings Accounts, increasing price transparency for medical procedures, allow the pooling of small businesses to procure the same benefits as larger corporations, allowing the purchase of insurance across state lines, and reforming both healthcare tax laws and the tort system.
McFadden said that individual states should be able to decide whether they want to issue individual mandates to purchase health insurance.
“If Minnesota wants to have a mandate or Massachusetts wants to have a mandate, then that’s their decision.” He said. “When I say that states are laboratories for experiments, I want them to experiment. You run into a fundamental problem with a program that’s this large, and covers 1/6th of the economy.”
McFadden maintained that last week’s pullout of PreferredOne, the chief provider in MNsure, is not the fault of the state’s health care exchange, is proof that large patient pools are not effective.
"I'm here to tell you today these pools under Obamacare are not working." he said. "When PreferredOne, who is the 60 percent low-cost provider, comes in and says 'We can't make money,' that's not MNsure, the exchange's fault. What it is, is that the system can't make money."
Republican Jeff Johnson hammered on the Dayton administration's handling of MNsure Friday, in what has swiftly become a principal theme of his campaign for governor.
It was Johnson's third press conference on MNsure since the news earlier this week that PreferredOne, which offered the lowest rates and sold the most plans on the state health insurance exchange in the last year, is pulling out. Four insurance companies continue to sell plans on the site, but Johnson and Republican allies seized on the news as they try to take advantage of the Dayton administration's struggles to get MNsure operating efficiently.
This time, Johnson called for Minnesota's legislative auditor, a Capitol watchdog agency, to expand an ongoing MNsure audit to include a look at the Dayton administration's role in setting PreferredOne rates. Johnson said the situation "looks fishy," but was not able to offer any evidence or even specific allegations of wrongdoing.
"That's what we need to find out," Johnson said.
A day earlier, Dayton when asked by reporters said his administration did not dictate anything to PreferredOne. The company has made no allegations to that affect, either.
"The Commerce Department and the administration do not dictate to these companies what the rates are," Dayton said. "The notion that we set these rates is another one of the fallacies that those who are opposed to the system want to perpetuate."
While Johnson has tried to turn the MNsure issue against Dayton, the DFL has hit back against Johnson by highlighting some of his own past votes on health care. Specifically, Johnson acknowledged Friday that as a state legislator in 2003, he voted for a budget backed by then-Gov. Tim Pawlenty, a fellow Republican, that eliminated about 38,000 adults without children from state-provided health care coverage.
"That was a decade ago in the midst of a very deep deficit that we were in the middle of and that was part of the governor's plan to balance the budget without tax increases," Johnson said.
Earlier in his campaign, Johnson talked more frequently of scrapping MNsure altogether. He still says he'd seek a federal waiver from complying with the federal Affordable Care Act, but has also acknowleged that if elected he would likely have to continue to deal with MNsure.
"We have MNsure sitting in front of us and we have to figure out how to move on from that," Johnson said.
Jeff Johnson, the Republican nominee for governor, expanded his attack on Gov. Mark Dayton's record on health insurance and management of MNSure, the state's troubled health insurance exchange.
He appeared at Mack Engineering -- a small Minneapolis manufacturing company of machined components for companies such as John Deere and Honeywell – where co-owner Jennifer Salisbury said her company was experiencing skyrocketing health insurance premiums for the company and its 28 employees.
The company is an example of a small group insurance plan that is not in compliance with Obamacare because it does not meet mandated coverage requirements that are designed to give every person an adequate health plan. The Obama administration offered states more time to get small group plans in compliance, but Minnesota declined so that all employers would be treated the same, rather than having some in compliance and others not. Currently, 75 percent of small group plans are Obamacare-compliant.
Johnson said that by declining the extra time, Dayton had caused undue hardship on small businesses such as Mack Engineering.
“This is another example of Gov. Dayton hurting small businesses and their employees,” he said. “He wouldn’t stand up for the Mack Engineerings of Minnesota.”
Jeremy Drucker, a spokesman for Dayton’s re-election campaign, replied in a statement: “What Commissioner Johnson is proposing is to penalize the majority of Minnesota companies who are now providing improved health care coverage for their employees. They would be socked with higher insurance costs if the minority of employers…were allowed to continue to offer substandard plans.”
Drucker added that the cost increases cited by Johnson are due to improvements, such as requiring more comprehensive coverage and no longer allowing disqualification for pre-existing conditions.
Anne O’Connor, a spokeswoman for the Commerce Department, said an analysis showed that continued noncompliance would increase costs for groups in compliance between 6 and 10 percent. That's because the non-compliant plans would sweep up the healthiest, cheapest customers, thereby increasing costs for everyone else.
Johnson may sense an opening this week on health care related issues as MNSure faced another setback. PreferredOne, which offered the lowest rates and had signed up nearly six out of 10 consumers who shopped on the online marketplace, announced it was pulling out of the exchange, which led to speculation that rates could increase as its customers seek alternative coverage.
Republican U.S. Senate candidate Mike McFadden said the withdrawal of the largest insurer from MNsure, the state’s health care exchange, is evidence of the Affordable Care Act’s failure, blaming President Obama and his opponent, Sen. Al Franken, for enacting what he called a broken system.
PreferredOne was the top-selling insurer on MNsure, but its CEO said they’d be pulling out of the exchange, saying their participation was “not sustainable.” PreferredOne insured six out of 10 MNsure consumers who now will have to seek out other providers and may result in higher healthcare premiums.
“I’m a businessman, and as a businessman I know that when someone provides 60 percent of the market and is the low-cost provider drops out of the program, you’re going to see a significant increase in premiums. This doesn’t work.” McFadden said, pointing to a chart from the Hoover Institution that illustrated the tangle of functions that make up the ACA. “I’m very disappointed in President Obama and Sen. Franken because this program has been based on lies.”
The biggest of all, he said, is that Obama care decreased the cost of insurance in the country. PreferredOne’s withdrawal is proof of that, he argued. However, he said he does not believe the insurance company should be held responsible for leaving MNsure. He remained focused on a system he said could be fixed by a “state-based, market-based, patient-centered” system that allows consumers to buy their insurance across state lines.
Franken spokeswoman Alexandra Fetissoff said that because of the ACA, 95 percent of Minnesotans are now insured, while the state’s uninsured rate has been halved.
“Mike McFadden would repeal the health law and take us back to a time when women were charged more for health coverage simply because they were women, people with preexisting conditions were denied coverage, half the bankruptcies in this country were connected with health care emergencies and young adults couldn't get covered under their parents' plan,” she said in a statement. “Once again, Mike McFadden has proven that he would rather jump at the opportunity to play politics than actually solve problems.”
McFadden made his statements on the day the Franken campaign launched another ad claiming McFadden’s investment firm, Lazard Middle Market, was involved in a merger that moved an American pharmaceutical company to Ireland to avoid paying U.S. taxes.
McFadden called the ad “patently false,” saying his firm did not represent the company that made the inversion, and that Franken praised a similar move by Medtronic to new headquarters in Ireland. However, while Franken praised the move as a potential job-creator, he also said the it "needs careful scrutiny."
McFadden said he said companies leave the country because they lack the tax incentives to stay.
“What this is evidence of is you have a president and a Democratic senator and a Democratic Senate that don’t understand tax policy and haven’t done anything over the last six years to make the United States have a competitive tax climate.” he said.
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