Welcome news on Minnesota health insurance costs this week sends a clear message to Congress and the Trump administration: The individual market can be stabilized without repealing the Affordable Care Act (ACA). The consumer-focused improvement to the law that worked here should be rolled out nationally.
On Monday, Minnesota officials unveiled premium cost changes for 2018 for those who buy health insurance on their own instead of getting it through an employer or a public program such as Medicare. After hikes of 50 percent or more for 2017, prices for the coming year will hold steady or decrease for many even as other states face much higher increases.
Four of the five insurers selling individual policies in Minnesota posted decreases, while Blue Plus customers can expect an average increase of 2.8 percent. Minnesotans generally will have a wide variety of plans to shop, with just five counties served by one insurer. About 4 percent of consumers here buy on the individual market, either directly from insurance companies or from MNsure, the online marketplace where consumers can access federal aid to instantly discount premiums.
Credit is due Republican legislative leaders who championed the reinsurance policy that’s helping hold down prices. Reinsurance cushions the small pool of individual policyholders from rate hikes by using state dollars to reimburse insurers for care costs incurred by some enrollees with very expensive medical needs. Last spring, lawmakers provided up to $271 million annually for the next two years.
Gov. Mark Dayton’s administration has advocated for reinsurance on the federal level but also champions allowing more Minnesotans to buy into the state-run MinnesotaCare program.
A bipartisan effort in Congress to pursue reinsurance and other reforms to stabilize individual market prices got underway in early September. Sen. Lamar Alexander, R-Tenn., and Sen. Patty Murray, D-Wash., led a series of hearings to find pragmatic improvements to the 2010 ACA. The hearings were a refreshing change after years of unhelpful Republican rhetoric about killing Obamacare.
The last-ditch Graham-Cassidy bill to repeal the law unfortunately derailed the Alexander-Murray effort’s momentum. Thankfully, the two senators haven’t given up after that bill’s demise. As Minnesota’s situation illustrates, reforms like reinsurance can work. But the price tag for it here suggests that states probably can’t sustain a program like this for long.
A national reinsurance program would require a considerable investment as well. In 2016, a transitional ACA reinsurance program provided $4 billion in reimbursement. But there’s important context to consider. The federal government spends far more to subsidize those who get health insurance through their jobs. The tax exclusion for employer-sponsored insurance premiums is the nation’s “largest tax expenditure,” according to the Washington, D.C.-based Tax Policy Center, costing “an estimated $260 billion in income and payroll taxes in 2017.”
The entrepreneurs, farmers and others in the individual health insurance market don’t benefit from this preferential tax treatment. A federal reinsurance program, though costly, would help address this unfairness. By keeping coverage costs stable, a reinsurance program could also buy time for Congress to weigh other reforms — such as allowing consumers under 65 to buy into Medicare — that could be more affordable.
Minnesota Republicans merit praise for enacting a politically-doable solution to aid consumers, even as congressional Republicans’ efforts to repeal the ACA destabilized the marketplace and contributed to higher costs. Congress should follow Minnesota’s pragmatic lead.