Minnesota House approves $384 million reinsurance plan

The Minnesota House voted Monday to spend $384 million on a program Republican lawmakers say will help stabilize the state's individual health insurance market by subsidizing insurance companies and reducing their risk from high-cost patients.

The bill's "reinsurance" plan would funnel money from state health care funds to insurance companies to help keep costs down. In turn, GOP lawmakers suggested, more insurance providers would want to offer plans in Minnesota, and the competition would help lower premiums.

Arguing vigorously against the plan were DFLers, who said it would drain needed funds from the state's low-income health program, reward insurance companies and provide no guarantee of savings for many individual insurance buyers.

With two exceptions, all members of the Republican majority present for Monday's debate voted for the bill, with many calling it a necessary second step toward fixing the state's health care market. The Legislature voted earlier in 2017 to spend $326 million in premium relief to people on the individual market.

The bill "will take pressure off the insurance companies and hopefully get more of them in the market," said Rep. Greg Davids, R-Preston, the bill's author. Davids said the bill likely would prompt premiums to drop by between 17 and 18 percent.

Some of the debate centered on funding sources for the new program. Part of the money — $80 million — would come directly from the fund that helps pay for the state's MinnesotaCare insurance program for low-income residents. Other portions of the cost would come from redirecting some future MinnesotaCare funding, as well as some tax money headed for the state's general fund.

House Minority Leader Melissa Hortman, DFL- Brooklyn Park, said Republicans are overspending, given the earlier approval of hundreds of millions in premium relief.

Most of the arguments made before the House's 78-53 vote were not focused on the bill lawmakers eventually approved. Instead, both DFLers and Republicans zeroed in on an alternative proposed by DFL lawmakers.

Originally put forward by DFL Gov. Mark Dayton, the plan would expand MinnesotaCare to more residents of varying income levels. People buying insurance on the individual market would choose between private insurers' plans or the state-run plan, and pay the full, unsubsidized premium for whichever plan they selected.

DFL supporters said the buy-in program would cost $12 million to start and would provide more options, especially those who live in areas where few health plans are offered.

Rep. Clark Johnson, DFL-North Mankato, wrote a bill for the buy-in program and got a majority of his DFL colleagues to sign on as co-authors. But Republicans who control the House committees where the bill would be heard declined to give it a hearing.

Johnson tried instead to offer the plan as an amendment to the reinsurance bill, proposing it as a complement to the GOP plan. Republicans rejected the idea, saying it would burden health care providers with more people in a program that offers smaller reimbursements than private plans. Rep. Matt Dean, R-Dellwood, suggested the idea was a "Soviet-style plan." Davids, the author of the reinsurance bill, dismissed the buy-in idea as "fluff dust."

Johnson argued that many of his constituents were interested in an expanded state program, and that it wouldn't require all Minnesotans to get government-run health care. Several DFLers said Republicans were inaccurately claiming that the buy-in program would harm rural clinics to make political points.

"We have become all politics and almost no policy when we talk about health care in this body," said Rep. Erin Murphy, DFL-St. Paul. "There have been a number of assertions made on the floor today that are flat-out wrong."

Two Republicans — Rep. Cal Bahr, R-East Bethel, and Rep. Eric Lucero, R-Dayton — broke with their party and voted no. Four DFLers voted in support of the bill: Rep. Laurie Halverson, DFL-Eagan, Rep. Paul Marquart, DFL-Dilworth, Rep. Gene Pelowski Jr., DFL-Winona and Rep. Duane Sauke, DFL-Rochester.

The Senate is expected to vote on its own reinsurance bill on Wednesday. Dayton has said he is open to the idea of a reinsurance program, but only if it is not funded with money intended for schools or elderly Minnesotans and if it comes with clear projections for cost savings for people facing higher premiums.