Minnesota’s efforts to limit spiking premiums for some insurance customers was mired in confusion Wednesday, with politicians from both parties expressing anger over the Trump administration’s handling of the matter.

Gov. Mark Dayton said at a news conference that he’s trying to get a definitive answer from officials at the federal Department of Health and Human Services on whether it would grant the waiver needed to operate Minnesota’s “reinsurance” program, an infusion of more than $500 million in state money aimed at lessening premium hikes in the state’s individual insurance market.

While federal officials have long signaled that the waiver would be forthcoming, Dayton said, the state still has not received official word. At the same time, he said federal officials indicated for the first time last week that federal tax credits that would flow through the new reinsurance program would likely be offset by a reduction in federal support for the state’s Basic Health Plan. The program, known as MinnesotaCare, provides insurance to low-income workers.

The lack of certainty is a problem for insurance companies that are running out of time to adjust their rates, the DFL governor said. Without an answer from Washington, he said it’s increasingly likely that Minnesota insurers will set individual market rates, on average, 20 percent higher than what customers would pay with reinsurance. State law calls for the public release of final 2018 insurance rates by Oct. 2.

“We’ve done everything we can to resolve this,” Dayton said. “I don’t want to scare people, we don’t want to scare people about what might happen in the future. But we can’t avoid that reality any longer.”

The DFL governor was not the only Minnesota politician upset over the federal lack of response. U.S. Rep. Erik Paulsen, a Republican, said that the administration must grant the waiver immediately and that it would be “wrong” to make corresponding cuts to MinnesotaCare.

“The agency misled our elected officials and undermined all of our good work by planning to cut the Basic Health Plan’s funds without notice,” Paulsen said, adding he was “appalled” and calling for immediate approval of the waiver and restoration of MinnesotaCare funding.

In a letter to Health and Human Services Secretary Tom Price, Paulsen wrote that MinnesotaCare “provides affordable coverage for more than 100,000 low-income Minnesotans.” Federal cuts would “ultimately increase health care costs statewide,” he added.

The Department of Health and Human Services did not respond to a request for comment.

The reinsurance program was an initiative of Republicans in Minnesota’s Legislature. It would direct $542 million in state funds in the next two years to help insurers defray the costs of particularly high health claims. Insurers said that would help avoid another year of major rate hikes for the approximately 5 percent of Minnesotans who get insurance on the individual market rather than through an employer.

“Preserving the individual market is jeopardized by the revelation that Minnesota may net a loss in total federal healthcare funding,” a group of four Republican state lawmakers wrote Wednesday in a letter to Price and Treasury Secretary Steven Mnuchin. “People’s livelihoods — their families, small businesses, homes — are at stake.”

State Sen. Scott Jensen, a Chaska Republican and a medical doctor, said a group of senators will discuss possible solutions on Thursday. He called the developments “extremely disappointing” and said lawmakers might have to consider a suggestion by DFL Sen. Tony Lourey to scrap the reinsurance program altogether if it means losing funds for MinnesotaCare in favor of direct rebates to individual market customers.

Since the reinsurance approval would come with some tax benefits to the state, the net federal funding loss to Minnesota’s health care programs would amount to $161 million a year. That’s because federal officials say that while Minnesota could get $208 million in additional federal help for people facing premium hikes, it could also see a $369 million cut to MinnesotaCare.

Dayton said state officials spent months working with the federal government to make sure the reinsurance program would not affect MinnesotaCare funding.

Emily Piper, the state commissioner of human services, said MinnesotaCare cuts would hit hardest in communities outside of the Twin Cities. Program eligibility is based on income; a family of four with an annual income of under $49,500 qualifies for MinnesotaCare.

“We’re talking about health care for people all across Minnesota, particularly in greater Minnesota,” Piper said. “The long-term stability of that program is put in jeopardy as a result of the federal government.”


Star Tribune staff writer Jennifer Brooks in Washington contributed to this story.