The House passed a bill on Monday, Mar. 13 that would establish a ‘reinsurance program’ which is intended to help stabilize rising insurance premiums in the individual marketplace.
The bill, sponsored by Rep. Greg Davids of Preston is designed to stabilize premiums by mitigating the impact of high-risk individuals by providing health carriers a collective financial cushion.
The bill was approved on a 78-53 vote.
Known as the Minnesota Premium Security Plan Act, or HF5, it would establish an insurance pool for health insurance carriers, governed by the Minnesota Comprehensive Health Association, a Legislature-created nonprofit.
Under the plan, carriers would share the burden of high-risk patients’ medical costs once claims hit a certain threshold.
“This is another significant step towards reversing the devastating impacts caused by MNsure and Obamacare and actually improving the health insurance market for hardworking Minnesotans,” said Davids, chief author of the Minnesota Premium Security Plan. “This legislation ensures that Minnesotans with the greatest medical needs will be taken care of while also potentially reducing premium rates by roughly 18 percent or more.”
Nonpartisan fiscal staff estimate the plan could cost the state $384 million over the next biennium.
Because an estimated two percent of high-risk patients incur approximately 40 percent of the individual market’s medical bills, which, in turn, causes insurance companies to increase premiums throughout their network, proponents believe a reinsurance system will address concerns for insurers and customers alike.
Davids believes a reinsurance model will help reduce rates by nearly 20 percent as a result of the legislation.
“By taking some of the pressure off the carriers, our hope is that more carriers will come in,” Davids said. “The goal is to provide more choice and to drive costs down so we can maintain an individual health care market in Minnesota.”
The bill heads to the Senate where Sen. Gary Dahms (R-Redwood Falls) is the sponsor. That chamber debated the bill on Wednesday, Mar. 15.
“This is about moving forward,” Davids said. “This is about getting a market stabilized for 2018.”
Under the proposed plan, once insurers hit $50,000 in claims, they would be eligible for a 50 to 70 percent reimbursement, funded by the established system, up to $250,000 in claims.
The reinsurance pool is the second major insurance overhaul passed this session in the House. The chamber previously approved a $327 million package that gave insurance companies funding to issue reimbursement checks to individual insurance market consumers.
According to the legislation, the Minnesota Premium Security Plan will be administered by the Minnesota Comprehensive Health Association (MCHA), which for over forty years ran a high risk pool that brought stability to the individual market and ensured the sickest Minnesotans had access to needed coverage. It will be funded using existing revenue sources.
The MCHA board, comprised of members of the public and health plan experts, will design payment parameters to mitigate risk, stabilize or reduce premium rates, increase participation, and account for federal funding available for the plan.
The board will have
authority to set:
• Attachment point beyond which costs are eligible ($50,000 or more).
• Coinsurance rate (between 50-70%).
• Reinsurance cap ($250,000 or less).
Parameters will be submitted to the Department of Commerce for approval. The board will also have the authority to audit eligible health carriers and is required to contract with an independent auditor for an annual reinsurance program audit.