Bipartisan Reinsurance Bill Projected to Reduce Premium Costs by 17-18 percent
ST. PAUL – The Minnesota House of Representatives has approved the Minnesota Premium Security Plan (HF5), which establishes a state-based reinsurance program on a bipartisan vote of 78-53. This program is designed to stabilize premiums by mitigating the impact of high-risk individuals, or those who are the most sick, on the individual health insurance market. According to Minnesota Management and Budget, the proposal is estimated to reduce premiums by 17-18 percent.
“Woodbury families and small business owners who purchase coverage on the individual market are struggling to afford out-of-control premiums that continue to rise every year,” said Rep. Kelly Fenton, R-Woodbury. “This legislation is a step in the right direction. The Minnesota Premium Security Plan is estimated to lower rates by 18 percent or more, help stabilize the individual insurance market, and ensure that the sickest Minnesotans continue to have access to the coverage they need.”
Prior to the Affordable Care Act, Minnesota had a nation-leading health insurance safety net program. Today, Minnesota’s individual insurance market is a third as large and twice as sick as it was before Obamacare.
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. The Senate is expected to pass a similar proposal in the coming days.