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Legislative News and Views - Rep. Greg Davids (R)

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RELEASE: Davids: Walz administration analysis confirms reinsurance will lower premiums

Wednesday, March 06, 2019

ST. PAUL, MN—Analyses prepared by Minnesota Management and Budget (MMB) — one of Governor Walz's state agencies — show that an extension of the state's reinsurance program "is expected to reduce premiums in the individual market in plan years 2020-2022" and premiums "could be as much as 20 percent lower due to the reinsurance program."

The statements are contained in the 2/28 and 3/5 MMB fiscal notes on page 10. Both fiscal notes include the statement that the reinsurance program is "expected to reduce premiums," and the updated fiscal note released on 3/5 adds on Page 10, "[t]he Department has recently learned that individual market premiums could be as much as 20 percent lower due to the reinsurance program." A 20 percent reduction would bring down premiums for all Minnesotans on the individual market, compared to Governor Walz's proposal which would cost significantly more state money and only help those who do not qualify for premium tax credits. Rep. Greg Davids, R-Preston, who chief authored the reinsurance bill in 2017, urged Governor Walz to reconsider his support for reinsurance as part of his supplemental budget proposal.

"Minnesotans are still struggling with premiums that are too expensive, and we know this is a tool that will lower health care costs and bring more health plan options into the market," Rep. Davids said. "Governor Walz's own agencies confirm that this will work, it will be cheaper than what he is proposing, and will help more people. I am begging the governor to reconsider his stance on reinsurance, and do right by Minnesotans—failure to extend this program would result in higher premiums and throw our individual market back into chaos."

The fiscal note analyses were prepared for SF761, which is expected to be passed out of the Senate Finance Committee Wednesday morning, would extend reinsurance for three more years. Republicans approved a reinsurance program in 2017 that has earned national recognition and has successfully held premiums steady or reduced premiums for Minnesotans two years in a row. While the bill is currently moving through the Senate, the Democrat-controlled House has given the bill just one hearing, and Governor Walz did not include reinsurance funding in his recently-released budget proposal. The House DFL held a hearing last month, but the bill has since stalled and not advanced since being referred to the House Health and Human Services Finance Division.

The fiscal note went on to highlight that the reinsurance program may be so successful that it is cutting off operational funding for MNsure, the state's insurance exchange under the Affordable Care Act. The 2/28 fiscal note states "Reductions in premiums as a result of reinsurance would also reduce MNsure’s premium withhold revenue. The premium withhold revenue reductions that would result from this bill put at risk MNsure’s ability to effectively execute essential business, customer service, and outreach functions." The 3/5 fiscal note states "Reductions in premiums as a result of reinsurance also reduce MNsure's premium withhold revenue. MNsure is not able to absorb additional years of reinsurance and the associated reduction in revenue to MNsure if reinsurance is extended. "MNsure is funded primarily through a 3.5% tax on all health plans sold in Minnesota, so a reduction in premiums would lead to reduced tax revenue.

"I hope my friends on the other side of the aisle will recognize that not passing an extension of reinsurance would be devastating. Minnesotans—especially those in Southeast Minnesota—can't afford another round of 40, 50, or 60 percent premium increases. We have to get this done, or Minnesotans will be the ones who pay the price," Rep. Davids concluded.