Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

House passes reinsurance program aimed at stabilizing individual market

Rep. Greg Davids, left, listens as Rep. Clark Johnson responds March 13 to a question about HF5, which Davids sponsors. In part, it would create the Minnesota Premium Security Plan, which would provide reinsurance for health carriers operating in the state’s individual health insurance market. Photo by Paul Battaglia

The House passed a bill Monday that would establish a reinsurance program intended to help stabilize rising insurance premiums in the individual marketplace by providing health carriers a collective financial cushion.

Approved on a 78-53 vote, the Minnesota Premium Security Plan Act, or HF5, sponsored by Rep. Greg Davids (R-Preston), 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.

Nonpartisan fiscal staff estimate the plan could cost the state $384 million over the next biennium.

Because an estimated 2 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 said he believes the reinsurance system would result in a 17 to 18 percent decrease in individual premiums.

The bill heads to the Senate where Sen. Gary Dahms (R-Redwood Falls) is the sponsor. That chamber is expected to debate the bill Wednesday.

“This is about moving forward,” Davids said. “This is about getting a market stabilized for 2018.”

Under the 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 bill would redirect a number of funding sources into this new account, including a one-time $80 million transfer from the Health Care Access Fund, designed in 1992 to increase access to health care for low-income residents. It also includes a $70 million per year credit from the General Fund, along with taxes from insurance companies and HMOs.

Davids said at a news conference earlier in the day that there’s no guarantee the plan will keep insurance companies competing in the state, but added that “reinsurance programs work.”

Some DFLers disagree. Rep. Clark Johnson (DFL-North Mankato) unsuccessfully pushed a plan that would allow customers in the individual market to buy into MinnesotaCare, similar to something Gov. Mark Dayton proposed earlier this year. House Minority Leader Melissa Hortman (DFL-Brooklyn Park) touted her caucus’s plan as “sustainable” and less expensive than the GOP reinsurance bill.

The Republican plan costs “more than $700 million to prop up the individual marketplace in Minnesota through the private insurers,” Hortman said. “This is not affordable. This is not sustainable.”

“Our goal should be people should be able to get health care,” Rep. David Bly (DFL-Northfield) said. “Instead we’re talking a lot about how we have to keep insurance companies interested in offering people access to health care.”

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.


Related Articles


Priority Dailies

Governor signs special session budget bills into law
One week after a marathon special session that saw lawmakers pass most of the major budget bills needed to fund the state’s government over the next two years, Gov. Tim Walz signed the legislation into law.
After sunrise, the sun sets on 2019 special session
It took a grueling special session that stretched past sunrise, but Minnesota lawmakers completed their work early Saturday morning on passing a new two-year state budget.
House DFL outlines $47.8 billion 2020-21 spending proposal
The plan, dubbed the “Minnesota Values Budget,” would increase spending by $416.9 million over the 2020-21 biennium’s projected base budget.
Budget forecast: Projected surplus drops by almost $500 million, still tops $1 billion
The state has a $1.05 billion projected budget surplus for the upcoming biennium, Minnesota Management and Budget officials announced Thursday.
Walz budget would raise gas tax, emphasize education, health care
Education, health care and community prosperity are key targets for funding in the 2020-21 biennial budget proposed by Gov. Tim Walz.
Committee deadlines for 2019 unveiled
Legislators and the public officially know the timeline for getting bills through the committee process.

Minnesota House on Twitter