Feds still considering Minnesota proposal to lower insurance rates as time running out

ST. PAUL-Minnesota's plan to lower health insurance premiums next year had just one little complication, but it's threatening to turn into a big complication: It requires approval from the federal government. And with time running out, that approval still isn't here.

The $542 million proposal, called "reinsurance," would keep premiums around 20 percentage points lower next year on the individual market than they'd otherwise be. That's where the estimated 4 percent of Minnesotans without employer or government coverage get their insurance. But if the federal government doesn't approve the plan - or waits too long to do so - many Minnesotans could pay thousands more per year for their coverage.

"Right now, about 160,000 Minnesotans will be paying more than they should in 2018 unless that waiver approval gets done very soon," said Jim Schowalter, president of the Minnesota Council of Health Plans.

Allison O'Toole, the CEO of the state-run MNsure exchange where Minnesotans can buy plans on the individual market, told Congress last week that anything but "quick federal approval" of reinsurance would "have a devastating impact on our overall market, and more importantly Minnesotans."

Minnesota's entire congressional delegation has supported the reinsurance plan. The state's representatives in Congress, Democrats and Republicans, sent a letter Friday to key federal agencies asking them to approve reinsurance "as soon as possible."

FEDS CONSIDERING REQUEST

Health and Human Services Secretary Tom Price and staff at the Centers for Medicare and Medicaid Services are considering Minnesota's request, filed in June. If Minnesota's reinsurance program is denied, then premiums will jump up by an average of 20 percentage points. If reinsurance is approved, some people will even see their premiums drop.

Under federal law, CMS has until after Christmas to make a decision - but that would be too late. Minnesota is required by law to announce 2018 individual market rates Oct. 2 - just over two weeks away. Open enrollment in Minnesota begins Nov. 1 and ends Jan. 14, just a few weeks after the federal deadline.

The monthslong wait for approval could represent the complexity of the issue and routine bureaucratic steps. But advocates of reinsurance are hoping it's not more than that, given President Donald Trump's public suggestion to "let Obamacare fail" instead of propping up the health insurance markets created by the 2010 Affordable Care Act.

"Listening to the president, we've certainly heard very explicit threats of sabotage of the marketplaces," said state Sen. Tony Lourey, DFL-Kerrick. "I hope cooler heads prevail and they grant this waiver."

The waiver got bipartisan support from Minnesota's congressional delegation and both parties in the state Legislature.

State Sen. Michelle Benson, R-Ham Lake, acknowledged that some national Republicans have discussed letting health insurance markets collapse but said "Republicans in the Minnesota House and Senate took a different approach."

"I hope the Trump administration will look at this waiver as an opportunity for breathing room for the individual market in Minnesota," Benson said.

IMPACT ON CONSUMERS

Even with reinsurance, paying for health care won't be easy for many Minnesotans on the individual market. Though rates will be lower than they otherwise would be, that still leaves them at roughly the same levels as last year - rates so high that the state passed an emergency premium relief plan.

That premium relief plan, which provides 25 percent premium discounts to around 95,000 Minnesotans per month, is expiring. That means many Minnesotans with ostensibly flat premiums will pay significantly more as their state discount vanishes.

This won't affect Minnesotans earning less than $48,240 for an individual or $98,400 for a family of four. They qualify for subsidy from the federal government that won't be going away.

All these financial crunches will be amplified if reinsurance is denied and rates go up even more from their current level.

"If reinsurance gets denied I think we have significant problems," Benson said. "I think the market is damaged significantly. There will be some people who just won't be able to afford the coverage."

The state could have a fallback option if its reinsurance plan is rejected: Take the $271 million per year reinsurance would have cost and spend it to reauthorize premium relief. Lourey called that a good "Plan B" that doesn't require federal approval. But Benson warned that the rejection of reinsurance by the Trump administration could create a "toxic environment" in the Republican-controlled Legislature.

MARKET NOT IN DANGER OF COLLAPSE

One reason Minnesota lawmakers put such a high priority on passing a reinsurance plan was the near-collapse of the individual market in the summer of 2016, after Blue Cross Blue Shield pulled out and other insurers threatened to do the same. That could have left many Minnesotans without any option for health insurance.

The insurers said they had been losing money from too-low premiums and increased the 2017 rates to compensate. Reinsurance was supposed to help stabilize the market by having taxpayers cover the cost of some of the sickest and most expensive customers.

Even if the feds deny reinsurance, the Council of Health Plans says all Minnesota insurers are likely to offer plans for 2018.

But more stable doesn't mean the individual market is fully healthy. Despite state initiatives such as the premium relief plan and reinsurance, Minnesota leaders say the state's insurance markets continue to be buffeted by Congress and the federal administration's actions.

"We can't expect things to be stable in Minnesota until we have stability in D.C.," Schowalter said. "And we're still waiting."