Reinsurance? The State of Minnesota Thinks It’s a Good Thing
The healthcare market in the state of Minnesota has been on a roller coaster lately. Premiums in the state have skyrocketed – in some cases, shooting up by as much as 59 percent. This has caused customers to dig even deeper in order to afford coverage or even forgo coverage altogether. Expensive health insurance claims have even forced big players like Blue Cross and Blue Shield to drop their individual plans in the Minnesota market. In an interview with NPR in June of 2016, Blue Cross and Blue Shield said, “based on current medical claim trends, Blue Cross is projecting a total loss of more than $500 million in the individual [health plan] segment over three years.”What percentage of claims are high-dollar enough that they send insurance companies into a spiral? Unbelievably, only 2 percent of high-risk patients can account for 40 percent or more of the medical bills submitted for claim on the individual market. In order to assist struggling insurance companies and provide lower premiums to consumers, the Minnesota legislature has been working on a bill that would reimburse insurance companies 50 percent for claims up to $50,000, up to $250,000 in claims. In the midst of negotiations over the bill, Minnesota Mark Dayton had requested that the plan include “reinsurance contingent upon receiving federal funding,” as well as a tax on the healthcare industry to cover the cost of the bill. The final version of the bill included his appeal to require federal funding for the plan. While federal funding will remove some of the financial burden, the state will likely cover most of the cost. Minnesota state senator Gary Dahms voiced his support for the final bill as it approached a final vote in the House and Senate.
“So now we have a marketplace that’s collapsed and we need to do something to bring that marketplace back,” he said to the Austin Daily Herald. “And this is one of the ways we can do that.”
The plan, budgeted to cost $271 million over the next two years, was finalized in both houses. It will be funded by the state’s general treasury, as well as a special health account. Now, as the bill has landed on Governor Dayton’s desk, it’s unclear whether or not he will sign it. Senate Majority Leader Paul Gazelka told Minnesota Public Radio that he has high hopes for the bill if it should be signed into law. “We’re blaming the health insurance companies and to me that’s a lot like blaming the referees in a big game that didn’t go well for us. They’re just taking in premiums and paying out losses,” he said. The legislature worked hard to move the bill through before insurance companies submit proposed rates to state regulators this year. All eyes are currently on the governor’s desk – as well as looking forward to an insurance market that they hope will be more stabilized in 2018.