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'It is pretty tough to swallow': Feds pull $100 million from Minnesota's reinsurance program

Sen. Tony Lourey (speaking) addresses members of the Senate Committee on Health and Human Services Finance and Policy Wednesday, Dec. 5, 2018 in St. Paul. Dana Ferguson / Forum News Service

ST. PAUL — Minnesota lawmakers on Wednesday, Dec. 5, learned the state could get $100 million less than originally expected to help offset the cost for the state’s reinsurance program.

While the news won’t impact coverage, premiums or rates for 2018 or 2019, it will hit state coffers.

Federal officials in October of 2017 projected a $184 million payment to Minnesota for 2019. But in a Nov. 30 letter to state commerce officials, they said Minnesota would receive $84.8 million.

In the letter, a director from the Centers for Medicare and Medicaid Services didn’t immediately offer a reason why the funding changed.

“It is pretty tough to swallow,” Sen. Tony Lourey, D-Kerrick, told fellow lawmakers on the Senate Committee on Health and Human Services Finance and Policy as he broke the news.

Other committee members expressed frustration about the change and said they would press for answers about the feds’ reasons for altering the projection.

“The federal government can do this to Minnesota’s insurance program because we turned over our nation-leading health care to the federal government,” said Committee Chair Michelle Benson, R-Ham Lake. “We are in a new paradigm in health care.”

Minnesota in 2017 passed a law that set up the reinsurance program, a financial safety net for insurance providers, in an effort to stabilize the individual market and drive down premiums. It is slated to expire in 2020 and likely to be a topic of intense debate during the 2019 legislative session.

News of the slash in expected funding came minutes before the committee was set to weigh a presentation on the potential impact of allowing those who buy non-group insurance for themselves or their families to buy into MinnesotaCare.

The proposal, oft-mentioned on the campaign trail by Democrats, would allow people on the individual health insurance market to buy a policy from MinnesotaCare. The state-sponsored health insurance plans cover needy people who don't qualify for Medical Assistance.

Republicans on the panel pointed to an analysis from a Blue Cross Blue Shield-appointed actuary and said the buy-in option could price some middle-class families out of the market and drive up costs. The model they referenced was based on a Massachusetts buy-in option.

Democrats, meanwhile, said the figures were skewed and asked Benson to hold a full hearing on the subject.

Benson said she wasn't planning to hold a hearing on the MinnesotaCare buy-in proposal, but would be willing to do so if Governor-elect Tim Walz asked.

"If the governor requested it, I would give the same courtesy as I gave to Gov. Dayton,” Benson said.

Follow Dana Ferguson on Twitter @bydanaferguson, call 651-290-0707 or email