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Minn. health insurance markets have stabilized. Will they stay that way?

Whitney Nguyen processes open enrollment requests at the MNsure Contact Center in St. Paul, on Oct. 30. The open enrollment period runs from Nov. 1, 2018 to Jan. 13, 2019. Scott Takushi / St. Paul Pioneer Press
  1. PAUL — After six years of the state-run insurance marketplace MNsure, are Minnesotans ready for more or less government involvement in their health care?

MNsure just passed its first enrollment deadline on Saturday, Dec. 15, and for the second year in a row, rates are declining, access has been largely maintained and enrollments remain steady.

“I would call it very successful for us,” Nate Clark, MNsure CEO, said of the current signup season that runs until in mid-January and so far is outpacing last year.

“We measure our success by the number of folks who actually do enroll, that’s why we are happy to see this high number of signups,” Clark said.

The stability keeping consumers in the market didn’t happen on its own.

It took widespread government intervention and the commitment of hundreds of millions of dollars of taxpayer money to stabilize Minnesota’s individual insurance market.

Those interventions are set to expire at the end of next year unless lawmakers extend them, and some of the sources of funding that paid for them is also in question.

That means when the Legislature reconvenes next month — with a new Democratic House majority and a new governor, Tim Walz — they’ll have big decisions to make that could impact the health care of millions of Minnesotans.

How did we get here?

In 2010, a Democratic Congress approved President Barack Obama’s signature policy initiative, the Affordable Care Act, often called Obamacare. The aim was to slow the exponential rising costs of health care by getting more people insured through changes to the private market and the expansion of government programs.

The largest impact was on people who don’t get health care through their employer. Minnesota decided to run its own exchange and launched MNsure in 2013 as the federal marketplace came online for consumers.

Not everything went as planned.

The initial rollout was plagued with technical problems, in Minnesota and across the nation. When the system did work, Minnesota had a competitive individual market with some of the lowest premiums in the nation, and the rate of uninsured plummeted.

But it didn’t last.

Government leaders, experts and insurers nearly all underestimated the pent-up demand for medical services for the newly insured.

After the initial MNsure launch, the state’s insurers had more than $600 million in costs beyond what they had collected in premiums, according to data the Minnesota Council of Health Plans presented to lawmakers in October.

In order to stem their losses, insurers increased rates dramatically, throwing the individual market into turmoil. The number of people in that market has been cut in half to about 150,000 people since Obamacare launched because consumers have gone on employer plans, gotten government insurance or have been priced out of the market.

Many consumers may not have liked the increased government intervention in health care that Obamacare brought, but many of its provisions proved popular. Consumers supported things like mandatory coverage for pre-existing conditions, no-cost preventive care, allowing children to stay on their parents’ health plan until age 26 and prohibiting insurers from dropping customers who got sick.

What many politicians and consumers didn’t like was a key tenet of the Affordable Care Act — nearly everybody had to have insurance or pay a penalty. That way, with both sick and healthy people in the market, insurers could balance their risk.

President Donald Trump and Republicans in Congress repealed that provision in 2017. So far, it has not had a catastrophic effect on insurance markets.

How did government intervene?

Minnesota lawmakers did two big things to bring down individual insurance rates, although many argue rates are still far from affordable for many residents.

First, they approved $312 million worth of state spending to give customers who didn’t qualify for tax breaks through the Affordable Care Act a 25 percent rebate on their insurance premiums in 2017. The one-year rebate program only spent about $200 million of that funding.

Next, lawmakers created one of the nation’s first reinsurance pools. The idea was to help insurers cover the cost of their most expensive patients so they wouldn’t jack up premiums on everyone else.

Under the plan, insurers would get government aid for 80 percent of the costs a patient incurred between $50,000 and $250,000. The Legislature approved $542 million in funding for 2018 and 2019 and the state also gets help from the federal government.

The measure won approval in 2017 with some bipartisan support, but it was favored more by Republicans than Democrats. DFL Gov. Mark Dayton allowed it to become law without his signature, referring to reinsurance as a giveaway to rich insurance companies.

Despite criticisms, reinsurance has had a big impact. Individual market insurance rates have fallen two years in a row.

Other states have since emulated Minnesota’s effort, Commerce Commissioner Jessica Looman told lawmakers earlier this fall. “Reinsurance is a place a lot of states are looking at to stabilize their market,” she said.

Lawmakers were frustrated in early December when they learned the federal funding for the program would be cut by $100 million next year. That money is essentially how the state recaptures what residents would have received in federal tax breaks had the reinsurance program not brought down rates.

Jim Schowalter, CEO of the Minnesota Council of Health Plans, which represents the state’s seven largest nonprofit insurers, says there is evidence that the reinsurance program will not spend all the money state lawmakers allocated for 2018 and 2019 even with the federal cut.

“It would be the ultimate bang for the buck if we were getting a decrease in premium and spending less than we thought for the result,” Schowalter said.

He noted that final numbers for 2018 wouldn’t be available until sometime next year. But he insisted he’s “not alarmed” by the proposed cut in federal money for reinsurance.

What happens next?

After repeated failed attempts at the federal level to repeal and replace the Affordable Care Act, health care was a key campaign issue in races for state and federal offices.

Republicans vowed to implement more free-market solutions to keep insurance rates down while Democrats largely focused on a proposal from Dayton to increase access to the state’s insurance program for the working poor — MinnesotaCare.

In November, Democrats won control of the state House and retained the ­governor’s office while Republicans prevailed in a special election to keep their one-seat majority in the Senate.

Late Friday, Dec. 14, U.S. District Judge Reed O'Connor in Texas found the Affordable Care Act invalid on the basis of the political and legal history of a few key provisions. O'Connor decided that once Congress repealed the tax penalty that enforced a mandate that most Americans get health insurance, the whole law became invalid. The judge did not issue any injunction in the case, meaning that in the short term, nothing will change in health care services or insurance while the courts consider the issue.

When lawmakers return to the Capitol next month, they’ll certainly debate what government can and can’t do to further stabilize insurance rates. The “MinnesotaCare buy-in” has support from House Democrats and Gov.-elect Walz, but its fate is uncertain in the GOP-led Senate.

The chamber’s health committee gave a sneak peak at the debate Dec. 5 when a Blue Cross and Blue Shield analyst argued expanding MinnesotaCare would eventually lead to higher premiums for the middle class and more people becoming uninsured. Democrats were critical of the study, saying that it was one-sided and missing some information.

Republicans are likely to make the case for extending the reinsurance program beyond 2019. Insurance ­companies like that idea because it offsets some of their highest-cost patients without introducing new competition.

Finally, there’s another health insurance policy issue that needs lawmakers’ attention: a 2 percent tax on health care providers that is expected to raise $692 million next year before it expires.

The money goes into a health care access fund that helps pay for a large variety of programs including reinsurance, MinnesotaCare and other efforts to keep health care affordable and accessible.