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New legislation aims to reduce insurance premiums

The Minnesota House of Representatives has taken another step toward addressing rising health insurance premium costs by approving legislation that could reduce individual premiums.

The Minnesota House of Representatives has taken another step toward addressing rising health insurance premium costs by approving legislation that could reduce individual premiums.

We're seeing the dramatic increases in the individual market right now because there are a large number of people in poor health who are very high users, which drives up the cost for everybody. This stresses the entire system and forces the remaining members of the health insurance pool to pay higher rates.

Reinsurance kicks in for sick Minnesotans once they have reached a certain level of health care needs and expenses. Under this proposal the state covers that amount, which provides a ceiling total that the person can put on the entire insurance market.

According to the legislation, the Minnesota Premium Security Plan will be administered by the Minnesota Comprehensive Health Association (MCHA), which for over 40 years ran a high risk pool that brought stability to the individual market and ensured the sickest Minnesotans had access to needed coverage. It will be funded using existing revenue sources.

The MCHA board, comprised of members of the public and health plan experts, will design payment parameters to mitigate risk, stabilize or reduce premium rates, increase participation and account for federal funding available for the plan. Parameters will be submitted to the Department of Commerce for approval. The board will also have the authority to audit eligible health carriers and is required to contract with an independent auditor for an annual reinsurance program audit.

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Other states have been working to do this and they’ve been seeing reductions in the rates overall. We’re hopeful for similar success in Minnesota, and if the non-partisan projections are accurate, it could be double-digit decreases.

 

Minnesota’s individual insurance market is a third as large and twice as sick as it was eight years ago, and that passing the reinsurance proposal is just another step toward improving the overall individual health insurance market. Earlier this session, lawmakers provided premium relief to eligible subscribers and approved other reforms, such as allowing for-profit HMO’s to operate in Minnesota, which will improve health care options and drive down costs.

Recovering from the negative impacts of the last several years of health insurance reform is going to take a lot of time, and these are just the opening steps in that process. We’re in what many health care professionals have called a ‘death spiral’ when it comes to health insurance, and we are trying to turn that spiral around, but it’s going to take some time.

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