Lawmakers reach deal to extend buy-down of Minnesota health insurance premiums

Minnesota lawmakers have struck a $716 million deal extending the state's reinsurance program to prevent surging health insurance premiums on the individual market.

Key lawmakers in both parties announced the deal Thursday, one day before the deadline to request a waiver from the federal government. The Senate approved the measure on a 47-20 vote. The House is expected to pass the bill Thursday night, even as fractures emerged in the House DFL majority over the agreement.

The deal authorizes a five-year extension but funds it for three years. The program funnels money to insurance plans to cover the highest-cost Minnesotans, allowing rates to stay lower for the broader pool of people within those plans.

Supporters of the deal in both parties said insurance rates on the individual market would soar by at least 20 percent next year without one. Next year's rates are announced in October, right before the midterm elections.

"Until we find something that works better, this is what the answer's going to be," said state Sen. Gary Dahms, R-Redwood Falls, one of the lead negotiators. "This is what we find is working the best. It's the most stable."

Reinsurance started in 2017 as a temporary relief program. But as the cost of health insurance has soared in recent years, lawmakers have extended it multiple times. About 167,000 Minnesotans get their insurance on the individual market.

Tensions emerged within the House DFL caucus soon after the agreement became public. Democrats have criticized the program for sending hundreds of millions of dollars to insurance plans without addressing the high cost of the underlying care.

"I and many of my Democratic colleagues in the House consider reinsurance to be basically a bridge to nowhere," said House Health Committee Chairwoman Tina Liebling, DFL-Rochester. "We keep extending the bridge and it’s still a bridge to nowhere."

The final deal does not include a study for a public health insurance option, something Democrats had sought.

"I don’t know what our caucus is getting for reinsurance," said state Rep. Jen Schultz, DFL-Duluth, who is running for Congress this year.

Republicans and other Democrats said the deal was necessary to promote huge premium increases this fall. State Rep. Zack Stephenson, DFL-Coon Rapids, said the program saves hundreds or thousands of dollars per year, depending on the overall health of the person insured. Stephenson said he was citing data from the state Commerce Department.

"This is a significant savings," he said.

Reinsurance costs the state more than $200 million a year, factoring in both the payments to insurance plans and administration costs.