Legislative leaders sound alarm on individual health insurance costs

Legislative leaders of both parties say the increases announced last week on individual health care policies have put the state into a crisis.

“I hope that people see the flashing red lights because this is an emergency situation,” said Commerce Commissioner Mike Rothman to a packed legislative oversight hearing.

The market on individual health insurance plans in Minnesota is small, only five percent.  But after two years of high claims and massive losses in the pool, the state’s largest provider Blue Cross announced it would no longer provide individual coverage in 2017.  Fearing a mounting high-risk pool, the remaining individual providers this summer told the Department of Commerce they too would pull out, which threatened the complete collapse of the individual health insurance market. Only when regulators agreed to enrollment caps and premium increases did the seven remaining underwriters agree to stay in the market, both on the MNsure exchange and through private purchases.

On September 31st, Rothman announced premium increases of 50 to 67 percent. Individuals who sign up through MNsure are eligible for federal tax credits to bring down the costs, but those who don’t qualify for MNsure or don’t enroll in time to beat the cap limit could be left without federal subsidies or insurance.

“Quite frankly, Minnesotans are in a health care crisis right now,” said House Speaker Kurt Daudt.

Daudt and Republican caucus leaders offered a package of legislative solutions to try and stabilize the crisis.  Among the proposals was reducing the tax on healthcare plans sold through the MNsure exchange. Those policies are currently taxed to pay for the administrative costs of MNsure.  Republicans argue the tax reduction would save $22 million over three years. Democrats have been opposed to any MNsure tax reduction in the past, saying it would gut the program. 

Republicans are also calling for the state to request a series of federal waivers from the requirements of the Affordable Care Act, also known as Obamacare. One waiver would cancel the federal income tax penalty for not buying an individual plan on the health care exchange. The other waiver would allow Minnesotans to apply the federal tax credits to policies bought outside of the exchange. Finally, Republicans say they want legislation to scrap MNsure all together.

Speaker Daudt stopped short of calling for a special legislative session, but said the crisis needs immediate action. 

“The fact that Minnesotans will be without coverage on January first is unacceptable and we need to take action before the next regular session,” he said.

A spokesman for Governor Dayton says the governor is exploring options, but would not consider calling a special session before the November elections.

“We also agree that we need to sit down tomorrow and solve this crisis,” said House Minority Leader Paul Thissen.

At a meeting of the MNsure Oversight Committee at the Capitol on Wednesday, Commerce Commissioner Rothman and Health Commissioner, Dr. Ed Ehlinger promised to work with lawmakers immediately on finding solutions.  Rothman says one idea worth exploring is creating a reinsurance coverage plan for underwriters to guard against excessive economic losses.

On the state of the crisis facing the state, Rothman told lawmakers, “I think this calls for urgent action.”