Policymakers can keep helping area residents who buy their own insurance

February 17, 2019

Today, about 9,000 people in the greater Rochester area buy their own health insurance. They all get a break on premiums every month thanks to the Minnesota Premium Security Plan.

Unless policymakers in St. Paul re-up the program, also known as reinsurance, state regulators say premiums will increase dramatically for 2020.

This year and last, reinsurance lowered premiums by $113 a month for 40-year-olds in Olmsted County and the surrounding areas. Statewide, on average, premiums were 20 percent lower, according to the Minnesota Department of Commerce.

That reduction was just what lawmakers had planned.

The only surprise is that it looks as if it will cost about half as much as expected. Numbers presented to the group overseeing reinsurance showed that through December 2018, less than 50 percent of the available money was needed for medical bills.

Numbers presented to the group that is overseeing the program showed that through 75 percent of the year, just 31 percent of the available money was needed for medical bills. Of course, bills are still coming in for care people needed this past October, November and December, but the totals won’t come close to the $271 million appropriated in the original plans.

Every spring, health insurers ask the state to approve health insurance premiums for the coming year. Premiums for 2018 and 2019 didn’t include all expected medical bills for people who buy their own insurance. That’s because when a person’s medical bills are between $50,000 and $250,000, the state will pay at least half of the expense using reinsurance funds.

There’s no doubt reinsurance is a success. But some people do have doubts about whether it should continue.

The answer is yes. Here’s why:

• No new money is needed. The Legislature appropriated $271 million per year to fund reinsurance in 2018 and 2019. Lower enrollment than projected means there is a funding surplus that could be used to help people 2020 and 2021. Knowing that just $138.9 million is needed for 2018 should relieve policy makers’ concerns about how to fund the help in 2020 and 2021.

• It brings federal money to Minnesota. The federal government contributed $131 million for 2018 and an estimated $84 million in 2019.

• It already has federal approval. Federal regulators approved the plan through 2022, but state law only allows the program through this year.

Premiums for 2020 are being calculated now. The people at health insurance companies who put together rates need to know whether the state will help pay part of expensive medical bills or if people who buy their own insurance have to foot the entire bill.

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