Significant changes were made to the state’s insurance program for the working poor during the 2013 legislative session
Jeff Nygaard has been enrolled in MinnesotaCare for nearly two decades. Last year the 59-year-old Minneapolis resident earned about $21,000 through freelance writing, part-time work at an art studio and modeling assignments. He currently pays $47 per month for his state-subsidized health-insurance coverage.
Over the years, Nygaard’s dealt with some significant health scares. A decade ago he suffered a stroke owing to a hole in the wall of his heart. That required surgery to fix the problem.
A few years later his elbow swelled painfully. He was diagnosed with cellulitis and treated with antibiotics. If untreated, the skin infection could have been fatal.
“I really would be up a creek without a paddle if I hadn’t had some kind of coverage,” Nygaard said. “If we didn’t have MinnesotaCare, I actually don’t know what I’d do.”
Creation of a state-run health insurance marketplace where individuals and small businesses can purchase products was the major focus of health care discussions at the Capitol in 2013. Much less attention was paid to changes to MinnesotaCare — the state’s two-decade old insurance program for the working poor, with about 130,000 enrollees currently — that will have ramifications across the state.
Most notably, the $10,000 cap on coverage of in-patient hospital costs was eliminated. That means that MinnesotaCare enrollees facing a significant medical crisis will no longer risk incurring huge debts in order to receive treatment.
In addition, the Legislature got rid of a requirement that individuals be without insurance for at least four months before they become eligible for the state-subsidized program. Another change involved the elimination of an asset test for MinnesotaCare enrollees. Previously, individuals couldn’t own property worth more than $10,000 and families couldn’t possess assets valued above $20,000. Houses, vehicles used for work and retirement funds were exempt from that cap. But now there will be no asset limits for individuals seeking coverage through MinnesotaCare.
The Legislature also reduced monthly premiums, which vary depending on an individual’s income. Currently those payments are capped at $100 per month; the average annual premium in 2012 was $357. Now premiums will be capped at $50 per month, with premiums reduced between 10 percent and 50 percent depending on household characteristics.
“It’s really a huge win for Minnesota,” said Sen. Tony Lourey, DFL Kerrick, chair of the Health and Human Services Finance Division. “It’s a really big deal.”
’The next generation of MinnesotaCare’
Many of these changes, which will take effect on January 1, 2014, are designed to bring MinnesotaCare in line with requirements of the federal Affordable Care Act (ACA). In fact, Minnesota is the only state in the country that’s received clearance from the federal government to have in place a program that will eventually morph into what’s known as a Basic Health Plan under the ACA. Essentially MinnesotaCare will become the Basic Health Plan in 2015, the earliest date allowed under federal regulations.
“We’re thinking about this as the next generation of MinnesotaCare,” said Scott Leitz, assistant commissioner of health care for the Minnesota Department of Human Services. “The changes that were made this year to MinnesotaCare really improved the program and made it much more consistent with where coverage is just generally going with public programs through the Affordable Care Act.”
Liz Doyle, associate director of TakeAction Minnesota, the liberal advocacy group, comes to a similar assessment.
“I think [the changes] mean a significant improvement in the quality and accessibility of MinnesotaCare,” Doyle said. “There’s several changes that make MinnesotaCare a better quality program for people that are going to be enrolled, and several barriers that prevent people from accessing MinnesotaCare now will be removed.”
Kate Johansen, the primary lobbyist on health care issues for the Minnesota Chamber of Commerce, points out that the state is attempting to bring its program in line with federal guidelines, even though the exact rules for the Basic Health Plan (BHP) won’t be known until 2015. “We’re kind of making a safe bet,” Johansen said. “A lot of the reforms to MinnesotaCare are smart anticipations of what are likely BHP requirements.”
The number of MinnesotaCare enrollees with incomes between 138 and 200 percent of federal poverty guidelines ($23,550 for a family of four) is currently about 35,000. That figure is expected to grow to nearly 200,000 by 2017. That’s in large part because of the federal mandate that will kick in next year, under which individuals will be fined if they don’t have coverage.
“Folks who maybe were on the fence about getting coverage, there will be more of those folks coming in,” Leitz said.
In addition, the program’s costs are currently split almost evenly between state and federal dollars. But starting in 2015, it’s estimated that the federal government will pick up 85 percent of the tab.
“It was easier to continue, and made more sense to us to continue, a program that was already in place, rather than dismantling it for one year and then bringing it back up again when Basic Health Plan funding was available to run MinnesotaCare,” Leitz said. “So we just bridged it for a year.”
Republicans question sustainability
Republicans voted unanimously against the changes to MinnesotaCare. But that’s at least in part because it was included in the health and human services omnibus bill, which they criticized for making $50 million in cuts despite tax increases of roughly $2 billion.
But Republicans are critical of some of the changes. Sen. Julie Rosen, R-Fairmont, the ranking minority member of the Health and Human Services Finance Division, thinks scrapping the asset test was a mistake. “That’s a problem,” Rosen said. “When it comes to preserving MinnesotaCare I felt strongly about doing that, but we did open doors quite a bit for it. … I just hope we can afford those major changes going forward.”
Rep. Jim Abeler, R-Anoka, the ranking minority member of the Health and Human Services Finance Committee, points to reductions in premiums as an example of misplaced priorities. “I think that was a nice thing to do,” Abeler said of the premium reductions. “But given the needs of the disabled community and the need for services on the long term care side, … I think that money would have been better spent in that niche.”
Johansen has a slightly different concern about lowering premiums. “Obviously it’s good for access and it’s good for increasing enrollment,” she said. “What’s bad about it is it further de-links people from consumer behavior. Even if you’re on a public program, that doesn’t mean you shouldn’t know how much your health care costs.”
Republicans also question some of the assumptions about how much of the tab the federal government will pick up for these changes given its crippling long-term debt problems. “I’m very concerned that it’s not going to be able to be sustained,” Abeler said. “It’s the old [habit of] making promises we can’t keep with money we don’t have.”
Nygaard points out that in the past, there was talk of cuts to MinnesotaCare and he was afraid that he might lose eligibility. He looked into what was available in the private marketplace, but determined that even catastrophic coverage was too expensive. “It was outrageously out of my reach,” he said.
While those options should improve with the roll out of the state-run insurance marketplace, Nygaard is relieved that MinnesotaCare looks like it will be around for the long haul. “I literally don’t know what I would do without it,” he said.