Is the individual insurance market worth preserving?

After a long delay, the federal government approved the “innovation waiver” needed to implement the state’s $542 million reinsurance plan. Passed in 2017, the bill was meant to defray insurers’ costs for the most expensive patients while restraining premium spikes for individually purchased health plans.

But the waiver comes at a cost: In exchange for its approval, the feds want to chop $369 million from MinnesotaCare, the state’s low-income health plan. That has some, notably DFL gubernatorial candidate Rep. Tina Liebling, DFL-Rochester, questioning whether the waiver should have been accepted.

But there is an even more fundamental question: Is the private, individual insurance market in Minnesota worth preserving at all?

To answer that question, we went to two of the Legislature’s primary health-policy leaders.

Rep. Greg Davids, R-Preston, is the House Taxes Committee chair and author of the 2017 reinsurance package, which the Commerce Department says prevented insurers from tacking on an additional 20 percent rate hike on 2018 individual plan premiums.

Sen. Tony Lourey, DFL-Kerrick, is the former Senate Health and Human Services Finances subcommittee chair and a legislative architect of the MNsure health exchange.

Both men think the individually purchased insurance market should be preserved. But they have very different ideas on how to keep it.

Rep. Greg Davids

Minnesota Lawyer: Is the private, individual insurance market in Minnesota worth preserving?

Davids: I need one word: Yes. The answer is yes.

ML: So then the question is why?

Davids: Because there are about 5 percent of Minnesotans in that market. It’s self-employed people, it’s our farmers, that access this market. And they need that market desperately. Obamacare has severely, well, almost destroyed it. So I think it’s worth saving, I think we need to get it back and I think we will.

ML: Reinsurance as passed is a two-year fix at best. One of the factors that made us ask whether it is worth preserving the self-purchased market is the prospect of having to keep passing bills like that. How do you address that question?

Davids: If you don’t have the individual market, then what is the alternative? We know that expanding MinnesotaCare is not an option. So what do you do for these folks? Out in rural Minnesota, there are counties today where Obamacare has totally destroyed the market. There are no carriers in several counties. Where I live, there are no all-access carriers. None. I mean, the American people were straight out lied to by Obamacare. So what do we do from here?

So yeah, reinsurance is a two-year deal. Hopefully they can sort some things out at the federal level to give us some direction. If Congress would just pass laws saying let the states take care of their own, that would be the best solution. Because we can figure it out, the feds can’t. The federal government and Congress is so tremendously dysfunctional, regardless of what party is in control. Send it back to the states.

ML: You say that making MinnesotaCare available to everybody, presumably through Gov. Mark Dayton’s public option, is not the answer? Why?

Davids: Because it would bankrupt the state. Various states that have tried to do something similar, and even the Democrats have said, don’t do this. [Colorado Gov. John] Hickenlooper in Colorado wanted to move that way. In Vermont, they went to move that way and they said no, this will cost more than the state budget.

Obamacare has almost totally destroyed the private market; it’s not quite there yet. I think it is worth preserving. So I’m going to do everything I can to preserve it.

ML: What changes are needed to preserve the market? Would it remain much the same as it is?

Davids: Not the same as it is, but the same as it was. In the past, you actually had a very vibrant private market. Everybody says you couldn’t get coverage before. Yes, you could.

You had the Minnesota Comprehensive Health Association, which took care of the folks who had [chronic] health issues and gave them a very good policy—it could not be priced more than 1.25 percent above the average rate. I had cases where you would put people on MCHA and it was actually cheaper than Blue Cross for just a regular plan.

So the way it was before is much, much better. And I think we have to work to try and get back there.

Sen. Tony Lourey

Minnesota Lawyer: Is the private, individual insurance market in Minnesota worth preserving?

Lourey: The individual market is worth preserving. And it is worth subsidizing.

If you think about it broadly, the individual market is about the only market that exists that, historically, hasn’t had major subsidies. What it has had is a framework where we have tried, with varying degrees of success, to segregate out more expensive and more involved patients to make it seem like [premium] rates were lower. But they are all part of the same pool to, tell you the truth.

There are several ways to address the rates. Reinsurance is one of them, and I have always maintained that reinsurance is a valuable market stabilization tool, but it has to be funded right. We funded this reinsurance program with one-time money out of the Health Care Access Fund, and that funding expires. There is only two years of it. And we did it at the expense of other populations—namely those in MinnesotaCare.

ML: Rep. Greg Davids told me that he thinks the Legislature will try to find a way to preserve the MinnesotaCare money.

Lourey: I am really glad to hear Greg said that. Because, you know, they have quit taking my phone calls, the Republicans. I have been trying to push them to work on their [congressional] team in Washington, D.C. I mean, Republicans are in charge of everything in D.C. And the DC crew made specific promises that MinnesotaCare would be held harmless.

That turned out to be a lie. The Trump administration reversed itself at the last minute and said [the federal waiver] would cost the state of Minnesota $369 million.

ML: You were worried about that outcome when the reinsurance bill was being considered in conference committee.

Lourey: I was very publicly worried about this very scenario. And now that it has come to pass, I have yet to see any real forceful public pushback from our Republican leadership in the Legislature. That’s very frustrating to me.

ML: So if the individual market needs to change to make it sustainable, what should it look like?

Lourey: It needs some sort of subsidies.

I think we have four options, each of them are far superior to the reinsurance program that we have right now. First, a reinsurance program that is funded correctly would be far superior and I could get onboard with it.

ML: Meaning a long-term, permanently funded reinsurance program?

Lourey: Yeah. I mean, reinsurance is a valuable tool. But it has to be funded the right way. If you want to herald stability brought about by reinsurance, I am going to follow up with a question—isn’t sustainability a hallmark of stability? I mean, what we passed is only two years of money that is then gone.

ML: So that’s one option.

Lourey: That’s one. Second, a MinnesotaCare buy-in is one that I think would be actually a fantastic option.

Third, a premium subsidy similar to [the 25 percent premium rebate] operating in 2017 would be far superior to what the reinsurance bill turned out to be. Truthfully, we could have done another premium rebate to help those individuals without all these federal interactions. I think that would have been a better option than what we have before us. And more palatable.

I’m trying not to be combative, but I am finding it more and more challenging.

The fourth option would be an ACA-style Minnesota tax break for populations above 400 percent of the federal poverty level. Actually, that one is probably the best.

ML: Is it also the least politically palatable on the other side?

Lourey: Well, Greg Davids authored it in 2016.