Minnesota’s Falling Health Insurance Premiums Are Hardly a Sign of Obamacare Stability

“Minnesota health insurers propose lower premiums,” read a headline from the Minneapolis StarTribune late last week.

According to the reporting under the headline there will be some premium drops for individual health insurance plans in that state’s market, and supposedly this is a sign of stability. from Obamacare. “Health insurers in Minnesota’s individual market say they want to cut premiums next year — the latest sign of stability in a market that for several years was plagued by premium spikes under the federal Affordable Care Act,” the paper reported.

The thing is the “stability” is being created by a massive influx of state and federal tax dollars subsidizing this marketplace.

[mks_pullquote align=”left” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]…this does not solve the long term problems with the ACA, this reinsurance program will be a significant ongoing expense to the state of MN.”[/mks_pullquote]

I questioned North Dakota Insurance Commissioner Jon Godfread about the article, asking him what was going on in Minnesota and what it might mean for our state.

He pointed to this passage in the article which acknowledges the subsidies: “Enacted in 2017, the reinsurance program is in effect for 2018-19, with state law authorizing up to $542 million in spending. The program offsets 80 percent of an individual’s total annual medical claims costs between $50,000 and $250,000.”

“So basically the state is buying down the rates (its more complicated than that as it’s a reinsurance program, but the concept is the same, using state general fund dollars to absorb some of the high costs of individual plans),” Godfread told me in an email, adding that he believes the State of Minnesota is on the hook for $300 million of the cost of the program. “My comment back to that would be, if our ND Legislature authorized spending upwards of $300M to decrease health insurance rates in ND, I am confident we could find a way to do just that, but this does not solve the long term problems with the ACA, this reinsurance program will be a significant ongoing expense to the state of MN.”

He added that North Dakota isn’t likely to follow Minnesota down this path. “I do not believe an outlay of upwards of $100sM of state dollars to support a broken health care model is wise use of our dollars,” he said.

“MN will have to answer down the road how to continue to feed their reinsurance program,” he continued. “The solution is replacing the ACA with a bill that would authorize the states to take back control of our health insurance market, that is what we and many other states have been asking for.”

Recently Godfread’s office announced a study into ways the state could shape health insurance policies in ways to hold rates down without obligating taxpayers to big new spending. I interviewed him on my radio show about the initiative last month.