The Minnesota reinsurance program has officially gone into effect.
After two years of large rate increases in the individual market, a new state reinsurance program will help stabilize rates for Minnesotans who buy their own coverage in 2018.
Earlier this year, Minnesota lawmakers enacted a law creating the Minnesota Premium Security Plan, a reinsurance program designed to help stabilize premiums in the state’s individual market by providing a financial backstop against especially high-cost claims. The program is primarily geared towards people without employer-provided insurance. The Legislature’s plan called for spending $542 million over two years, but was contingent on federal approval.
The Commerce Department estimates that the new program will reduce premiums for 2018 by about 20 percent on average from what they otherwise would be without reinsurance.
*Note: neither the 2017 nor 2018 rates include the temporary, one-year 25 percent premium subsidy that the Legislature enacted in 2017 for those Minnesotans who do not qualify for federal tax credits that reduce premiums.
The new program recently received federal approval, which will allow Minnesota to use federal funds to cover a significant portion of the reinsurance costs and hold down rates for consumers. Funding is based on savings from premium tax credits that the federal government would otherwise pay to Minnesotans for higher rates without reinsurance. This federal funding is estimated to be $139 million in 2018 and $184 million in 2019.
Tim Wilkin, the lobbyist for the Minnesota Association of Health Underwriters, worked tirelessly with the MAHU legislative team to make this happen.
With the reinsurance program, Minnesota will be using public money to help offset the cost of the plans sold through MNsure, the state’s insurance exchange, and the broader individual market. Without the federal waiver, much of the savings would simply go to the federal government, since lower premiums would result in smaller federal tax credits that MNsure consumers receive under the federal Affordable Care Act (ACA).
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