Monday, January 18, 2016

Minnesota to consider extending public health insurance to most of those eligible for ACA subsidies

An update to my article about MinnesotaCare, Minnesota's public insurance program that in 2015 was converted into a Basic Health Plan under the ACA, serving residents with incomes up to 200% of the Federal Poverty Level:

On Friday, the state's Health Care Financing Task Force did vote (as my prior piece anticipated) to recommend extending MinnesotaCare eligibility up to 275% FPL -- which had been the eligibility cutoff before the ACA. That would take care most of those who would otherwise be eligible for subsidized private plans under the ACA.. The task force split along partisan lines, however, with no Republicans voting for the change, which would entail applying to HHS for an "innovation waiver" to alter the ACA subsidy structure (MinnesotaCare would be the only option for insurance seekers up to 275% FPL, as it now is for those with incomes up to 200% FPL).

As Republicans control the state's House of Representatives, the change is unlikely to happen this year. Republicans would go the other way and replace MinnesotaCare with subsidized private plans.  One option before the task force was to sweeten the ACA's private plan subsidies for those in the 200-275% FPL range to a level comparable to what MinnesotaCare would offer. That would cost the state considerably more than extending MinnesotaCare to 275% FPL. I don't know whether Republicans on the task force endorsed the sweetened-subsidy option or just want to go with an unvarnished ACA subsidy structure.

Taking an estimated 40,000 or so subsidized private buyers out of the state private plan exchange, MNSure, and putting them in MinnesotaCare would leave the already-underfunded exchange really strapped. The task force therefore recommends swapping the 3.5% tax on insurers for plans sold in the exchange for a 1% tax on all individual market plans sold in the state (over three quarters of individual market plans sold in Minnesota are sold off-exchange). Republicans oppose that change too.

MinnesotaCare's largest funding source is a 2% tax on healthcare providers that sunsets in 2019. The task force recommended ending the sunset, making the tax permanent. Republicans object to that because, you know, tax increases (making a temporary tax permanent is a tax hike in their lexicon).

The state is likely to maintain this year's status quo in 2016, with the election determining whether MinnesotaCare is expanded or abolished. It's a well-regarded program that launched in 1992, with a broader provider network than most state Medicaid programs.

One note on the proposed expansion: While MinnesotaCare would provide coverage with an actuarial value of 87% to residents with incomes in the 201-250% FPL range, the AV would drop to 73% for those from 251-275% FPL. That's a lot of cost-sharing for those upper-income enrollees: in ACA exchanges, AV 73%, offered with silver plans to enrollees with incomes from 201-275% FPL, usually means a deductible in the $1500-2000 range. Since MinnesotaCare is a public program, paying something like Medicaid rates to nonprofit managed care providers, I'd be curios to see the extent to which the lower cost of care translates to smaller deductibles and copays at AV 73%.

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