Thursday, April 21, 2016

Proposed in Minnesota, an industrial-strength public option

Minnesota progressives and elected officials in the state's Democratic Farmer-Labor party (DFL) are yearning to get back to the future with MinnesotaCare, the state's excellent public insurance program for residents of low-to-moderate income who earn too much to qualify for Medicaid.

Prior to ACA implementation, MinnesotaCare was available to Minnesotans with incomes up to 275% of the Federal Poverty Level. In 2015, the plan was converted under the ACA into a Basic Health Plan, which qualified it for federal funding but cut off eligibility at 200% FPL. Former enrollees above that income level were sent to the ACA marketplace, where both premiums  and out-of-pocket costs are considerably higher.

A task force appointed by the governor recommended in mid-January that the state seek an ACA innovation waiver to restore MinnesotaCare eligibility to 275% FPL, with funding equivalent to the cost of federal marketplace subsidies for enrollees up to that income threshold. I wrote about that plan and its implications on healthinsurance.org in January. Its impact on the private plan marketplace and larger individual market would be fairly modest -- just 37,000 enrollees in the 200-275% FPL range are forecast -- but it would provide high actuarial value coverage to the majority of those who would otherwise be eligible for subsidies in the ACA marketplace if MinnesotaCare did not exist.

Last month, a more radical proposal was introduced in legislation in the Minnesota State Senate. I have a piece up about this proposal today on healthinsurance.org. It would offer MinnesotaCare at only modestly reduced actuarial value (if reduced at all) to anyone who wanted to buy in. While costs have not yet been closely calculated, the hope is that the premium would be in silver plan range:

If MinnesotaCare really is offered at a silver-range price to all comers, however, its effective discount would be so huge that it's hard to envision many buyers choosing anything else. It is a public option on steroids -- offering not just a low-cost version of the silver plans that are the marketplace's norm, but a richer benefit set
The would disrupt the ACA's rather skimpy benefit and subsidy structure, effectively giving enrollees 15-20 more points in actuarial value for their money. My questions: could the private market withstand such competition? If not, would that be a bad thing? 

1 comment:

  1. Thanks for covering this issue.
    Minnesota Care is community rated, I believe, so that premiums do not go up with age. It would be interesting to see if a plan like this can co-exist with private insurance.

    Personally I faVor a Medicare buy-in for the other states that do not and will never have a Minnesota Care program.

    But any buy-in must decide how to set the buy-in premium, and what happens if the plans lose money at the buy-in premium. I assume that government must be the reserve, and that is fine, but the potential for taxpayer involvement must be discussed.

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