Minnesota has embraced several voluntary aspects of the ACA:
- It runs its own marketplace
- It, along with New York State, run a Section 1331 Basic Health Program (BHP)
- It has a Section 1332 reinsurance waiver
The Section 1332 waiver mixes state funds with federal pass through funding to lower gross, pre-subsidy premiums. Lower gross premiums are valuable to folks who are not eligible for subsidies. This was a fairly large and potentially politically potent cohort prior to the passage of the American Rescue Plan (ARP) as someone earning 400% FPL would pay 9.86% of income for the benchmark silver plan while someone earning 401% FPL would pay the full premium which could be, if the household was large enough, old enough and likely rural enough, be a quarter to a third of family income. The ARP changed the subsidy table for 2021 and 2022 so that no one would pay more than 8.5% of family income for the benchmark silver plan. The ARP has addressed most of the affordability concern as a function of family income.
Last night, Minnesota’s legislature passed along a budget to the governor:
MN HHS budget bill sent to Governor
✔️12 month Medicaid coverage for new moms
✔️family glitch fixed
✔️one year extension of reinsurance w/coinsurance at 60/40
✔️financing of MNCare (ACA BHP) to replace loss of federal passthrough $ from reinsurancehttps://t.co/ptdHUKEZ4r— Dr. Lynn A. Blewett, MA, PhD (@LynnBlewett) June 29, 2021
I have a hard time understanding the policy rationale for not freezing the reinsurance program for 2022. I can get an abundance of caution that the ARP subsidies won’t be extended or made permament so having a reinsurance program on the books that can be readily re-activated in 2023 makes a lot of sense. However, lower gross premium levels leads to lower premium spreads which compresses affordability for subsidized buyers AND in the Minnesota context, lower gross premium levels also reduce the federal pass-through amount for their BHP program. The BHP is a per-capita block grant where the federal government sends Minnesota 95% of what they would have spent on individuals earning from 133% to 200% FPL on the Exchanges with the expectation that Minnesota can provide the same or better coverage for a little bit less federal expenditure. Lowering gross premiums lowers the federal funding share.
This is a head scratcher to me.
piratedan
so in plain financial English… they passed a law that is ultra cautious and costs a bit more to the folks of Minnesota than it needed to be?
SEMN Progressive
David is right. There is no logic to extending reinsurance. Minnesota has divided control of its legislature, the only state this year that has that. The Republican Senate really wanted to extend reinsurance despite the lack of a good reason to do so and the DFL (Democratic-Farmer-Labor) House gave the Senate that in exchange for some of its priority issues in a year when money was not as tight as expected.
dnfree
If you figure it out, let us know.
JML
@SEMN Progressive:
Pretty much. MN Senate GOP would have absolutely died on this hill and thrown the state into chaos (a government shutdown was nigh, and this one would have really hurt). Dems yielded on this to get the rest of the work done.
dnfree
@JML: thanks!
OpExMom
Makes sense politically. There’s a MN gubernatorial election next year and Dems didn’t want headlines about rising rates (which would have happened w/out reinsurance) to hit a month before the election. Yeah, I get the expanded APTC eligibility acts as a shock absorber but a lot of people don’t understand that.