Gov. Mark Dayton and several DFL lawmakers are proposing a dramatic expansion of the state's MinnesotaCare program, hoping to create a "public option" that would offer health insurance for any Minnesotan struggling to find and afford coverage.
Announcing the plan Thursday, Dayton said the buy-in option — removing MinnesotaCare's income restrictions and allowing anyone to purchase coverage — is "the single most significant step that Minnesota can take" to shore up its unstable insurance market for individuals.
"It's not working for Minnesota," Dayton said. "Maybe it's working for the insurance companies, but it's not working for Minnesotans."
Dayton estimated that 100,000 Minnesotans, many of them farmers, would benefit from having public competition to private health plans. MinnesotaCare is a state-subsidized insurance program, created in 1992, aimed at people who earn too much for programs such as Medicaid but struggle to afford private coverage.
Dayton's proposal follows a startling report last week that showed that the share of Minnesotans without health coverage jumped from 4.3 percent in 2015 to 6.3 percent last year — the first rise after years of decline — despite a strong economy and labor market.
Republican legislators have generally opposed "MinnesotaCare for all," which was first proposed by DFLers last year. Senate Deputy Majority Leader Michelle Benson, R-Ham Lake, said that despite its surface appeal, the expansion could hurt doctors because MinnesotaCare pays them at lower rates than commercial insurers do. Privately insured patients might also wind up paying more to compensate, she said.
"Remember the last time someone told you that health care was going to be cheaper and easier?" Benson said. "That didn't work."
The proposal also faces resistance from Minnesota hospitals and doctors, who anticipate patients dropping private insurance for public options that pay less.
Dayton tried to address those concerns by proposing that the buy-in program would reimburse providers at federal Medicare rates, which generally exceed the Medicaid rates the state uses for existing subsidized programs.
Even so, the Minnesota Medical Association would support only a limited expansion of MinnesotaCare, to counties lacking private insurance options or to people paying exorbitant premiums, a spokesman said.
The Minnesota Council of Health Plans, which represents the state's biggest health insurers, also warned that the cost would be passed on to privately insured patients.
"[MinnesotaCare] underpays doctors and hospitals. Will they take less for providing the same service? If not, who is going to make up the difference?" said Jim Showalter, the council's president.
MinnesotaCare was created 26 years ago under Gov. Arne Carlson, a Republican. Its current income limit for enrollment is 200 percent of the federal poverty level, or $49,200 for a family of four.
Today the program covers 89,000 Minnesotans and is funded partly through a state tax on medical providers, which will expire at the end of 2019 unless lawmakers renew it. Like the much larger Medicaid program, which covers roughly 1 million poor and elderly residents, MinnesotaCare is largely supported by federal funding.
The expansion would benefit from MinnesotaCare's name recognition and the state's bargaining power over provider fees, but the buy-in program would be distinct. Minnesotans would purchase coverage using the MNsure health insurance marketplace and pay full premiums, though they could apply for federal tax credits.
The estimated average monthly cost per person would be about $469 — 13 percent lower than the average private plan last year, Dayton said.
The MNsure exchange launched in 2014, as part of the federal Affordable Care Act, to expand health insurance options to Minnesotans without workplace or government coverage. The exchange helped drive the state's uninsured rate to a historic low.
Since then, insurers have raised premiums or reduced benefits in plans sold on the exchange, or insurers have withdrawn from the individual market in certain sections of the state altogether, said Sen. Tony Lourey, DFL-Kerrick.
Minnesotans who consequently dropped coverage might return to the exchange to buy MinnesotaCare because they view it as a "trusted source," Lourey said.
"A big part of the degradation in the insurance landscape, the increase of uninsured in our state, has to do with people not thinking that the [current] options are working for them." Lourey said.
Minnesota Farmers Union President Gary Wertish threw his support behind the proposal, citing a farmer who pays $43,000 per year in premiums and deductibles and was under pressure to drop his insurance — despite the physical dangers of farming.
"That's what's happening out there," he said. "People are dropping [coverage], taking that gamble."
Jeremy Olson • 612-673-7744
89,000: Number of people currently covered by MinnesotaCare.
100,000: Estimated number who might use the buy-in.
$469: Estimated monthly cost per person for buy-in coverage.