Minnesotans ought to pause for a moment of appreciation after national headlines last week warned that health insurance “premiums will soar” from the latest misguided effort in Washington, D.C., to repeal and replace the Affordable Care Act.
More than in most states, policymakers here took advantage of the opportunities to innovate that President Barack Obama’s health reform law provided. One worthy result is a revamped MinnesotaCare program that may pay an unexpected dividend: insulating consumers in the state’s private market from 20 percent premium price hikes due to the uncertainty over the Obama law’s “cost-sharing reduction subsidies,” or CSRs.
This state innovation ought to be rewarded by the Trump administration as it considers its next steps on health care. Unfortunately, there’s a risk that this pioneering reform could be undercut by Health and Human Services Secretary Tom Price. The state’s congressional delegation must not let this happen.
The Tuesday report that put a timely spotlight on CSRs’ link to coverage costs comes from the respected Congressional Budget Office. CSRs are one of two key ways that the Obama law helps people who buy on the individual market — meaning they don’t get coverage through a job or a public program — pay for private health insurance. Those who qualify get tax credits to help pay monthly coverage costs. CSRs are also available to offset high deductibles and other out-of-pocket expenses.
The Obama law requires insurers to provide CSR aid to consumers, with the federal government reimbursing insurers monthly. As congressional efforts to repeal the Obama law have faltered, the Trump administration has threatened to stop these payments, mostly out of spite, it seems.
Insurers wouldn’t simply swallow these losses but likely would recoup the dollars by increasing the cost of individual policies. The CBO estimated a 20 percent increase nationally for popular individual plans in 2018 if CSR aid ends. The Trump administration announced last week that it would reimburse insurers this month, but the aid’s future remains uncertain.
The good news is that Minnesota’s private insurance market is shielded from potential hikes more than most states’. The reason: Consumers who would be eligible for CSRs generally aren’t buying private plans, meaning insurers here wouldn’t have to raise prices to recoup losses. Instead, these consumers are covered through the state-run MinnesotaCare program.
MinnesotaCare serves about 90,000 people who make too much for Medical Assistance but not enough to comfortably afford private insurance. While the program predates the Affordable Care Act, the 2013 Legislature and Gov. Mark Dayton’s administration pushed for changes that allow it to capture millions of additional federal dollars to pay its costs. The CSR reimbursements are part of this federal funding stream, providing around $103 million a year toward MinnesotaCare’s bottom line. Only one other state — New York — has employed this strategy.
Unfortunately, the threat to defund CSRs could undermine MinnesotaCare finances. Experts differ on whether the state could make use of another mechanism to make up for the lost funds, but losing any aid would not be good. Cutting off these funds could also discourage other states from innovating, which is why Price should protect programs like MinnesotaCare. Through a spokeswoman, Price declined to comment last week on what the agency’s MinnesotaCare policy will be.
Neither consumers nor insurers are well-served by the month-to-month uncertainty over CSR reimbursements. These funds help stabilize the private market and allow state innovations like MinnesotaCare to flourish. Sen. Lamar Alexander, a Tennessee Republican, has sensibly said Congress should simply appropriate the funds rather than leave it up to the administration. Minnesota’s three Republican House representatives should lead on this, too.