Today, Senate Republicans will again deliver on their ongoing commitment to Advance Minnesota’s health care system with the second major reform bill in three months, the Minnesota Premium Security Plan. Senate File 720 will stabilize the individual market by creating a new reinsurance program estimated to lower 2018’s expected premiums by 21-23%, according to a Minnesota Department of Commerce analysis.
“Minnesota used to have a reputation as a health care leader, but MNsure has driven our health insurance market into crisis,” said the bill’s author, Sen. Gary Dahms (R-Redwood Falls). “The emergency premium relief we passed early in session was critical to begin our long road to recovery, and the Minnesota Premium Security Plan is the next step to stabilize the individual market.”
Just 2% of the people in the individual market generate 40% of the total medical bills, which forces up premiums for the rest. The Minnesota Premium Security Plan uses a proven reinsurance structure to stabilize the individual market by absorbing the cost of unusually high medical bills, thereby lowering premiums for the rest of the market. The Minnesota Premium Security Plan works like this:
- Insurers pay 100% of an individual’s benefit costs up to $45,000 per year.
- Once an individual’s benefit costs reach $45,000, the state steps in and pays 80% of further costs up to $250,000. The insurer continues paying 20% of these costs.
- If the individual’s benefit costs exceed the reinsurance cap of $250,000, the subsidy drops off and the insurer pays the 100% of the remaining costs.
The proposal does not require any new revenue and will be paid for with existing dollars and a federal state innovation waiver.