A Bipartisan Model for Lowering Obamacare Premiums?

Some policy experts think Minnesota has one, but it could be a tough sell for lawmakers in other states.

The Minnesota state Capitol
Before the November elections, the rising price of health insurance premiums under the Affordable Care Act (ACA) dominated the news. Now that President Trump and the Republican Congress have vowed to repeal the law, the conversation has largely shifted to what premiums will look like if Obamacare ceases to exist.

But the "repeal and replace" debate doesn't do anything for the consumers struggling under high premiums now. One state has agreed on a way to give them immediate relief -- and it could be a solution for other states as well.

Minnesota approved a law last month, passed by a GOP legislature and signed by Democratic Gov. Mark Dayton, that will give a 25 percent discount on premiums to anyone who didn't qualify for federal ACA subsidies this year.

Minnesota experienced some of the most drastic premium hikes in the country. On average, they jumped 59 percent from 2016 to 2017. Most consumers haven't felt the premium spikes because more than 80 percent of people who use the ACA marketplace nationwide receive federal subsidies. In Minnesota, though, only 62 percent, or about 100,000 residents, qualify for them. 

That's because Minnesota had a lower-than-average uninsured rate when the ACA was enacted. More than 20 years ago, the state established the Health Care Access Fund, which works quite a bit like the ACA's Medicaid expansion. The fund, which still operates, offers lower premiums to people who don't qualify for Medicaid and to people who -- before the ACA came along -- couldn't afford insurance because of pre-existing conditions. It's funded through a tax on insurers and providers.  

To pay for the 25 percent discount, the state is tapping into its rainy day fund. Rainy day funds are typically reserved for drastic unforeseen circumstances, but Democratic state Rep. Laurie Halverson said "a lot of us felt like this was an emergency for our residents." 

While there is “nothing that should stop another state from pursuing something similar,” said Justin Giovannelli, a professor at Georgetown University’s Center on Health Insurance Reforms, “Minnesota appropriated some $300 million, and that’s significant for many states."

Four states -- Illinois, Nevada, New Jersey and North Dakota -- have no rainy day funds, and states as a whole saved less in 2016 than the year before.

What's more, it could be a tough sell for many lawmakers. It was in Minnesota.

While it was ultimately a bipartisan bill, Republicans initially argued that the state should increase competition, not bail out consumers, to tackle the high cost of health insurance.

To convince Republican lawmakers to agree to the bill, Democrats will let health maintenance organizations (HMOs) operate as for-profit institutions in the state. Up until now, HMOs in the state had to be nonprofits. Democrats say that kept insurers fair, but Republicans argue that allowing more flexiblity will increase competition and give consumers more plan options.

“The fact that we didn’t have [for-profit HMOs] up to this point was a core Minnesota value,” said Halverson, who sees the law as just the first piece of what many in the state hope to be an overhaul of its health-care system.

“After we work on insurance stabilization, we have to address the rising cost of care," she said. "I want us now to focus on true reform. This law is just the first salve."

Mattie covers all things health for Governing.