In 2017, to help stabilize high health insurance premiums in the individual insurance market, Minnesota established a state-run reinsurance program. This program, or the Minnesota Premium Security Plan (MPSP), reduces premiums and increases the affordability of health insurance in Minnesota’s individual health insurance market. As a result of the program, premiums for Minnesotans buying insurance on their own are about 20 percent lower on average than what they would otherwise would have been without reinsurance.
These lower premiums also lower the amount of money the federal government spends on tax credits provided to people who purchase coverage on MNsure. The federal government passes along these savings to Minnesota to help fund the state’s reinsurance program.
Reinsurance Program Authority
Minnesota received authority from the U.S. Department of Health and Human Services and the U.S. Department of Treasury to operate a state-run reinsurance program between 2018-2022 via a 1332 waiver. States must reapply to continue this program every five years. In July 2022, Commerce received permission to continue the Premium Security Plan through 2027.
Section 1332 of the Affordable Care Act permits a state to apply for a State Innovation Waiver to pursue innovative strategies to provide its residents with access to high-quality, affordable health insurance.
In 2017, Minnesota enacted a law that create the Minnesota Premium Security Plan. This state-based reinsurance program is designed to stabilize premiums in Minnesota’s individual health insurance market by partially reimbursing insurers for high-cost claims.
The new state law authorized up to $271 million per year in 2018 and 2019 for the reinsurance program, and it called for the Minnesota Commerce Department to submit a State Innovation Waiver application to secure partial federal funding. This waiver application was approved by the federal government in September 2017.
The state subsequently authorized funding for 2020 and 2021, and then again provided funding for 2022. As part of the legislation authorizing the 2022 funding, the legislature also directed the Department of Commerce to apply for a continuation of the state’s 1332 waiver.
On April 1, the Governor signed a law providing state authority to continue the reinsurance program through 2027. This bill also provided funding to support the program in 2023-2025.
The Departments of Health and Human Services and Treasury approved Minnesota’s request to continue the state’s 1332 waiver on July 13, 2022.
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