Governor Dayton’s proposal would expand choice and increase competition in individual health insurance marketplace, provide more affordable options for Minnesotans
Governor’s proposal would allow more Minnesotans to purchase MinnesotaCare health insurance coverage
ST. PAUL, MN – Tonight, during his seventh State of the State Address to a joint session of the Minnesota Legislature, Governor Mark Dayton proposed a set of reforms to make health coverage more affordable for Minnesotans who purchase their insurance on the individual market. Governor Dayton’s plan would allow Minnesotans to purchase their health insurance through a “public option,” by enrolling in MinnesotaCare coverage. MinnesotaCare was established in 1992 by Republican Governor Arne Carlson, and has historically had bipartisan support. Approximately 107,000 Minnesotans are enrolled in MinnesotaCare coverage for 2017.
Governor Dayton’s proposal, which he included tonight’s address, would expand health care choices for Minnesotans everywhere in the state, increase competition in the health insurance marketplace, and save Minnesotans money on their health care costs.
“This Public Option could offer better benefits than many policies, presently on commercial markets; more options for people to keep their doctors and clinics; and less expensive coverage than what is available today,” said Governor Dayton. “The Public Option will also guarantee that all Minnesotans have at least one good option available on the individual market, wherever they live.”
In addition to expanding eligibility for MinnesotaCare, Governor Dayton’s proposed health reforms include 25 percent premium reductions for 125,000 Minnesotans
who have experienced steep premium increases during this Open Enrollment period. The Governor’s plan would help improve the choice of doctors and clinics for Minnesotans, and increase transparency in the health insurance marketplace. Additional details about Governor Dayton’s proposals are included below. The Governor’s remarks regarding health reform, as prepared for delivery, are also included below.
How It Works: Making Health Care More Affordable
Since 2014, more than 250,000 Minnesotans have gained access to health insurance. Now, Minnesota’s uninsured rate is the second-lowest in the nation, with nearly 96 percent of Minnesotans covered. But steep premium increases and high deductibles have placed a big financial burden on far too many Minnesotans. Governor Dayton’s health reform proposals would provide hardworking Minnesotans more health care choices, encourage competition, and hold insurance companies accountable.
Providing More Affordable Health Care Choices for Minnesotans
· Giving Minnesotans a Choice for More Affordable Health Coverage – The Governor’s proposal would increase competition in the individual health insurance market by giving Minnesotans the choice to purchase another affordable insurance option. It would allow Minnesotans who earn more than 200 percent of the federal poverty level (i.e. a family of four earning over $49,200 per year) the opportunity to purchase MinnesotaCare coverage through MNsure. This would increase choices for middle-class Minnesotans, encourage competition, and ensure all Minnesotans have access to affordable coverage with a comprehensive network of health care providers across the state.
· Saving Minnesotans More Than $800 Per Year, On Average – Purchasing quality health coverage through MinnesotaCare is less expensive than buying coverage directly from a private insurer, because it leverages the buying power of more than 1 million Minnesotans enrolled in public plans. Minnesotans who purchase MinnesotaCare would get high-quality health coverage for approximately $469 per month, on average. That is more than 12 percent ($69) less than the average statewide premium of $538 for private insurance in 2017. Under the Governor’s proposal, families would spend on average $838 per person less in 2018 than in 2017 on their health insurance premiums.
· A Sustainable, Competitive Option for Minnesota – After a one-time startup investment ($12 million), the cost of Governor Dayton’s plan would be funded entirely by the premiums of Minnesotans who choose to buy MinnesotaCare coverage. If the Legislature enacted this proposal by April 1, Minnesotans could purchase MinnesotaCare coverage as early as the 2018 open enrollment period.
Lower Private Health Insurance Premiums
· Cutting 2017 Private Health Insurance Premiums by 25 Percent – Governor Dayton’s proposal would reduce 2017 private health insurance premiums by 25 percent for most individual market policyholders. In October, Governor Mark Dayton proposed a 25 percent health insurance premium rebate for Minnesotans who purchase health insurance in the individual market, but do not receive federal tax credits. The Governor’s direct relief would reduce average 2017 rate increases from 55 percent to 16 percent.
Helping Minnesotans Choose and Keep Their Doctors
· Choose and Keep Your Doctor – Governor Dayton’s proposal would improve choice of doctors and clinics for Minnesotans who purchase individual health insurance. The Governor’s plan would allow people with serious health conditions to keep their doctors for 120 days into the new plan year, require health insurers to offer at least one plan contract with every primary care provider in every rural county, and close loopholes to ensure that private health insurers are required to contract with more clinics and hospitals.
Holding Health Insurance Companies Accountable
· Increasing Transparency in the Health Insurance Market – Governor Dayton’s proposal would ask the Office of the Legislative Auditor to conduct a comprehensive audit of private health insurers in Minnesota. The audit would review insurers’ administrative expenses, reserves, and payment rates to health care providers to ensure the highest level of transparency and accountability for any rate increases.
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In the Governor’s Words
Governor Mark Dayton announced his health reform proposals tonight during his seventh State of the State Address to a joint session of the Minnesota Legislature. The following is the health reform section of Governor Dayton’s remarks, as prepared for delivery. His full remarks are available online.
One area where the former President, the Congress, and I have fallen short, is to provide all Minnesotans with more affordable health care. The Affordable Care Act has had some very important successes.
During the last three years, over 250,000 Minnesotans have gained health care coverage. Nearly 96 percent now have health insurance, making us one of the most successful states in the nation.
There are important features of the Affordable Care Act, which must be preserved. They include requiring health insurers to offer coverage to people with pre-existing medical conditions. The Kaiser Family Foundation estimates that over one-fourth of American adults, including 744,000 Minnesotans, have pre-existing health conditions that would disqualify them from coverage under the insurance industry's former practices.
We must also protect the Medicaid expansion and MinnesotaCare that have provided lifelines for 300,000 Minnesotans, as well as many rural hospitals and clinics. And parents should remain able to cover their children under their policies until they reach age 26.
It is also essential to protect the quality of coverage Minnesotans have gained under the Affordable Care Act.
Obamacare now requires that insurance plans must include 10 essential health benefits: outpatient care, hospitalization, maternity, pediatric care, mental health and substance abuse treatments, emergency, preventive, laboratory, and rehabilitative services, and prescription drugs.
Some people object that they must buy higher-cost coverage they don't need, like maternity coverage for us 70 year-old males.
However, those minimum requirements assure all Minnesotans of more complete coverage, from their health insurance policies.
Previously, over one-half of the personal bankruptcies in this country were caused by people's uninsured health care costs. Most often, the people involved had health insurance. But they found out too late – after an illness or injury had afflicted them or a family member – that the treatments their doctors prescribed were not covered by their insurance.
Those are some of the successes of the Affordable Care Act. Another is the dramatic improvement of MNsure, as evidenced by its performance during the current Open Enrollment period. More than 106,000 Minnesotans have enrolled in MNsure coverage for 2017. Over 60 percent of them will receive federal tax credits, which will lower their health insurance costs by an estimated $350 million this year.
Wait times for MNsure's telephone assistance have averaged two and a half minutes during this busy Open Enrollment period. MNsure has more work to do, but it's significantly improved.
On the other hand, far too many Minnesotans who don’t qualify for federal tax credits have been hit with rapidly rising health insurance costs – from drastic increases in their premiums, to extremely high deductibles.
Too many others have discovered that, contrary to the promise of the Affordable Care Act, they cannot keep their current doctors under any available new plan.
Those failures of the ACA are having devastating effects on the lives of many Minnesotans. Last week, I heard from Sheri Sexton about the huge premium increases that she and her husband, Vince, are facing this year.
Sheri and Vince run the Irish Ridge Dairy in Millville, which has been in their family since 1859. They have always purchased their own health insurance.
Last year, the Sextons paid $1,580 a month for their insurance coverage. This year, their premiums will cost them $2,200 a month. That adds up to $26,400 this year for a policy with a $13,000 deductible.
But, despite that awful cost, Sheri and Vince cannot afford to go without health insurance.
What they are facing is not uncommon.
Their experience shows how urgent this problem is, and why we must work together, to help the Sextons and 123,000 other Minnesotans afford the health care they need.
Sheri and Vince Sexton are with us tonight, and I thank them for sharing their story with us.
Three months ago, I proposed state aid that would lower the cost of 2017 premiums by 25 percent. It would save Sheri and Vince Sexton $6,600 this year. I again ask the Legislature to send me a premium relief bill that I can sign by the end of this week.
During these past three months, I have been urging legislators to pass that emergency premium relief immediately, and then tackle the reforms needed to prevent more insurance price increases in 2018 and beyond.
I am told that some of you worry I won't support those reforms, if they are not tacked on to this bill.
I'm amazed that anyone thinks I won't support whatever changes we can make at the state level to prevent this kind of disaster from happening again. No one has heard more than I, about its devastating effects on the lives of good Minnesotans. No one wants to prevent a repeat of those problems, more than I do.
Yet I recognize the enormous complexity of our country's current health care systems, which now comprise 19 percent of our national economy. And I am mindful of the Law of Unintended Consequences, which has been prominently on display during this debacle.
I have also learned that no matter how bad a situation has become, another mistake can make it even worse.
That is why I have urged legislators to take the time that's available to consider carefully the effects of their proposed changes on our state's existing health care policies and practices.
We all agree that significant improvements are needed. That’s the easy part. The harder part is: What is the most cost-effective solution? And how can we get it done?
I believe that Minnesota's insurance carriers, health care providers, other health experts, and major consumer stakeholders, should be asked in legislative committees: What can we do to make good quality health care available and affordable to all Minnesotans?
What must we do to eliminate, or at least reduce, escalating insurance costs? And what will it cost us to achieve those goals?
One favored proposal is reinsurance. I am prepared to support such a plan. But I ask that legislators design it carefully, in order to give Minnesotans the best possible results at the most affordable price.
Senator Gazelka, Senator Benson, and I have committed to work together to find that best solution for Minnesota.
I believe another goal of reform should be to bring more competition into Minnesota's health care marketplace and thus create more choices for consumers.
This year, the state's Individual Market was plagued by its largest insurer pulling out entirely, which greatly upset the rate calculations of the remaining companies and required drastic rate increases to keep them providing individual coverage at all.
In too many parts of our state, people had very limited choices; and had to scramble to find any coverage, when some plans restricted their numbers of new members.
We should consider current legislative proposals to increase competition, such as permitting for-profit companies to participate. However, we should first consider carefully the effects of such changes on our state's existing market, current providers, and consumer protections.
Another source of much-needed competition that could offer consumers a better choice, is through a so-called "Public Option.”
My Public Option proposal would give Minnesotans, who buy their health coverage on the individual market, an affordable, high-quality option: to purchase coverage provided through MinnesotaCare. This Public Option would be modeled on the current MinnesotaCare program, which would continue to provide high-quality coverage to low-income Minnesotans.
The Public Option would be sold through MNsure, alongside the other commercial products, and would be available to anyone who purchases individual market coverage.
Premiums would cover the cost of the coverage. Some consumers would pay the full premium, while lower income consumers would pay reduced premiums with federal tax credits, as they do today for commercial products sold on MNsure.
After the program's start-up, its costs would be covered entirely by the premiums charged those enrollees.
This Public Option could offer better benefits than many policies, presently on commercial markets; more options for people to keep their doctors and clinics; and less expensive coverage than what is available today.
The Public Option will also guarantee that all Minnesotans have at least one good option available on the individual market, wherever they live.
Implementation of this proposal would require federal approval. However, if the Legislature enacted it by April 1st and the federal government then approved it, the Option could be available to Minnesotans, when the Open Enrollment Period for 2018 begins next fall – and provide them with another choice for good quality, affordable health insurance.
Why would we deny our citizens that chance to get a better deal?
We are in a time of great national uncertainty about the future of our nation's health care under the new leadership in Washington. So, now more than ever, we must protect the elements of Minnesota’s health care system that are working.
One important way to preserve the progress we have made is to continue the provider tax, which, for the past twenty-five years, has funded health care coverage for thousands of Minnesotans.
Presently, that tax is scheduled to end after December 2019; but I am proposing tonight to repeal its sunset. I believe it would be a serious mistake to eliminate such an essential source of state funding for health care, just as our citizens' needs are increasing and continued federal support is uncertain.
Minnesotans need us to work together to solve their health care problems. That is what, I believe, we should expect from ourselves. If we all give a little, Minnesotans will gain a lot.