Minnesota Senate vote sets up clash over lowering health care costs

The Republican-controlled Minnesota Senate on Monday voted to extend a state program aimed at curbing health care premiums for residents who purchase plans through the individual market, setting the stage for a clash with Democrats over the best approach for lowering costs.

The reinsurance program, launched in 2017, uses a combination of state and federal funds to offset health insurer costs for covering plan participants with high medical bills. It has been credited with helping lower premium prices for the roughly 155,000 residents who buy insurance on their own.

"Reinsurance works," Senate Majority Leader Paul Gazelka, R-Nisswa, said in a statement. "It has been effective in stabilizing the market and proven to be cost-effective for the state."

Extending the reinsurance program for three years would not require any additional state funding at this time because an existing pot of money for reinsurance approved by legislators has not been fully spent. Federal funds for the program are also expected to continue through 2022. Supporters say that without action, affected consumers would see a spike in their premiums.

But Democrats opposing the bill say there are better ways to tackle health care costs. Gov. Tim Walz said he has concerns with extending what he called a stopgap effort. The Democrat, who is pushing for his own plan to offer subsidies to lower costs for Minnesotans using the individual market, questioned whether insurers have done enough to contain costs themselves and cautioned against giving the health plans a blank check.

"This needs a broader fix, it needs more thought in it," he said. "And at this point in time we're certainly not interested in reinsurance."

Democrats in control of the House are also skeptical. After Republicans tried to force a vote on the House floor on Monday, Majority Leader Ryan Winkler, D-Golden Valley, said a hearing is needed to "find out whether or not this program is working."

"I suspect, members, that we will find it is not working as it is intended to, that it is a huge gift to insurance companies," he said. "Once it is fully examined, we will see that this is a bill that is not ready to be passed this year."

The Senate vote comes as health plans work to set premiums for next year. Those 2020 rates must be submitted to the state Commerce Department for approval in the months ahead. While many factors can influence rates, Patsy Riley, interim president of the Minnesota Council of Health Plans. said that history suggests premiums could spike again in the coming years without action to continue to offset the cost of that small number of high bills.

"We continue to hope that we'll be able to have conversations with both the governor's office and House representatives and to bring the case forward for why we think reinsurance is a really practical Minnesota approach to help keep high premiums in check," Riley said.

Reinsurance is just one facet of the health care fight brewing at the state Legislature this session. Lawmakers are expected to debate whether to renew a 2 percent tax on health care providers and hospitals that funds a variety of health care needs and Walz's OneCare Minnesota proposal to create a statewide public option.