Minn. budget chief challenges GOP's proposed health rebates

Premium relief proposed by Republican lawmakers for some Minnesota health insurance customers would cost the state $20 million just to distribute and could delay rebate checks getting delivered until 2018, the state's top budget official said Monday.

Republicans running the Legislature start hearings Tuesday on an initial batch of health care bills in the House and Senate, anchored by $300 million in relief to customers in the state's individual health insurance market who face spiking premiums. The proposal would offer income-based discounts, with rebate checks issued by the state.

That's a contrast with DFL Gov. Mark Dayton's plan for a rebate with no income eligibility measures, and with the money issued directly to customers by the insurance companies rather than the state. Republicans say Dayton's plan, budgeted at $313 million, is unfair because it provides subsidies to wealthy people who can afford the higher rates.

But Minnesota Management and Budget Commissioner Myron Frans said at a press briefing that the GOP plan would be costlier than described. He said it would likely require a new online portal to take applications, connections to federal tax databases to verify qualification, links to state records to confirm residency, and some sort of process for cutting checks and ensuring they went to intended recipients.

"Our first take is that this is going to cost a lot of money, and it's going to take a long time," Frans said. "And if we're going to go down that road, then it's going to make it very difficult to get this done in 2017."

Frans estimated it would take two hours of staff time per application for the approximately 123,000 people who would be eligible to apply. He said that would require hiring 100 additional employees.

Rep. Joe Hoppe, the Chaska Republican sponsoring the rebate in the House, said he and colleagues are willing to refine the proposal. But he disagreed that it's too big and complex to orchestrate within months.

"I feel like that's kind of what they do," Hoppe said. "They send checks out to Minnesotans all the time."

The Republicans' proposal would for three months provide a 25 percent premium rebate to anyone on the individual market who doesn't qualify for other subsidies — except those making more than 800 percent of the poverty rate ($95,040 for an individual or $194,000 for a family of four). For the rest of the year, people making less than that rate, but too much to get federal help, would receive 20, 25 or 30 percent rebates, depending on their income.

The plan, sponsored by Hoppe and Sen. Michelle Benson, R-Ham Lake, includes a provision for people who could lose coverage for certain serious medical conditions. It would also allow for-profit health maintenance organizations, or HMOs, to operate in Minnesota. Currently the state is only open to nonprofit HMOs.

If insurance companies can quickly set up systems to distribute discounts, then the state should be able to do the same, Hoppe said — particularly since some of its departments already perform similar tasks. The Republican proposal sets aside about $8.5 million for administrative costs.

But Frans said it would likely require an entirely new process system.

Benson said Frans' comments showed the two parties edging closer to a compromise. She blasted the DFL-led government's "poor decisions over the past six years," but said her party is willing to work with the governor.

"If the only obstacle in reaching agreement ... is figuring out who processes the claims and issues the checks, that's a great sign," she said.

Erin Golden • 612-673-4790