State says $100 million in MinnesotaCare funding is at risk

Minnesota Attorney General Lori Swanson wants to intervene in a federal dispute over "cost-sharing reductions," a form of subsidy under the federal Affordable Care Act that the state says is providing more than $100 million per year in funding for the MinnesotaCare health insurance program.

Republicans in the U.S. House filed a lawsuit in 2014 to block funding for the cost-sharing reduction (CSR) payments, which in most states help individual consumers lower their out-of-pocket costs with private insurance coverage under the federal health law.

Last year, a court enjoined the federal government from making the payments but stayed its injunction pending an appeal.

In Minnesota, most consumers with incomes that make them eligible for CSR subsidies receive coverage from MinnesotaCare, rather than private coverage. So the value of CSR payments for those consumers is largely directed under the ACA to the state government's "basic health plan" — another name for MinnesotaCare.

The state of New York has a similar program.

"The district court's injunction threatens these funds," Swanson and representatives from 14 other states, plus the District of Columbia, argued Thursday in a filing to the U.S. Court of Appeals in Washington, D.C. "If allowed to take effect, the injunction would put at risk approximately $870 million of annual funding to New York, and $120 million to Minnesota [in 2017]."

The state tapped $103 million in federal payments for MinnesotaCare in 2016, according to a news release from Swanson. The attorney general said more than 84,000 Minnesotans get basic health coverage through MinnesotaCare.

With the election of President Donald Trump, the U.S. House asked for a delay in responding to the Obama administration appeal so the new administration could formulate its position on the issue, said Tim Jost, an emeritus professor at Washington and Lee University School of Law.

"At this point, pursuant to a further request from the House and the Trump administration for delay, the appeal remains in abeyance with the next status call scheduled for Monday," Jost wrote Thursday in a blog post for the policy journal Health Affairs.

For people who qualify for CSR subsidies and buy private insurance, the government payments go directly to health insurers who pass along the money in the form of lower deductibles and cost-sharing features. In recent months, insurers have grown increasingly nervous about whether the Trump administration might decide to cut off the payments.

Cost-sharing reduction subsidies are provided only to those who qualify and are buying through government-run exchanges like MNsure in Minnesota. In April, about 11,843 people with individual insurance policies in Minnesota were benefiting from CSRs, MNsure says.

In his blog post, Jost said it's still not clear what position the Trump administration will take about the future of the CSR payments. On Thursday, a spokeswoman for the federal Centers for Medicare and Medicaid Services declined to comment.

"If the court permits the states to intervene, they will continue to make the arguments that the Obama Justice Department made in opposition to the lower court's order — that the House lacked standing to bring the litigation and that funds for the CSR payments have in fact been appropriated," Jost wrote.

Christopher Snowbeck • 612-673-4744