New Health Law Could Prove Costly to Minnesota Insurers

In 1976 a long standing health program, called the Minnesota Comprehensive Health Association was initiated by the legislature to provide coverage for those people with costly pre-existing health conditions. Without a change in federal rules this would cost the insurers more than $ 60 million a year. With the coming of the Federal Affordable Care Act in 2014, cover could not be refused to those with pre-existing conditions. To balance the expenses evenly, federal law will give these health plans reinsurance, if they have too many patients with costly care conditions.

The money comes from a fund that insurers across the country pay into, but Minnesota will not be able to avail these funds said Kirby Erickson, executive director of the Minnesota Comprehensive Health Association. MCHA has already covered residents with pre-existing conditions. The present laws would allow the residents maintain this cover.

Minnesota official’s argument with the federal government was that MCHA should be allowed to collect reinsurance payments though present rules did not allow this.

The money that’s going to be deposited by insurers in Minnesota probably won’t end up here – it will end up elsewhere in the country, “said Erickson. “It’s kind of like getting double billed.”

The issue was being reviewed by federal officials, since unless the issue was remedied, state officials feel Minnesota will be heavily penalized for their foresight.

State Rep. Jim Abeler, a Republican from Anoka is not too optimistic. MCHA is known as a high risk pool –and one of the states in the country to create this program is Minnesota. It is the largest in the country with 26,000 members. Though MCHA was created more than 30 years ago, this nonprofit group is not funded by tax payer money.

Advertisement

Minnesota is known for the lowest number of residents who lack health insurance, even before the health care law Minnesota is known to sort out the most difficult of problems in the health insurance market – like getting insurance cover for people with serious health issues. If high-risk pools are not allowed to participate in the transitional reinsurance program and they continue to exist for some period of time, carriers would pay both the federal reinsurance assessments as well as assessments for the MCHA program," state officials wrote in the Dec. 31 letter.

“An analysis by MCHA of their members whose annual claims exceed $ 60,000 suggests that minnesta carriers would pay over $ 60 million in 2014 to care for members of MCHA that could be paid for by the Federal Reinsurance Program.

Advertisement

This problem could be sorted if MCHA was closed by 2014 and all the people under it could move to the Health Insurance Exchange – where under the federal law all individuals could shop for insurance.

Through the federal exchange reinsurance could be sought for and insurers and subscribers would not have to fund #136.5 million, which was the assessed amount in 2011.

There are reasons why Minnesota officials don’t want to do this as they feel people under the MCHA cover will take time to get familiar with the new marketplace, and if all 26,000 members were to move into the health exchange program in 2014, the premiums would rise steeply, causing many people to drop insurance cover. There are some under MCHA with serious health problems.

“Our concern is that you don’t want people losing coverage,” said Julie Brunner, executive director of the Minnesota Council of Health Plans. You have to have a smooth transition.”

Delaying the transition may be a bad idea since the Affordable Care Act will be offering $10 billion for reinsurance in 2014, $6 billion in 2015 and$ 4 billion in 2016

“Individuals in high risk pools will have the greatest financial incentives to participate in an exchange,” wrote the American Academy of Actuaries in its December letter. “Prohibiting this population from participating immediately in the individual market, particularly in an exchange, could be unfair."

But if the federal government does not allow MCHA to collect reinsurance payments the program may have to close.

Reference: Christopher Snowbeck Pioneer Press

Source-Medindia