What is Going to Happen to Health Reinsurance in Minnesota?

Health reinsurance is a way to curb the stark price increase in the individual health insurance market as a short-term solution. It was founded in 2017 by Minnesota lawmakers to combat the high individual private health rates after the Affordable Care Act. Reinsurance went into effect in 2018.

In the special legislative session in 2021 legislators passed a one-year extension of the reinsurance program.  In 2022, lawmakers will reevaluate the reinsurance program to determine if an expiration date needs to be established.  If the end date is decided against, other options of funding this program will be looked into. It is currently funded by both state and federal funding.

The health reinsurance program accomplished its goal of stabilizing the private health insurance rates.  The MN health reinsurance program has stabilized the large rate increases in 2016 and 2017 to flat or low increases in 2020 and 2021.  The program uses public funds for private enrollees.

At issue with the reinsurance program is that the program uses public funds for private enrollees that have high medical expenses.  When a private health enrollee’s annual medical bills reach $50,000, the MN reinsurance program provides 80% coverage; the other 20% is covered by the private insurance company. This ends when the annual bill reaches $250,000.  The recent law changes the 80% coverage to 60% of the enrollees medical costs between $50,000 and $250,000.  This program requires large amounts of funding; in 2019, around $150 million, and in 2020, $160 million.  Also, the reinsurance program reduces the federal funding MN receives for its MinnesotaCare program. This is because federal funding for MNCare is connected to the prices of private insurance. Lower private insurance rates lead to less funding for MNCare.

As Minnesota and its legislators look for long term solutions, we here at MN Health Insurance Network will continue to help those individuals and families navigate the complex health insurance issues to find the best option at the best price.  Click here for a no obligation MN health insurance quote.