LSP 2017 MN Legislature Healthcare Wrap-Up

The 2017 Minnesota state legislative session is complete, including a four-day special session that was needed for the Legislature to finish passing a budget. Land Stewardship Project members and staff were active throughout the session fighting for healthcare policies that put people before corporate profits.

On a positive note for healthcare, the Legislature provided short-term help for Minnesotans facing unaffordable costs. This will make a difference for some families this year, and we successfully defended MinnesotaCare for now.

But on the negative side, the Legislature prioritized health insurance companies over people and threatened the long-term stability of Minnesota’s healthcare system. Also, the Legislature blocked Governor Mark Dayton’s proposal, which LSP supported and worked for, to create a “public option” for all Minnesotans to buy into MinnesotaCare, a solution that would be a step forward for quality, affordable coverage.

Health Insurance Companies Were Valued Ahead of Better Health Care for Minnesotans

The Legislature found almost $900 million to prop up insurance companies this session. This money came in two parts:

1) Premium discounts — $325 million. Early in the session, a bill was passed to provide a 25 percent discount for Minnesotans buying individual insurance plans who do not qualify for other subsidies that make insurance more affordable. While this provides some needed help to families, it also benefits insurance companies and allows them to continue taking advantage of Minnesotans. This state money ends up in insurance companies’ pockets; this publicly funded windfall comes after insurers raised premiums by 50 percent or more for 2017, making healthcare unaffordable for thousands of Minnesota families.

2) Reinsurance — $542 million. The Legislature passed a state-funded “reinsurance” plan, which was demanded by the insurance companies. Reinsurance protects insurance companies from losing money by having the state take over paying for some of the most expensive patients. Rather than come from a tax on the industry, this money came out of Minnesota’s public coffers.

For all this public money spent on the healthcare industry, there is no certainty that 2018 will be any better for people buying individual insurance. Costs could still be higher; insurance companies offered no assurances that they would lower premiums and deductibles or improve coverage.

In short, insurance companies got their way, while the people lost out.

Unstable Healthcare Budget With Long-term Threats

After spending nearly $900 million for insurance companies, the Legislature pushed a budget with major cuts to the public programs that provide healthcare for one in five Minnesotans. The final budget cut funding for Health and Human Services by more than $100 million and, even more concerning, gutted almost the entire $1 billion Health Care Access Fund (HCAF) reserve.

The Health Care Access Fund was set up 25 years ago as a dedicated fund that pays for MinnesotaCare and Medical Assistance to ensure access to healthcare for all Minnesotans. The fund is maintained by a small 2 percent tax on healthcare providers, but this tax is scheduled to end after 2019 — so the main funding source for MinnesotaCare will be gone. The budget passed this session makes the situation worse, by raiding the Health Care Access Fund to pay for other things. Specifically, the budget will take out $700 million over the next four years ($392 million in 2018-19; $312 million in 2020-21). Earlier this session, the Legislature spent $400 million from the HCAF to pay for the reinsurance program. Together, these changes drain the fund from about $1 billion down to just $4 million by 2021. These changes threaten the future viability of MinnesotaCare.

Opening the Door to For-profit HMOs That Could Walk Away with Public Assets

Legislation passed that opened the door to for-profit HMOs to begin operating in Minnesota.Currently Minnesota HMOs are required to be nonprofits — an important feature when they receive contracts to manage the state’s public healthcare programs.

Attorney General Lori Swanson raised the alarm about the opportunity for major trouble if nonprofit HMOs decide to become for-profit companies. Together, these nonprofits have more than $3 billion in cash reserves and $7 billion in total assets, which have been built up with public help over decades in the form of tax breaks, public contracts and subsidies. These companies could convert these public assets into private profits and fat payouts to executives if protections for taxpayers are not put into law.

Unfortunately, strong legislation regulating for-profit conversions was dropped at the end of the session by the Legislature. The final budget includes a two-year moratorium on nonprofit HMOs converting to for-profit, which is better than nothing. However, should companies want to convert after those two years are up, there are no protections to prevent insurance companies from walking away with our public assets.

MinnesotaCare Is Protected, but Faces an Uncertain Future

MinnesotaCare, the quality, affordable public healthcare program for 100,000 Minnesotans, was in danger but survived this session. Protecting MinnesotaCare was a top prioirtiy for LSP. A proposal by the Legislature to eliminate Minnesota’s state-run health insurance exchange, MNsure, was left out of the final budget bill passed by the Legislature. This is important because getting rid of MNsure could effectively destroy MinnesotaCare by eliminating the public portal for enrolling and thus making it impossible for people to sign up.

Many threats remain to MinnesotaCare, however. Federal healthcare changes being proposed could slash Medicaid funding to states, forcing Minnesota to make tough choices about who to throw off of healthcare coverage. Federal funding that supports MinnesotaCare directly is also much in doubt under the proposed federal changes. Also, as described above, the main funding source for MinnesotaCare (the tax on healthcare providers) is scheduled to expire after 2019, and it is not clear what will become of the program’s funding after that.

The budget passed by the Legislature this year lessens Minnesota’s ability to deal with these challenges by draining the fund that pays for MinnesotaCare and stretching the state’s healthcare budget thin. MinnesotaCare continues to be fundamental in LSP’s goal of creating a healthcare system in which people’s lives count first, and protecting MinnesotaCare will need to be a top priority for Minnesotans going forward.

Jonathan Maurer-Jones is an LSP organizer specializing in healthcare issues. He can be reached at 218-213-4008 or via e-mail. Paul Sobocinski is a farmer and an LSP organizer who specializes in healthcare issues. He can be reached at 507-430-1509 or via e-mail. For more in LSP’s Affordable Healthcare for All work, click here.