October, 29, 2024
Governor Tim Walz
75 Rev Dr Martin Luther King Jr Boulevard #130
St Paul, MN 55155
Dear Governor Walz,
The Minnesota Council of Health Plans and our local nonprofit health plan members—Blue Cross and Blue Shield of Minnesota, HealthPartners, Medica, Sanford Health Plan of Minnesota, and UCare—are committed to ensuring Minnesotans have access to affordable health care. The Council supported the creation of the Minnesota Premium Security Plan (“reinsurance”), which led to a stable, much more affordable marketplace for Minnesotans. Reinsurance, combined with enhanced federal subsidies, has supported a record number of Minnesotans in finding affordable coverage. However, both programs are scheduled to sunset in 2026. Without action, this “double whammy” will result in a record number of Minnesotans losing coverage. I am therefore writing to urge that your FY 2025-26 Budget Recommendations prevent tens of thousands of Minnesotans from losing coverage by funding, extending, and building upon these successful state programs.
The Council has a decades-long track record of working with policymakers to find solutions to complex problems. The Council was instrumental in creating MinnesotaCare in the 1990s and was a key partner in the successful implementation of the ACA and the creation of MNsure in the 2010s. Consistent with our goal of providing accurate data to support informed decision-making, the Council recently commissioned RAND Health Care to estimate the impact of sunsetting enhanced subsidies and reinsurance, as well as to explore ways to mitigate that impact. When enhanced federal subsidies were first adopted, MNsure estimated that this policy alone saved Minnesota families an average of $684 per year in 2022. One MNsure scenario modeled the impact on a Mankato family of two with a $72,000 income as losing eligibility for a $1,192 monthly credit. Reinsurance lowers premiums by about 20% on average from what they would have been otherwise. RAND found that without action, premiums will dramatically increase, and as many as 93,000 Minnesotans will find coverage unaffordable and become uninsured.
The Council started exploring supplemental policies and even alternative approaches to reinsurance as part of the RAND study. Much more work needs to be done, however, to ensure major policy choices are made with known impacts. While we continue our work on vetting longer-term policies, reinsurance remains the only proven, timely solution available to head off what will otherwise be catastrophic 2026 cost increases for many Minnesotans. Transfers of $276 million in 2023 and $8.83 million in 2024 out of the Premium Security Account, effectively zeroed out funding for a program authorized to run through 2027. Minnesotans who purchase their own health insurance coverage, like many farmers, entrepreneurs, small business owners, daycare providers, and early retirees, need your leadership and support to restore this funding and avoid a catastrophic increase in costs for plan year 2026.
The timing of legislative action is critically important, as our organizations are required to file 2026 rates with the Minnesota Department of Commerce in late spring and request action on this issue before March 1, 2025. Taking swift action will provide continued financial relief to Minnesotans and avoid alarming increases in their health insurance costs and the number of uninsured Minnesotans.
Sincerely,
Lucas Nesse, President and CEO