Medicare expansion in Tennessee

Tennessee has not expanded Medicaid coverage (which is called TennCare) as allowed under the Affordable Care Act, which means that there are an estimated 117,000 residents in the coverage gap — ineligible for Medicaid and also ineligible for premium subsidies in the exchange. This group is comprised of non-disabled adults with income below the poverty level and without minor children.

If the state were to expand Medicaid, at least 250,000 people (some studies have put this number quite a bit higher) would gain access to coverage, including nearly 100,000 who currently have access to premium subsidies and cost-sharing reductions in the exchange, but who would have access to much lower out-of-pocket costs under Medicaid.

But Medicaid expansion in Tennessee has been a non-starter for most Republican lawmakers, and the GOP holds a strong majority in both chambers of the state’s legislature. Instead, GOP lawmakers voted in 2018 to impose a work requirement on low-income parents who are currently eligible for Tennessee Medicaid. They propose using TANF funding to cover the cost of implementing the work requirement.

Tennessee also enacted legislation in 2019 to seek federal permission for a block grant funding model for Medicaid — an approach that Congress rejected in 2017, but that Republican lawmakers have long supported. The state’s block grant funding proposal was approved by the Trump administration in its waning days, although changes might be made under the Biden administration.

In addition, 128,000 children have been removed from the Tennessee Medicaid program — in some cases because they were no longer eligible, but in others because of missing or erroneous paperwork.

Tennessee receives CMS approval for block grant Medicaid funding

In January 2021, just days before the end of President Trump’s presidency, CMS announced that Tennessee’s Medicaid block grant waiver proposal had been approved. The waiver approval, which is valid for ten years (much longer than typical 1115 waiver approval periods), will allow Tennessee to be the first state in the nation that utilizes a block grant approach to federal Medicaid funding, although Puerto Rico has long used a block grant funding model for Medicaid, which has led to significant funding shortfalls in the territory’s Medicaid program.

The incoming Biden administration may make changes to the approved waiver, but they would have to go through a review process. It’s noteworthy that law professor Nicholas Bagley pointed out in 2019 that Tennessee’s proposal was likely not legal under the existing rules for Medicaid and the constraints of what can and can’t be changed with 1115 waivers.

In May 2019, Tennessee Governor Bill Lee signed H.B.1280 into law. The legislation directed the state to seek federal permission to convert the state’s current federal Medicaid matching funds into a block grant, indexed for inflation and population growth. The Trump administration had expressed willingness to consider such proposals, but Tennessee was the first state in the nation to enact legislation to get the ball rolling on it (and in November 2019, the White House Office of Management and Budget removed the administration’s guidance on block grant waivers).

In September 2019, Tennessee officials published the state’s block grant proposal (along with a summary and FAQ page), opening up a 30-day public comment period that ran through mid-October. During the comment period, advocates expressed concerns that Tennessee might use the waiver authority to reduce benefits for the state’s most vulnerable residents (Tennessee has not expanded Medicaid, so enrollees are all low-income and also either pregnant, elderly, disabled, children, or very low-income parents of minor children).

But the final version of the proposal, which was submitted to the Trump administration for review in November, was modified (changes noted in red font), in part to clarify that the state wouldn’t use their waiver authority to make benefit reductions, and that any benefit changes would be “additive in nature” (i.e., the revised proposal states that Tennessee can add benefits to the TennCare program without seeking additional CMS authority, but cannot use the block grant waiver authority to reduce the existing benefits package; the approval that CMS granted in January 2021 states that “Any coverage or benefit changes to existing populations covered are limited to those that are additive in nature, and the state is not authorized to make reductions to its current approved coverage or benefits package without approval of an amendment.“) Even so, a group of 21 prominent patient advocacy groups expressed strong opposition to Tennessee’s block grant waiver, noting that “It is irresponsible to approve this waiver during this public health crisis, and especially to do so for an unprecedented 10-year period. This waiver agreement, if implemented, will limit Tennessee’s flexibility in responding to recessions, pandemics, new treatments and natural disasters – and as a consequence moves in the opposite direction of the lessons learned from 2020.”

Tennessee’s proposal included a provision that would allow the state to share in any savings that the program generates, and was clear in noting that the state is proposing a modified block grant approach that would boost federal funding if enrollment in the program was to increase (as opposed to a traditional block grant model, which could result in a funding shortage for a state in the event of a recession or other incident that causes a sharp increase in the number of people eligible for Medicaid).

Tennessee expects the block grant approach to result in “significant additional federal funding,” and hopes to use the money to provide additional services, such as nutritional assistance, housing support, and dental care.

The state’s proposal calls for calculating the block grant based on “core medical services and related expenditures” for Tennessee’s Medicaid population, although some costs — such as prescription drugs, payments to hospitals for uncompensated care, and costs for Medicare-Medicaid dual-eligible enrollees — will not be included.

The idea of switching to a block grant model for federal Medicaid funding is not new. In 2017, the American Health Care Act (which passed in the House) and the Graham-Cassidy bill (which was introduced in the Senate but did not pass) both called for a block grant approach, and Republican lawmakers have long advocated this change. But for now, federal Medicaid funding continues to be an open-ended commitment from the federal government, with states receiving varying matching percentages to fund their Medicaid programs (in Tennessee, for every dollar the state spends on Medicaid, the federal government sends them $1.87. So federal funding covers about two-thirds of the cost of Tennessee’s Medicaid program).

Tennessee seeks CMS approval for a Medicaid work requirement, despite rejecting Medicaid expansion

Tennessee is also one of several states with Medicaid work requirement proposals that are currently pending CMS approval. Tennessee’s 1115 waiver proposal was submitted in December 2018, under the terms of H.B.1551, which was signed by Governor Bill Haslam in May 2018. In the waiver proposal that was submitted to CMS, the state notes that they received “a number of comments in opposition” to the work requirement proposal, but pointed out that state law (H.B.1551) requires the state to seek federal permission to implement a Medicaid work requirement (regardless of public opinion or comments).

The Trump administration approved Medicaid work requirement waivers for several states, but a federal judge has blocked implementation of the work requirements in some states, and the others have been paused either in response to pending lawsuits or in response to the COVID pandemic (during the COVID public health emergency period, states are receiving additional federal Medicaid funding, but are not allowed to disenroll people from Medicaid, thus effectively preventing a work requirement from being implemented). Tennessee’s work requirement is still pending CMS approval as of January 2021, and the Biden administration is unlikely to approve any Medicaid work requirements.

But under the proposed waiver, Tennessee Medicaid enrollees subject to the work requirement would have to work or participate in various community engagement activities for at least 20 hours per week in order to retain their Medicaid eligibility. The legislation also calls for the state to seek federal permission to use TANF funding to implement the work requirement, which is noted in the state’s 1115 waiver proposal.

The terms of H.B.1551 call for a work requirement for TennCare enrollees who are “able-bodied working-age adult enrollees without dependent children under the age of six.” No other exemptions were specified in the text of the bill. But the proposal that was submitted to CMS in late 2018 includes various other exempt populations, including people age 65 and older (most other states with proposed or approved work requirements have opted to exempt people at a younger age, usually closer to 55), people who are medically frail, people who are mentally or physically unable to work (as certified by a medical professional), and people who are caring for a disabled individual over the age of six (in addition to one caretaker per household who is caring for any children under the age of six). A full list of exemptions is on page 3 of the work requirement proposal, and the state also notes that they would reserve the right to temporarily waive the work requirement in counties that are economically distressed.

Since Tennessee has not expanded Medicaid, the only population that would be subject to the work requirement would be parent and caretaker relatives — a population that qualifies for Medicaid in Tennessee with income up to 101 percent of the poverty level (96 percent plus a 5 percent income disregard).

The state is proposing a monthly reporting requirement for members subject to the work requirement, but compliance would only be checked once every six months, and members would need to have been compliant for at least four months out of the six-month period in order to retain Tennessee Medicaid eligibility. Those who hadn’t complied with the work requirement (and successfully reported their compliance) for at least four months would lose access to TennCare until if and when they demonstrate one month of compliance.

Who would be subject to the proposed work requirement?

There are about 1.5 million people enrolled in TennCare, but the work requirement would not apply to the vast majority of them, including children, the elderly, and disabled enrollees. According to the fiscal note for H.B.1551, there are about 300,000 TennCare enrollees in the parent and caretaker relatives eligibility category at any given time. Roughly half of them already meet, or are exempt from, the existing TANF/SNAP work requirements in Tennessee, so they would automatically be deemed compliant with a Medicaid work requirement.

Nearly 49,000 of the remaining 150,000 enrollees are assumed to be the primary caregiver for a child under the age of six, and would thus be exempt from the work requirement. According to the fiscal note, additional exemptions, for people who are elderly, disabled, or in drug addiction treatment, bring the estimated number of people who would be subject to the work requirement down to 86,439. Assumptions about exemptions are in the accompanying fiscal note (it’s important to note that the legislation itself did not include any exemption details other than the exemption for a primary caretaker of a child under six years old — unlike other bills that were introduced with exemption language included in the text — but the final waiver proposal did include a variety of exemptions).

Interestingly, the fiscal note stated that an estimated 1.22 percent of the parent and caretaker TennCare population would be exempt from the work requirement due to being in treatment for drug addiction, but a proposed amendment to the bill, which would have explicitly exempted people going through substance abuse treatment, was tabled in a 68-22 vote in the House. The proposed waiver, however, does include an exemption for people undergoing “inpatient or residential treatment or an Intensive Outpatient Program (IOP) for a substance use disorder.”

The fiscal note includes an estimate (based on Kaiser Family Foundation data) that 57 percent of the people subject to the work requirement are already working, leaving roughly 37,000 people who are not currently working, but who would be subject to the work requirement if it’s enacted. The state’s expectation is that about 10 percent of those people would lose their Medicaid coverage due to failure to comply with the work requirement.

In a scathing report on the proposed waiver, however, Georgetown University’s Health Policy Institute notes that coverage losses could end up being far higher than the state has estimated, citing the extensive coverage losses in Arkansas after a work requirement was implemented there.

It’s noteworthy that Arkansas did expand Medicaid, and thus allows able-bodied adults to be covered by the program even if they don’t have children (and the Arkansas work requirement includes an exemption for parents with children under the age of 18, while Tennessee’s proposal only exempts one parent per household if they are taking care of a child under age six). In Tennessee, the only able-bodied, non-elderly adults enrolled in Medicaid are those who have dependent children and income that doesn’t exceed 101 percent of the poverty level, since the state has steadfastly rejected federal funding to expand its Medicaid program to cover more low-income adults.

GOP lawmakers want to use TANF money to impose work requirement

H.B.1551 was amended by the House in March 2018, adding a section to the bill to require the state to also seek federal approval to use TANF (Temporary Assistance for Needy Families) funding or other federal funding to implement the work requirement. The state initially estimated that implementing the work requirement would cost more than $18 million per year in state funds, and Republican lawmakers want to use TANF money — designated to provide assistance to very low-income families — to cover the cost of imposing a work requirement that is expected to strip health coverage away from several thousand impoverished Tennessee residents (the waiver language states that Tennessee is requesting federal approval to use TANF funding to implement the work requirement “and to provide additional supports to individuals subject to the work requirement.”

Lawmakers noted in 2018 that TANF had $400 million in reserves in Tennessee, but one analysis clarifies that the surplus is due to the paltry level of support that TANF provides in Tennessee: a maximum of $185/month in benefits for a family of three.

Proponents of the work requirement and the proposed TANF funding note that one of TANF’s stated goals is to get people into the workforce and encourage self-sufficiency. But stripping low-income parents of their health insurance is not likely to prove beneficial in the quest to help people get back on their feet. And the “supports” that the state has proposed include providing Medicaid enrollees with “access to information and services designed to prepare and support persons in obtaining and maintaining employment.” And people who need to complete secondary education, “will be connected to adult education opportunities sponsored by the Tennessee Department of Labor & Workforce Development.” More robust supports, including state-sponsored childcare, transportation, Internet access, etc. are not included in the proposed waiver.

H.B.1551 passed in the Tennessee House in March, on a 72-23 party-line vote. The text of the amended legislation that passed in the House clarifies that if the federal government does not approve the use of TANF funding (or other federal funding) to implement the work requirement, the state won’t move forward with seeking a waiver to impose a Medicaid work requirement.

House Democrats tried in vain to add several other amendments to the bill, including:

•  An amendment to expand Medicaid and apply the work requirement to the expansion population.
• Amendments to exempt people going through substance abuse treatment, or who have a history of addiction or mental illness, from the work requirement
• An amendment to ensure that if parents of minor children were subjected to the work requirement, the state would seek to use TANF funds to pay senior citizens to provide childcare while the parents were working.
• An amendment that would require the state to seek approval to use TANF funding to provide jobs, paying at least $15/hour, to people subject to the work requirement.
• An amendment to exempt parents from the work requirement if they have children under the age of 12 (the bill calls for exempting parents if they have children under the age of 6).

An identical bill, S.B.1728, was introduced in the Senate in January 2018, but the Senate opted to substitute the amended version of H.B.1551 (with the requirement that the state must obtain TANF funding or other federal funding to implement the work requirement), voting on it in mid-April, and passing it overwhelmingly (23-2). In the Senate, several amendments were also rejected, including:

• An amendment to add Medicaid expansion to the legislation.
• An amendment to create an exemption from the work requirement for people experiencing domestic violence or acting as caregivers for other people, as well as an amendment to exempt people with bleeding disorders.
• An amendment that would call for the work requirement program to end after one year if the state’s costs associated with implementing the work requirement exceeded the state’s savings from the work requirement.

Although the Senate passed the measure in April, Tennessee officials had already posted a job opening for a “Policy Analyst to implement a new Medicaid work requirements program,” before the bill was even scheduled for a vote in the Senate. Critics of the proposed work requirement have denounced the state’s decision to post the job opening before the bill has been voted on in the Senate. But Tennessee’s Medicaid program defended the job listing, noting that if the bill did not pass, the state simply wouldn’t fill the position.

Former Governor Haslam pursued modified expansion

In March 2013, Tennessee’s then-Governor, Bill Haslam unveiled his “Tennessee Plan” for Medicaid expansion. His proposal involved using federal Medicaid funding to purchase private coverage for up to 175,000 to 200,000 low-income Tennessee residents.  It also called for copays for some enrollees, payment systems for providers that are based on outcomes rather than fee-for-service, and a clause that requires future renewal of Medicaid expansion to be approved by the legislature.

In November 2014, Haslam announced that his negotiations with the federal government were ongoing, and this was still the case in December, although Haslam stated he had “verbal” approval from the federal government for his plan. In January 2015, Governor Haslam called for a special session of the Tennessee legislature to address his Insure Tennessee plan.

But Senate committees shut it down

But the following month, the Senate Health and Welfare Committee voted 7-4 against Haslam’s Medicaid expansion proposal, blocking it from going any further in the legislative process during the 2015 session. Although representatives from the Tennessee Hospital Association, the Tennessee Medical Association, and the Tennessee Business Roundtable all provided support for the Medicaid expansion proposal, it was not enough to sway the conservative lawmakers who were concerned about the long-term costs to the state or the difficulty the state would face if it were to try to repeal Medicaid expansion a few years down the road.

For the record, the federal government paid 100 percent of the cost of covering newly-eligible Medicaid enrollees through 2016, and the state’s share will gradually rise to 10 percent by 2020 — but will never exceed 10 percent.

The Insure Tennessee legislation was considered again by another Senate Committee in March 2015, but it too was ultimately rejected. That version called for the state to wait until the Supreme Court ruled on King v. Burwell before proceeding with Medicaid expansion (in June 2015, the Court ruled that premium subsidies are legal in every state, thus preventing destabilization in the individual insurance market in Tennessee).  It also called for a six-month waiting period before Medicaid coverage could be reinstated if it were terminated because an enrollee didn’t pay premiums, and it required the state to obtain a letter from HHS stating that Medicaid expansion could be terminated at any time, at the state’s discretion.

A variety of bills, including SJR0103, HB1324, and HB1271, were introduced to expand Medicaid during the 2015 legislative session, but none of them advanced to a full vote.

Haslam had considered calling lawmakers back for another special session to address Medicaid expansion again, but said in April 2015 that he wouldn’t do so until it appeared that legislators had softened to the idea of Medicaid expansion, or were at least beginning to agree on modifications to the current proposal. Tennessee relies heavily on uncompensated care funding from the federal government, and by the fall of 2015, it was clear that the funding was in peril. Expanding Medicaid would eliminate much of the need for ongoing uncompensated care funding.

3-Star Healthy Task Force

In April 2016, Tennessee House Speaker Beth Harwell detailed the creation of a legislative task force to address access to healthcare in the state. Democrats roundly criticized the task force, calling it a joke and noting that there were no Democrats on the task force. Governor Haslam stopped short of saying that the 3-Star Healthy Project’s formation indicated that Insure Tennessee was dead, but acknowledged that Insure Tennessee hasn’t been able to get traction with the legislature, and noted that the plan that would work best would be one that could garner support from Tennessee lawmakers.

The “3-Star Healthy Project” task force began meeting to come up with proposals that could be sent to the federal government, and by September, they had a TennCare expansion proposal ready to send to CMS, although by early November, the schedule was that it would be submitted to CMS by the end of 2016. While it was better than nothing, it was a far cry from Haslam’s Insure Tennessee proposal.

In its initial phase, the pilot program was slated to expand TennCare eligibility only to people with mental health and substance abuse disorders, and to veterans. These groups would have been eligible for TennCare with income up to 138 percent of the poverty level, under the terms of the expansion pilot.

But when Donald Trump won the presidential election in November 2016, and the TennCare expansion proposal was put on hold while the state waited to see what would happen with healthcare reform at the federal level under the new Administration. Ultimately, the ACA was not repealed (as some had expected after Trump’s victory), but the Trump Administration has opened the door for Medicaid waivers with provisions that the Obama Administration never allowed, including work requirements and block grants.

In 2018, Tennessee submitted a waiver proposal seeking permission to implement a Medicaid work requirement (aimed at the parent/caretaker population, as non-disabled, non-elderly adults in Tennessee are already ineligible for Medicaid since the state has refused to expand coverage). If approved and enacted, the work requirement would essentially be the opposite of Medicaid expansion, as it would serve to reduce the number of people with Medicaid coverage in Tennessee. Tennessee has also enacted legislation in 2019 that directs the state to seek federal permission to switch to a block grant funding model, instead of the current open-ended federal match.

Republican lawmakers introduced legislation (S.B.118 and H.B.69) in 2017, based in part on the work done by the 3-Star Healthy Task Force, calling for the state to propose a federal waiver to expand Medicaid using a block grant. Both bills were tabled in 2017, but reconsidered in 2018. Ultimately, H.B.69 was tabled again in 2018, and S.B.118 failed in committee. Ultimately, the state has enacted legislation that simply calls for the state to seek a transition to a block grant, but without expanding Medicaid.

Medicaid expansion via Insure Tennessee was also introduced again in the Tennessee House in 2018, but did not advance. A bipartisan proposal to allow people age 55 or older to purchase TennCare (i.e., a Medicaid buy-in program) also did not advance.

Who is eligible for Tennessee Medicaid?

Because Tennessee has not yet expanded Medicaid under the ACA, eligibility guidelines are unchanged from 2013, and non-disabled, non-pregnant adults without dependent children are ineligible for Medicaid, regardless of their income. TennCare is available to the following legally-present Tennessee residents, contingent on immigration guidelines:

• Adults with dependent children, if their household income doesn’t exceed 103 percent of poverty. This is one of the highest thresholds in the country among states that have not expanded Medicaid.
• Pregnant women and infants under one, with household income up to 195 percent of poverty.
• Children age 1 – 5 with household income up to 142 percent of poverty, and children 6 – 18 with household income up to 133 percent of poverty.
• CHIP (Cover Kids) is available to children with household incomes too high for Medicaid, up to 250 percent of poverty.

How do I enroll in Medicaid in Tennessee?

Enrollment in TennCare is year-round; you do not need to wait for an open enrollment period if you’re eligible for Medicaid

• Tennessee uses the federally-run insurance marketplace, so you can enroll through HealthCare.gov or use their call center at 1-800-318-2596. (Use this option if you are under 65 and don’t have Medicare.)
• You can enroll online via TennCare Connect.
• You can go to any of the state’s 95 Department of Human Services’ offices to apply in-person. You can also use the “find local help” link on HealthCare.gov to find someone in your community who can help you enroll.
• You can print a paper application (Spanish version here, and pages for additional family members are available here) and submit it to your local Department of Human Services office (click here for contact information).

Prior to 2019, the only way to enroll online was through HealthCare.gov. But after five years of delays, Tennessee debuted their TennCare Connect system in March 2019. The new program allows applicants to determine eligibility, enroll, and manage benefits online.

TennCare had initially planned to build a new system that would be functional by October 1, 2013. But that didn’t work out, and the old system didn’t have the functionality to be upgraded properly. So the state spent several years building the new system.

Tennessee Medicaid enrollment numbers

During the first open enrollment period (October 2013 through April 2014) 83,591 people in Tennessee enrolled in Medicaid or CHIP through HealthCare.gov. TennCare requested an additional $180 million from the state in late 2013 because of the rapidly increasing enrollment they were seeing soon after open enrollment began on the exchange.

As of August 2016, TennCare was covering 1.55 million people in Tennessee. A total of 1,628,196 people had coverage through Tennessee’s Medicaid and CHIP programs as of July 2016. That was a 31 percent increase since the end of 2013, despite the fact that the state had not expanded Medicaid. This is known as the “woodwork effect,” as people who were already eligible for Medicaid under the existing guidelines “come out of the woodwork” thanks to the outreach and enrollment efforts under the ACA.

Enrollment in Tennessee’s Medicaid/CHIP coverage fell sharply since 2016 amid the state’s efforts to purge children from the coverage rolls (due in some cases to paperwork falling through the cracks, and in others to families’ eligibility status changing). As of February 2019, total enrollment stood at just over 1.3 million people enrolled as of February 2019.

As of June 2020, Tennessee Medicaid and CHIP enrollment was 1,489,536.

Tennessee Medicaid history

Tennessee was among the last states to implement Medicaid, with their program taking effect in January 1969, three years after Medicaid was enacted.

TennCare was created in 1994 under a federal waiver that allowed for some deviations from the standard Medicaid program.  TennCare was the first Medicaid program to utilize private sector managed care for all of its members.  Initially, TennCare was available at no-cost for Medicaid-eligible residents, and also on a sliding-fee scale (premiums were subsidized) for Tennessee residents who were not able to obtain other private insurance, particularly those who couldn’t get other coverage because of pre-existing conditions.

By 1995, amid soaring enrollment, TennCare stopped accepting applications from non-Medicaid eligible adults unless they were unable to get other coverage because of pre-existing conditions.  And later the “uninsurable” population eligible for TennCare was reduced by implementing income caps for their eligibility.

TennCare’s financial viability continued to be in question, and in 2005 the state removed about 190,000 beneficiaries from the program, implemented benefit reductions, and put caps on the number of prescriptions a TennCare member could get.

Eventually, Tennessee created CoverTN and AccessTN to provide coverage for certain small business groups, the self-employed, and people who were otherwise uninsurable.  Following the reforms and the shift to only insuring the Medicaid-eligible population through TennCare, the program’s budget seemed to be getting back on track by the late 00’s.

When the ACA was created, it was intended that Medicaid expansion would be nationwide, so subsidies in the exchange were not designed to apply to people living below the poverty level, since they were expected to have access to Medicaid.  But in 2012, the Supreme Court ruled that states could opt out of Medicaid expansion, and Tennessee is one of 19 states that have not yet expanded their programs.

Because the state has rejected Medicaid expansion under the ACA, Tennessee is missing out on $22.5 billion in federal funding from 2013 to 2022. In addition, Tennessee residents will pay $7.8 billion in federal taxes that will be used to fund Medicaid expansion in states that are expanding coverage — while getting no Medicaid expansion funds for their own state.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

The post Tennessee and the ACA’s Medicaid expansion appeared first on healthinsurance.org.

Minnesota health exchange overview

Minnesota’s state-run exchange, MNsure, has five participating insurers for 2021, up from four in 2020. The exchange enrolled more than 122,000 people in individual market coverage for 2021.

As a result of the COVID-19 pandemic, MNsure joined most of the other state-run exchanges in offering a special enrollment period during which people who were uninsured could enroll in a health plan during the spring of 2020. Nearly 9,500 Minnesota residents enrolled in private plans through MNsure during this window, as well as another 13,700 who enrolled in MinnesotaCare or Medicaid (enrollment in those programs is open year-round for eligible residents).

Allison O’Toole, who led MNsure as CEO for three years, announced her resignation in March 2018, and the exchange named Nate Clark, the MNsure COO, as acting CEO. A few months later, the MNsure board named Clark as the permanent CEO. O’Toole left MNsure to work as director of state affairs for United States of Care, a non-profit created by Andy Slavitt, who was the acting administrator of CMS under the Obama Administration.

Throughout 2017, Minnesotans who bought their own health insurance (on or off-exchange) and weren’t eligible for ACA subsidies were provided with 25 percent premium rebates from the state as a result of S.F.1, signed into law by Governor Dayton in early 2017. The subsidies helped to offset the large premium increases that applied in Minnesota in 2017, and helped to stabilize the individual health insurance market in 2017. But the premium rebate program expired at the end of 2017.

Thanks in large part to the new reinsurance program that Minnesota created (details below), premiums decreased in Minnesota’s individual market in 2018, 2019, and again in 2020, although rates increased modestly for 2021. In May 2019, Minnesota leaders reached an agreement on a budget that included an extension of the reinsurance program through 2020 and 2021 (it has already been granted federal approval through the end of 2022, but the state has to continue to cover its share of the cost; Minnesota Governor Tim Walz had hoped to implement a premium subsidy program and a new tax credit in Minnesota starting in 2020. But a compromise in the budget ended up with the state opting to continue the existing reinsurance program for two more years instead.).

Open enrollment for 2021 health plans extended through December 22, 2020; Insurers implemented modest rate increases for 2021, after three years of overall rate decreases

MNsure enabled window shopping for 2021 health plans as of October 12, 2020. This gave residents a few weeks to browse the available plans before open enrollment started on November 1, 2020. And MNsure announced that open enrollment would continue through December 22, 2020, which was a week longer than the open enrollment period that applied in states that use the federally-run exchange; the flexibility to extend open enrollment is often cited as one of the benefits of having a fully state-run exchange. (MNsure had a similar extension in December 2019, for 2020 health plans).

For 2021, Quartz joined the Minnesota marketplace. Quartz already offered plans in Illinois and Wisconsin, and expanded into Minnesota for 2021. And two of the existing insurers — HealthPartners and UCare — expanded their coverage areas for 2021 (BluePlus and Medica already offered coverage statewide, and continue to do so in 2021).

The following average rate changes were approved for MNsure’s insurers:

• Blue Plus: 4.21 percent increase (down from an initially proposed 7.12 percent increase)
• Group Health/Health Partners (GHI): 0.67 percent increase (down from an initially proposed 4.15 percent increase)
• Medica: 2.42 percent increase (down from an initially proposed 7.06 percent increase)
• UCare: 1.6 percent increase (up from an initially proposed 1.39 percent decrease)
• Quartz: New for 2021, so no applicable rate change

PreferredOne Insurance Company, which offers plans outside the exchange, increased premiums by 1.05 percent (down from an initially proposed average increase of 5.09 percent).

Rate changes in previous years

Insurer participation in MNsure: 2014-2021

2014: Five insurers offered individual policies through MNsure for 2014: Blue Cross Blue Shield of Minnesota, HealthPartners/Group Health, Medica, PreferredOne, and UCare. Kaiser Health News reported that Minnesota offered some of the lowest premiums for silver (mid-level) plans in the U.S. Four of Minnesota’s nine regions made Kaiser’s list of the 10 least expensive places to buy health insurance.

2015: But PreferredOne, which offered the lowest rates in the nation in 2014 and captured a large portion of 2014 enrollees, withdrew from MNsure for 2015. PreferredOne said remaining on the exchange was “not administratively and financially sustainable.” A Star Tribune business writer attributed PreferredOne’s departure as a market dynamics issue rather than a problem with MNsure.

However, Blue Plus (an affiliate of Blue Cross Blue Shield of MN, offering HMO plans) joined the exchange for 2015, so there were still five insurers offering plans for 2015: Blue Cross Blue Shield of Minnesota, Blue Plus, Health Partners/Group Health, Medica, and UCare. MNsure offered 84 plans statewide, up from 78 for 2014.

2016: BCBSMN, Blue Plus, Health Partners/Group Health, Medica, and UCare offered individual market plans through MNsure for 2016.

2017: In an effort to recruit more carriers to offer plans through MNsure for 2017 — particularly outside the Twin Cities metro area — state regulators sent out a request for proposals from health insurers on August 15, 2016. Regulators noted that insurers could propose waivers of regulations in order to make it feasible for them to offer coverage through MNsure, although any such waiver requests would have to be approved by regulators.

Steven Parente, a health insurance expert at the University of Minnesota, called the state’s effort to recruit insurers to MNsure a “distress call” and noted that August 15 is awfully late in the year to be putting out a request for insurer participation, given that open enrollment begins November 1. And ultimately, no new insurers opted to join MNsure for 2017.

Blue Cross Blue Shield of MN dropped their individual market PPO plans at the end of 2016 due to significant financial losses. That left Blue Plus (which offered HMOs and covered roughly 13,000 people in 2016 in the individual market) as the only BCBSMN affiliate in the exchange. Roughly 103,000 people had to select new plans during open enrollment.

Most of those BCBSMN enrollees had off-exchange coverage, though. There were only about 20,400 MNsure enrollees (a little more than one in five MNsure enrollees) with coverage under BCBSMN who needed to switch to another plan during open enrollment. BCBSMN had individual PPO options available in all 87 counties in Minnesota through MNsure in 2016, while the Blue Plus coverage area — comprised of four separate HMO networks — was available in 77 of the state’s counties.

Nationwide, carriers have been shifting away from PPOs and towards HMOs and EPOs. In Colorado, Anthem Blue Cross Blue Shield also dropped their PPOs at the end of 2016. In Indiana, there were no PPOs available in the individual market by 2017. Blue Cross Blue Shield of New Mexico dropped all of their individual market plans at the end of 2015 except one off-exchange HMO. Blue Cross Blue Shield of Texas dropped their individual market PPO plans at the end of 2015.

Minnesota does still have PPO options available however. There are PPOs offered by Blue Cross Blue Shield of Minnesota and HealthPartners for 2021.

The broad network offered by PPOs tends to be attractive to enrollees who have health problems; they’re often willing to pay higher premiums in trade for access to broad network of hospitals and specialists. But PPOs are expensive for carriers, as enrollees don’t need primary care referrals to see specialists, and it’s more challenging for carriers to hold down costs when there are more providers in the network.

All of the MNsure carriers except Blue Plus are also limiting their total enrollment for 2017. By November 11, 2016, less than two weeks into open enrollment for 2017 coverage, Medica had hit their 50,000 member enrollment cap for 2017 (including on and off-exchange enrollments, and also accounting for expected renewals of 2016 Medica plans), and their policies were no longer available in the individual market in Minnesota, on or off-exchange. The only exception was five counties (Benton, Crow Wing, Mille Lacs, Morrison, and Stearns) where Medica agreed not to limit enrollment, as all of the other available carriers in those counties have imposed enrollment caps too. In those five counties, Medica plans continued to be available.

At that point, Medica’s market share in MNsure for 2017 stood at 34.2 percent. By December 14, Medica’s market share had dropped to 27.7 percent, as enrollments had continued to climb for the remaining carriers.

On January 31, Medica re-opened enrollment for 2017. This was because a smaller-than-expected number of 2016 Medica enrollees renewed their plans for 2017, meaning that the carrier still had some wiggle room under their 50,000 member cap; at that point, they had room for about 7,000 more enrollees. Medica plans were thus available throughout the duration of the special enrollment period that was added on at the end of open enrollment, and continue to be available for people with qualifying events.

2018: Plans continued to be available from Blue Plus, Health Partners/Group Health (GHI), Medica, UCare. In the months before a decision was reached regarding an extension of the open enrollment window for 2018 plans (the first year that the federal government imposed a shorter, month-and-a-half enrollment window), two of MNsure’s participating insurers had differing positions: UCare believed the exchange should add an additional two-week special enrollment period, while Medica did not want the exchange to have the option to extend the newly-scheduled six-week enrollment window. Notably, Medica capped their enrollment very early during the 2017 open enrollment period, and while UCare also had an enrollment cap, it was set with a target of nearly doubling their 2016 enrollment. But Medica is the only MNsure insurer that didn’t set an enrollment cap for 2018.

As was the case for 2017, enrollment caps were used in the individual market in Minnesota for 2018 by all insurers other than Medica (Medica did have an enrollment cap for 2017, which they hit very early in open enrollment; however, they resumed enrollments at the end of January 2017). Details about the insurers’ enrollment caps are in the plan binders in SERFF. For 2018, MNsure insurers implemented the following enrollment caps:

• Blue Plus: 55,000 member cap (aiming for a target of 50,000 effectuated enrollees, but effectuated enrollment is always lower than the number of people who initially enroll)
• Health Partners/Group Health (GHI): 73,400 member cap (aiming for a target of 70,000 effectuated enrollees)
• Medica: no enrollment cap
• UCare: 35,000 member cap (aiming for a target of 30,000 effectuated enrollees)

MNsure confirmed in May 2018 that none of their insurers had hit their enrollment caps for 2018.

Outside the exchange, PreferredOne had an enrollment cap of 3,000 members, although their 2017 membership was only about 300 people.

2019 and 2020: Blue Plus, Health Partners/Group Health, UCare, and Medica have continued to offer plans through MNsure, and all of them continued to participate in 2020 as well. Blue Plus expanded to once again offer statewide coverage in 2020, for the first time since 2016.

2021: Quartz joined the exchange for 2021, joining the four existing insurers. HealthPartners and UCare both expanded their coverage areas for 2021.

Minnesota Premium Security Plan: 1332 waiver proposal approved by CMS, but with a significant funding cut for MinnesotaCare

In May 2017, Minnesota Governor Mark Dayton submitted a 1332 waiver proposal to CMS. The 1332 waiver was based on H.F.5, which was enacted without Dayton’s signature in April 2017 (Dayton had proposed an alternative measure that would have allowed people in Minnesota to buy into MinnesotaCare; that measure was not able to pass the state’s Republican-dominated legislature).

[For more than two decades, MinnesotaCare was a state program subsidizing health insurance for low-income residents.  As of January 1, 2015, it transitioned to a Basic Health Program under the ACA, becoming the first BHP in the nation.]

H.F.5 created the Minnesota Premium Security Plan (MPSP), which is a state-based reinsurance program (similar to the one the ACA implemented on a temporary basis through 2016, and that Alaska created for 2017; several other states have since implemented reinsurance programs). The reinsurance program, which took effect in Minnesota in 2018, covers a portion of the claims that insurers face, resulting in lower total claims costs for the insurers, and thus lower premiums (average individual market premiums in Minnesota decreased from 2017 to 2018 as a result of the reinsurance program). The reinsurance kicks in once claims reach $50,000, and covers them at 80 percent up to $250,000 (this is similar to the coverage under the transitional reinsurance program that the ACA provided from 2014 through 2016).

H.F.5 was contingent upon approval of the 1332 waiver, because it relies partially on federal funding, in addition to state funding. Under the federal approval that was granted in September 2017, the federal government is giving Minnesota the money that they save on premium tax credits, and that money is combined with state funds to implement the reinsurance program (lower premiums — as a result of the reinsurance program — result in the federal government having to pay a smaller total amount of premium tax credits, since the tax credits are smaller when premiums are smaller).

It was expected that CMS would approve the state’s 1332 waiver proposal, and Governor Dayton requested that the approval process be swift so that the state could move forward with the implementation of the Minnesota Premium Security Plan in time for the 2018 plan year. Dayton indicated that his office had been told that approval would come in August 2017, but CMS didn’t approve the waiver until September 22. And the waiver approval letter noted that the federal savings for MinnesotaCare (the state’s Basic Health Program, or BHP) resulting from the reinsurance program would not be eligible to be passed along to the state — in other words, CMS would keep those savings instead.

[Federal BHP funding is equal to 95 percent of the amount that the federal government would have otherwise spent on premium subsidies and cost-sharing reductions for the population that ends up being eligible for the BHP. So lower premiums — as a result of reinsurance — for qualified health plans in the exchange means that the amount the federal government would have had to spend on premium subsidies for that population is lower. That translates into a smaller amount of funding for the state’s BHP, according to the approach that HHS took for Minnesota’s waiver approval.]

And based on the scathing letter that Dayton sent CMS a few days earlier, it appeared at that point that Minnesota could actually lose money on the deal — losing more in federal funding for MinnesotaCare than they gain in reinsurance funding. Dayton noted in his letter that the 1332 waiver approval process had been “nightmarish,” and that Minnesota went to great lengths to follow instructions from CMS at every turn, throughout the process of drafting H.F.5 and the 1332 waiver proposal. He explains that CMS provided Minnesota with explicit guidance in terms of how to draft the reinsurance program while maintaining full federal funding for MinnesotaCare, and highlighted the fact that the state never deviated from the instructions that were provided.

The StarTribune editorial board called out then-Secretary of HHS, Tom Price and the Trump Administration for their lack of clarity on the issue, for apparently misleading the state during the 1332 waiver drafting process, and for effectively punishing the state of Minnesota for taking an innovative approach to ensuring that as many people as possible have health insurance.

Insurers filed rates based on reinsurance being available. And by the time the waiver was approved, there was very little time to evaluate the potential impacts of the funding changes, as rates had to be finalized by October 2 in Minnesota. The finalized rates did incorporate the reinsurance program; the state has accepted the approved waiver, but Gov. Dayton sent a letter to HHS on October 3, asking them to reconsider the MinnesotaCare funding cuts, but the issue has remained unresolved.

Elimination of CSR funding results in additional funding cut for MinnesotaCare, but a lawsuit has partially restored that funding

Nationwide, 54 percent of exchange enrollees benefit from cost-sharing subsidies. But in Minnesota, only 13 percent of exchange enrollees are receiving cost-sharing subsidies. This is because of MinnesotaCare, which covers all enrollees with income up to 200 percent of the poverty level. That’s the same group that would otherwise benefit the most from cost-sharing subsidies, so the fact that MinnesotaCare is available means that most of the people who would otherwise be enrolled in cost-sharing subsidy plans are instead enrolled in MinnesotaCare.

At first glance, this would appear to have made the uncertainty surrounding cost-sharing subsidy funding in 2017 a little less of a pressing issue in Minnesota than it was in many other states, since private insurers weren’t facing the sort of losses that insurers in other states were facing without federal funding for CSR. But when the Trump Administration eliminated federal funding for CSR in October 2017, HHS took the position tha t since CSR funding had been eliminated, the CSR portion of the federal funding for the BHPs in New York and Minnesota would be reduced to $0. This was not a cut-and-dried conclusion, however, as explained earlier in 2017 by Michael Kalina.

In January 2018, the Attorneys General for New York and Minnesota filed a lawsuit against the US Department of Health and Human Services, seeking to restore funding for their Basic Health Programs. A judge ruled in favor of the states in May 2018, ensuring that MinnesotaCare would continue to receive at least some CSR-based funding. The amount awarded to the state for the first quarter of 2018 was just over half of what the state had initially expected in CSR-related funding, but a larger chuck of the funding was restored later in 2018. According to the Star Tribune, however, Minnesota still ended up losing $161 million in federal funding for MinnesotaCare due to the CSR funding cuts.

In early 2019, the Trump administration proposed yet another funding cut (a third, after the cuts imposed by the reinsurance program and the elimination of CSR funding) as part of a new methodology for calculating BHP funding. This one was much smaller than the other two cuts, but taken together the funding reductions are pushing MinnesotaCare towards a looming budget shortfall.

SHOP exchange: down to one carrier as of 2016, zero by 2018 (and still zero in 2019)

In 2015, there were two carriers in MNsure’s SHOP exchange for small businesses: Blue Cross Blue Shield of Minnesota, and Medica. But Medica announced in 2015 that they would exit the SHOP exchange in Minnesota, North Dakota, and Wisconsin at the end of the year. That left BCBS as the only small group carrier available through MNsure in 2016, but it didn’t change much from a practical standpoint, since 83 percent of MNsure’s small groups were enrolled in plans through BCBS in 2015. Indeed, Medica’s reason for exiting the small business exchange was based on low enrollment in the first two years.

Blue Cross Blue Shield of Minnesota continued to be the only insurer offering SHOP coverage via MNsure in 2017, but announced in July 2017 that they would no longer offer SHOP coverage in 2018, and would instead transition their SHOP enrollees to small business coverage outside the exchange. At that point, there were only 3,287 people enrolled in SHOP coverage in Minnesota — far below the 155,000 people that were originally projected to have coverage through MNsure’s SHOP program by 2016 (this much lower-than-anticipated enrollment has been the case in nearly every state’s SHOP exchange; this situation is not unique to Minnesota).

State law provided 25% premium rebate in 2017; amendment to allow plans without essential benefits was cut from final legislation

Throughout 2016, then-Governor Dayton called for a state-funded premium rebate for people who buy their own insurance but aren’t eligible for the ACA’s premium subsidies (those are only available for people with income up to 400 percent of the poverty level, or $100,400 for a family of four in 2019).

Governor Dayton also noted that the government needed to act quickly to stabilize the individual market in Minnesota, and by late November 2016, his patience with lawmakers was wearing thin. In a November 23 press conference, Dayton said that House Republicans needed to “stop dilly-dallying” and decide whether to move forward with Dayton’s rebate proposal.

Dayton had also indicated that he was considering calling a special session of the legislature after election day to address the situation, and that was being negotiated for December 20. But the talks fell through when Dayton and Republican House Speaker Kurt Daudt couldn’t agree on the three bills that would have been addressed in the special session; as a result, there was no special session.

Instead, the issue was taken up by lawmakers as soon as the 2017 legislative session began. On January 5, Minnesota Senators Michelle Benson (R, 31st District) and Gary Dahms (R, 16th District) introduced S.F.1. The bill called for using $300 million in state funding to provide a 25 percent rebate to roughly 125,000 people in Minnesota.

S.F.1 passed the Minnesota Senate by a 35-31 vote on January 12. Only one DFL Senator (Melisa Franzen, from Edina) voted with Republicans in favor of the legislation. It was then sent to the House, where an amendment was added that stripped out the requirement that health plans provide various mandated benefits (see “Journal of the Day” section “Top of page 154” in this version of the bill; under the terms of the amendment, as long as a carrier offered at least one plan with all the mandated benefits, they would have been allowed to offer others without mandated benefits).

The amended bill was sent back to the Senate on January 23; differences between the bills that the two chambers passed had to be reconciled before being sent to Governor Dayton for his signature. By that point, the amendment to allow less-robust plans to be sold had garnered national attention, and public outrage helped to push lawmakers away from the provision. S.F.1 had also called for $150 million to be appropriated for fiscal year 2018 (through June 30, 2019) from the state general fund to a state-based reinsurance program to stabilize the individual market (Alaska did something similar in 2016, preventing a market collapse), but that provision was also removed in the final version (Minnesota did ultimately set up a reinsurance program, effective in 2018, which has served to stabilize the market and reduce premiums).

A Conference Committee in the Senate recommended that the House “recede from its amendments” and the Conference Committee report passed the Senate on a 47-19 vote. The House passed the bill a few hours later, 108-19. It was sent to Governor Dayton, who immediately signed it into law. DFLers did have to compromise on one issue during the process: S.F.1 allows for-profit HMOs to begin operating in Minnesota’s individual market, which had long been limited to non-profit HMOs.

Consumers were told to expect the premium rebates to show up by April 2017, but they were retroactively effective to January 2017. So a person who had been paying full price for a plan since January 2017 saw a substantial premium reduction on the April or May invoice. Going forward, for the remainder of the year, a 25 percent rebate applied each month.

Since S.F.1 was signed into law with only a few days remaining in open enrollment (it ended January 31 that year), Governor Dayton and exchange officials were worried that there wouldn’t be enough time for people to learn about the rebate and apply for coverage before January 31. In December, Dayton had asked HHS to allow MNsure to extend its enrollment deadline to February 28 (instead of January 31) in order to allow lawmakers more time to work out the details of a state-based premium rebate while still allowing people to enroll after the legislative process is complete.

HHS denied the request for a blanket extension, but MNsure used their own authority on January 28 to grant a one-week special enrollment period (February 1 to February 8) due to exceptional circumstances. Although the state-based 25 percent premium rebate was available on or off the exchange, the one-week extension was only valid through MNsure; health insurers did not have to accept off-exchange enrollments without a qualifying event after January 31.

The 25 percent premium rebate program in Minnesota was only authorized for one year, so the rebates did not continue into 2018. And although almost 100,000 people received premium relief through the program in 2017, it ended up costing less than the legislature had allocated, and about $100 million was returned to the state’s budget at the end of 2017.

Protecting Medicaid enrollees from estate liens

In every state, Medicaid is jointly funded by the state and the federal government. Longstanding federal regulations, which predate the ACA, require states to “seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services” for any Medicaid enrollee over the age of 55. This applies essentially to long-term care services, but states also have the option to go after the individual’s estate to recover costs for other care that was provided by Medicaid after age 55.

Prior to 2014, this wasn’t typically an issue, as Medicaid eligibility was generally restricted by asset tests or requirements that applicants be disabled or pregnant (although Minnesota did have much more generous Medicaid eligibility guidelines than most states prior to 2014). But as of 2014, in states that expanded Medicaid under the ACA, the only eligibility guideline is income. Applicants with income that doesn’t exceed 138 percent of the poverty level are directed to Medicaid, regardless of any assets they might have.

When applicants use the health insurance exchange — MNsure in Minnesota — they’re automatically funneled into Medical Assistance (Medicaid) if their income is under 138 percent of the poverty level. But what these enrollees didn’t know was that the state also had a program in place to put liens on estates for Medicaid-provided services for people age 55 and older.

The combination of these systems caught numerous residents off guard. They were enrolled in Medical Assistance through MNsure based on their income, but were not aware that liens were being placed on their homes so that the state could recoup the costs upon their deaths.

State Senator Tony Lourey (DFL, District 11) addressed the issue with language included in HF2749, the Omnibus supplemental budget bill, which was signed into law by Governor Dayton on June 1, 2016. The legislation limits estate recovery to just what’s required under federal Medicaid rules (ie, essentially, long-term care costs for people age 55 or older), and makes the provision retroactive to January 1, 2014.

Early tech struggles

MNsure opened for business in the fall of 2013, but technological issues persisted well into 2015, despite numerous improvements throughout 2014. Given MNsure’s difficult launch, the state conducted a series of audits and reviews.  The first audit reviewed how MNsure spent state and federal money. Auditors concluded that the exchange has generally adequate internal controls and found no fraud or abuse. The review was conducted by the state Office of the Legislative Auditor, and the report was published in October 2014.

Another audit, also conducted by the Office of the Legislative Auditor and released in November 2014, found that the MNsure system in some cases incorrectly determined who qualified for public health benefits. The errors occurred during the first open enrollment period, before a series of system fixes were implemented. The audit did not quantify the total financial impact of the errors. The state Human Services commissioner said a consultant working on technical fixes to MNsure concluded that the eligibility functionality was working correctly as of June 2014.

A third audit, a performance evaluation report released in February 2015, said “MNsure’s failures outweighed its achievements.” Among other criticisms, auditors said MNsure staff withheld information from the board of directors and state officials, the enrollment website was seriously flawed and launched without adequate testing, and the first-year enrollment target was unrealistically low.

In April 2014, MNsure hired Deloitte Consulting to audit MNsure’s technology and improve the website to make enrolling in coverage and updating life events easier and more streamlined. Deloitte has been involved in successful state-run marketplaces for Connecticut, Kentucky, Rhode Island and Washington.

Software upgrades were installed in August 2014, and system testing continued right up until the start of open enrollment. To reduce wait times for consumers and insurance professionals, MNsure increased its call center and support staff and launched a dedicated service line for agents and brokers.

More in-person assisters were available in Minnesota for the 2015 open enrollment period. MNsure encourages residents to utilize the exchange’s assister directory to find local navigators and brokers who can help with the enrollment process.

MNsure has improved dramatically in terms of its technology since the early days of ACA implementation, and enrollment increased every year from 2014 through 2019.

Lawmakers approved switching to HealthCare.gov as of 2019, but governor vetoed

On May 9, 2017, lawmakers in Minnesota passed SF800, an omnibus health and human services bill. Among many other things, the legislation called for switching from MNsure to the federally-run marketplace (HealthCare.gov) starting in 2019 (see Section 5). But Governor Dayton vetoed it.

Gov. Dayton has long been supportive of MNsure, and had previously clarified that he would veto the bill. In noting his plans to veto the legislation, Dayton made no mention of the transition to HealthCare.gov that was included in the legislation, but focused instead on the sharp budget cuts in the bill. But his veto ensured that MNsure would remain in place, at least for the time being.

The Senate’s original version of SF800 did not call for scrapping MNsure, but the bill went through considerable back-and-forth between the two chambers, and the version that passed was the 4th engrossment of the bill.

In March 2015, Dayton had asked the legislature to create a Task Force on Health Care Financing that would study MNsure along with possible future alternatives. Dayton noted in his letter that he supported making MNsure “directly accountable to the governor and subject to the same legislative oversight as other state agencies” and his budget included half a million dollars devoted to the task force. The spending bill was approved by the legislature in May, and the 29-member task force was appointed in the summer.

One of the possibilities that the task force considered was the possibility of switching to Healthcare.gov, but it’s clear that there was no cut-and-dried answer to the question of whether Minnesota is better served by having a state-run exchange, switching to a federally-run exchange, or teaming up with the federal government on either a supported state-based marketplace or partnership exchange.

In a December 2015 meeting of the task force, the MN Department of Human Services presented a financial analysis of the alternatives available to MNsure. They determined that switching entirely to Healthcare.gov would cost the state an additional $5.1 million in one-time costs from June 2016 to June 2017. And switching to a supported state-based marketplace would cost an additional $6.6 million during that same time frame. If the state had opted to switch to Healthcare.gov, the soonest it could have happened was 2018, since HHS requires a year’s notice from states wishing to transition to Healthcare.gov, and Minnesota wouldn’t have been in a position to make a decision until sometime in 2016.

There were significant reservations about making that switch prior to the Supreme Court’s ruling on King v. Burwell. The Court ruled in June 2015 that subsidies are legal in every state, including those that use Healthcare.gov. Prior to the decision, a switch to Healthcare.gov could have jeopardized subsidies for tens of thousands of Minnesota residents. But once it was clear that Healthcare.gov’s subsidies are safe, some stakeholders began calling for Minnesota to scrap its state-run exchange and use Healthcare.gov instead. Because the MNsure task force was included in the 2016 budget, no hasty decisions were made.

In January 2016, the task force submitted their recommendations to the legislature. They covered a broad range of issues, but did not recommend that MNsure transition to the federal enrollment platform. Lawmakers essentially left the exchange alone during the 2016 legislative session.

The magnitude of the 2016 rate increases that were announced in October resulted in MNsure opponents renewing their calls to switch to Healthcare.gov. But it’s important to keep in mind that the 41 percent weighted average rate hike in Minnesota was market-wide, and did not just apply to MNsure enrollees. In fact, the off-exchange carrier (PreferredOne) had among the highest rate hikes in the state for 2016, at 39 percent, and the exchange’s weighted average rate increase (38.5 percent) was lower than the weighted average rate increase for the whole individual market (41 percent).

Minnesota health insurance exchange links

MNsure
855-3MNSURE (855-366-7873)

State Exchange Profile: Minnesota
The Henry J. Kaiser Family Foundation overview of Minnesota’s progress toward creating a state health insurance exchange.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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