More than 100,000 Minnesotans would lose their current health care coverage under Representative Matt Dean’s House Health and Services omnibus bill (House File 1638). The bill repeals MinnesotaCare, which would require Minnesotans to pay more for lower quality coverage. They could either pay much higher premiums, or risk higher deductibles and other out-of-pocket costs.
Under Dean’s plan, Minnesotans currently qualifying for MinnesotaCare would instead buy insurance through MNsure, our state’s health insurance marketplace. Because these households earn up to 200 percent of the federal poverty guidelines ($23,540 for an individual), they would receive a federal tax credit to lower their monthly premiums. The federal government also pays for lower out-of-pocket costs for participants at this income level who choose a “silver plan.” Silver plans are the second-lowest “metal level” on the exchange, generally charging higher premiums but with lower out-of-pocket costs than bronze plans. But even with federal cost-sharing reductions, the premiums and out-of-pocket costs would be higher than under MinnesotaCare.
Dean’s plan also involves a Premium Health Care Credit, which is found in the omnibus tax bill. This state credit would further offset monthly premium costs on MNsure. But expenditures on the credit are capped at $50 million in total, and the plan does nothing to reduce out-of-pocket costs.
A rough estimate shows that the combination of federal tax credits and the Premium Health Care Credit would not be enough to reduce an average silver plan to an affordable price. The impact on specific individuals will differ; however, if the state’s $50 million credit is spread among the Minnesotans currently paying for coverage through MinnesotaCare, it leaves the average monthly premium for a federally-subsidized silver plan for an individual at $107. That’s more than double the current maximum MinnesotaCare premium — and the coverage would also have higher out-of-pocket costs.
That means many working Minnesotans will likely fall into the “bronze trap.” Because of the unaffordable price of silver plan premiums, many MinnesotaCare households are likely to choose a bronze health insurance plan. They’ll still get the state and federal tax credits, but won’t get the federal cost-sharing reductions. When they get sick or injured, their higher deductibles and co-pays would leave them with much higher medical bills than they would have on MinnesotaCare or under a subsidized silver plan.
As if high premiums and the bronze trap weren’t enough, the Premium Health Care Credit would create a perplexing new expense at tax time. The Premium Health Care Credit would require health insurers to provide “premium assistance” to participants that results in lower monthly premiums. Then, when participants file their taxes, they will receive the state credit. The bill stipulates that by April 15, participants would be required to pay back their insurer for the entire premium advance.
This creates a range of problems. Many participants will not have received their tax refund by April 15. Others may find that their tax refunds aren’t enough to cover the entire price of the premium discount they received. These households would face a surprising new springtime expense when the “premium advance” bill comes due.
MinnesotaCare has provided affordable health insurance for working Minnesotans for two decades. But under Dean’s plan, 100,000 Minnesotans would be left choosing between more expensive monthly premiums or riskier low premium plans with high out-of-pocket costs. Policymakers should reject this plan and maintain Minnesota’s status as a national leader in access to affordable health insurance for working households.