Senate backs extending insurer payments, rejects Walz rebate plan

Updated at 2:45 p.m. with Walz comment

A three-year extension of an insurance subsidy program won Minnesota Senate approval Monday with no guarantee of action in the House.

The bill maintains a program where the state absorbs some private-market health expenses for the costliest claims, known as reinsurance. The Republican-led Senate earlier voted down a premium tax credit and rebate plan suggested by DFL Gov. Tim Walz.

The reinsurance bill passed by a 37-28 vote, with two Democrats joining all Republicans in support.

Without it, insurance companies could charge more to all policy buyers in the individual market to spread out risk. Sen. Michelle Benson, R-Ham Lake, said lawmakers need to provide health plans clarity before they submit 2020 rate proposals in the weeks ahead.

“We need to move quickly or we will have uncertainty in the rates that are filed,” Benson said. “And again, uncertainty in the insurance market causes unnecessary increase.”

She and fellow Republicans said the plan adopted two years ago has had the intended effect of tamping down premium increases.

“The program has worked very well, worked very smoothly,” said Sen. Gary Dahms, a Redwood Falls Republican who sponsored the bill. He said an extension is required to keep the market stable.

The bill relies on leftover funds from a half-billion dollar allocation made two years ago.

Gov. Tim Walz said he has concerns about reinsurance and whether the health industry is doing all it can to contain costs.

“Now it appears that we’re being a little bit complacent or lazy in just saying that’s the only fix. This needs a broader fix. It needs a more thought in it,” he said at an event near the Capitol on Monday. “And at this point in time we’re certainly not interested in reinsurance.”

Sen. Jeff Hayden, DFL-Minneapolis, said the reinsurance approach was supposed to be temporary but is turning into an entrenched program.

“This is government-run health care,” Hayden said. “We’re spending money. Outsourcing money to insurance companies that are unaccountable. Sending money to other places, spaces we don’t know about. Taking hard-earned taxpayer revenue that we’ve given them and now they get to do what they want.”

Hayden and others in his party said Minnesota has forfeited some federal money for its state-managed health programs so the reinsurance program hasn’t been all upside.

Democrats argued for putting money instead toward direct rebates to consumers, as Walz proposed.

“We should not continue to write checks to the health plans but should instead write checks to individual Minnesotans who are struggling with high premiums,” said Sen. Matt Klein, DFL-Mendota Heights.

Dahms argued that the tax rebate proposal is untested and raises concerns over who would be eligible.

“The cost of the rebate will be considerably higher per person that is helped versus reinsurance,” Dahms said before a party-line vote against the plan.

The House version of the reinsurance bill has gone through one committee but has at least two more panels to clear before a final vote could be held.

Senate Majority Leader Paul Gazelka, R-Nisswa, said he plans to make reinsurance as a priority in talks with Walz and DFL House leaders. He said the program can offer stability as lawmakers contemplate other health care changes that will take longer to implement.

“It does buy us three more years of time when we figure out what we are going to do,” Gazelka said

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