Dayton rejects Obama's health insurance policy change option

Posted: 11/18/2013 12:01:00 AM CST

Updated: 11/18/2013 11:31:27 PM CST

Siding with Minnesota health insurers, Gov. Mark Dayton said Monday that the state won't follow President Barack Obama's lead and let people renew individual health insurance policies that don't comply with the federal Affordable Care Act.

The governor made his announcement in response to a letter Monday from Julie Brunner of the Minnesota Council of Health Plans, a trade group that argued that letting consumers maintain coverage likely would result in fewer young and healthy people buying coverage through MNsure, the state's new health insurance exchange.

The absence of those consumers, Brunner wrote, could drive up costs and reduce options on the exchange.

Dayton expressed support for Obama's idea last week but backed away from it Monday after hearing from local health plans.

Republicans promptly panned his announcement, with one party activist calling it a flip-flop. However, a University of Minnesota expert said the governor had little choice.

'While I support the president's intent and applaud him for creating this option, I also respect that your members' ability to implement these changes would be crucial to their success,' Dayton wrote in a response letter to Brunner.

'Your letter raises serious concerns that these changes would create confusion in the marketplace, while leaving Minnesotans with fewer affordable health care options. Therefore, I have directed (state officials) to proceed with the current implementation of MNsure and the Affordable Care Act and with the plans made before last week's announcement.'

Controversy over canceled policies has galvanized Republicans in recent weeks.

'Hundreds of thousands of Minnesotans were recently notified that they will not be able to keep their current health insurance policies,' House Minority Leader Kurt Daudt, R-Crown, said in a statement. 'Gov. Dayton's reversal today is disrespectful to hardworking Minnesotans, and it's time he and Democrat lawmakers take responsibility.'

Added Sen. Michelle Benson, R-Ham Lake: 'Once again, Gov. Dayton made a promise he couldn't keep and Minnesota families are hurting as a result.'

Last week, Obama issued his executive order after controversy over insurance policies that are being canceled in other states and are being retrofitted with costly changes in Minnesota. The cancellations, in particular, have contradicted previous pledges from the president that Americans could keep health plans they liked even with the 2010 passage of the federal health law.

Supporters of the Affordable Care Act argue the law will help many in the individual market, including people who have been excluded from coverage due to pre-existing health conditions.

The health law mandates that all policies cover the cost of certain services, such as maternity care and pediatric dental services, to make coverage more like what many people receive through employer-sponsored insurance plans. The law also limits deductibles for consumers in hopes that people won't be surprised by high out-of-pocket costs.

But those goals are set against the experience of an unspecified number of Minnesota consumers who buy policies without the help of an employer, face premium increases due to health law changes and won't qualify for federal tax credits to offset the costs.

This fall, four large nonprofit health insurers in Minnesota sent letters describing changes required by the federal law to about 146,000 people who already buy individual health insurance policies. The premium implications vary, but insurers say the average premium increase ranges from 20 percent to 26 percent, depending on the company.

More than 60,000 of the letters went to customers of Eagan-based Blue Cross and Blue Shield of Minnesota, which is the state's largest health insurer in the individual market. Half were quoted a premium increase of less than 20 percent, said Jim McManus, a Blue Cross spokesman, with a few premium discounts in the mix.

But about 1 percent learned of premium increases of 100 percent or more if they stayed with current policies, McManus said, with the maximum increase at Blue Cross reaching 171.9 percent. When describing increases, the company has told consumers about different policies 'with a range of network and cost-sharing options at a range of price points,' McManus said in a statement.

Dayton's announcement is another example of how the Affordable Care Act currently stands as a political liability for Democrats, said Larry Jacobs, a professor of politics at the University of Minnesota. Whether the law remains a political challenge in the long run depends on whether the implementation story improves, Jacobs added.

For weeks, the controversy over canceled policies has developed as stubborn problems with a federal website mean many consumers in 36 states still can't survey their subsidized health insurance options under the Affordable Care Act. Minnesota is one of 14 states and the District of Columbia operating their own health exchange websites, and consumers have had more luck selecting options through the state-based systems.

'The governor is caught between his sentiment to do something and the reality that there is no real solution -- the die is cast,' Jacobs said of Monday's announcement.

The reality of the situation was spelled out by Brunner's letter, which noted that health insurers set premium rates for 2014 based on assumptions about when current consumers would transition into the new individual market, including the MNsure exchange. The Dayton administration has enthusiastically promoted the results of that process, stressing that premiums available on MNsure in the Twin Cities area will be among the lowest available across the country in 2014.

'If fewer younger and healthier people choose to purchase coverage in the exchange, the make-up of the risk pool changes resulting in premium increases,' Brunner wrote. 'There could also be fewer choices for consumers.'

Plus, Minnesota consumers aren't technically receiving cancellation notices because of a state law that guarantees the right to renew coverage, Brunner wrote.

Finally, Brunner stressed that Obama's option was transitional in nature, since consumers would have the option of extending policies only until October 2014. At that point premium increases could be even worse, she said.

Christopher Snowbeck can be reached at 651-228-5479. Follow him at twitter.com/chrissnowbeck.