Dayton proposes 'public option' for health insurance
ST. PAUL—A new form of health insurance could be available next year to Minnesotans in the individual health insurance market if a proposal by Gov. Mark Dayton gains approval of state legislators and the federal government.
About 250,000 people buy health insurance from the individual market. Dayton's "public option" would allow those who do not receive federal subsidies to buy a plan based on MinnesotaCare, which provides subsidized insurance to the state's working poor.
The new plan would be sold through MNsure, a state-run program that sells health insurance. It would compete with private insurance policies sold through MNsure.
Dayton representatives say the plan is the first of its kind.
"This public option could offer better benefits than many policies presently on commercial markets," Dayton wrote in his State of the State remarks, including "more options for people to keep their doctors and clinics and less expensive coverage than what is available today."
While some Minnesotans would pay the full premium price, federal tax credits would reduce premium prices for people with lower income.
The average price for an insurance plan under the new public option would be available to most Minnesotans for an average price of $469 per month, about 12 percent less than the $538 premium for private insurance in 2017, the Dayton administration said.
Dayton's office estimates the plan would save families an average of more than $800 per person annually in 2018 compared to 2017.
The public option plan would come with a $12 million start-up cost, which would later be replaced by money from premium purchases. The plans could be available in time for the 2018 open enrollment period if Legislature approves the plan by April.
The public option also would draw money from the Health Care Access Fund, which sits at a $733 million balance for 2018 and 2019. The fund, which raises revenue through a 2 percent tax to patients at the doctor's office, typically funds MinnesotaCare coverage for the working poor.
"Using the Health Care Access Fund in this way will mean more funds from the General Fund for investment in the economy, education and quality of life," Commissioner Myron Frans of Minnesota Management and Budget said during the governor's budget proposal presentation Tuesday, Jan. 24.
In addition to his plan to help Minnesotans get insurance in 2018 and beyond, Dayton also pushed a proposal he made last fall to cut premiums this year for individual health policies.
A rebate program Dayton wants would offer a 25 percent reduction to policyholders with private companies in the individual market, which has witnessed soaring premium costs.
The plan would offer the reduction through a one-time rebate using $312 million to drive down the costs of individual market plans for Minnesotans who do not receive federal tax credits. The money would come from the state's budget reserves.
Republicans generally agree with Dayton, but want to add some long-term reform to the legislation. House and Senate negotiators are trying to work out a final bill this week.
Dayton and Republicans also agree that for this year they should improve health-care access issues in greater Minnesota, where a trip to the doctor within an insurer's network can mean an hour-long drive for some patients.
Republicans were not thrilled to add the Dayton public option, but House Speaker Kurt Daudt, R-Crown, and Senate Majority Leader Paul Gazelka, R-Nisswa, said they were open to discussing the concept.
"The answer is a new approach, not doubling-down on government plans that will lead to fewer providers and scarcer care," Chairwoman Michelle Benson, R-Ham Lake, of the Senate Health and Human Services Committee said.
Daudt said he does not like keeping the health-care provider tax after it it is supposed to end in a couple of years. He called that a tax increase.
Sen. Tony Lourey, D-Kerrick, applauded the governor's public option plan.
"Access to quality, affordable healthcare is the benchmark for success, and this is exactly what Minnesotans will get with this expansion," he said. "Passage of this plan would restore comprehensive networks in rural Minnesota, and give hope to many Minnesotans who are struggling to keep up with health insurance costs."