MinnesotaCare: Reform under the Affordable Care Act

MinnesotaCarewas developed in 1992 as way to decrease the number of uninsured residents in the state. It is a publicly subsidized program to bridge the gap between those who do not qualify for Medicaid and those who do not receive employer-sponsored insurance. The program offers recipients different options of health insurance plans (from Medica, BlueCross, Health Partners, etc.) at a reduced premium, based on a sliding-fee scale determined by gross income and family size. MinnesotaCare served on average 129,000 residents each month in 2012.

MinnesotaCare, whose 2012 budget brought the state $549 million in expenditures, is funded by federal grants, a state tax, and the premiums paid by program enrollees. Minnesota receives a Prepaid Medical Assistance Project Plus (PMAP+) Section 1115 waiver issued by the federal government to provide health services to people who would not otherwise qualify for Medicaid. The waiver requires yearly renewal where the Department of Human Services is allowed to make amendments to the waiver and is currently set to expire on December 31^st of this year, just before the Affordable Care Act goes into effect. Minnesota places a 2% tax on the gross revenues of health care providers, surgical centers, hospitals, and wholesale drug distributors and a 1% premium tax on health maintenance organizations and non-profit service plan corporations that is put into the Health Care Access Fund. Funding to this has decreased, causing the federal waiver to make up an increasing portion of the funding, up to 44% in 2012 from 27% in 2011. The last portion of funding comes from the premiums paid by enrollees, which was 8% in 2012.

January 1, 2014 will bring major and still unknown changes for MinnesotaCare and its recipients. Two options for reform under the Affordable Care Act involve the expansion of Medicaid and the Basic Health Plan. The Affordable Care Act will increase the federal poverty guidelines for Medicaid up to 138% and many believe that this is sufficient and will decrease health expenditures in the state’s budget. However, this still leaves a large gap of Minnesotans uninsured. While there will be some federal subsidies for low-income people who don’t qualify for Medicaid, there are risks that those groups of people will choose to forgo insurance altogether which ultimately imposes higher costs on the state budget and health providers. However, officials are hoping the Basic Health Plan will help curb the increasing health care budget in the state. 

Many people, including the Department of Human Services Commissioner Lucinda Jesson, would like to see the state implement the Basic Health Plan in order to preserve MinnesotaCare. Under this plan, the federal government would subsidize about 95% of the costs of insuring residents who would otherwise be enrolled in MinnesotaCare.  Enrollment would be similar to its current state and include better benefits at lower premiums. The downfall of this option is that not all the Centers for Medicare & Medicaid Services have not yet issued federal guidance for this plan.

MinnesotaCare is a costly but much needed expenditure for the state of Minnesota. Preserving the program will ensure thousands of residents receive the care they need and prevent costly health care for the uninsured.