MinnesotaCare is a subsidized health program in the state of Minnesota. The program was enacted by the state legislature in 1992 in response to the high numbers of uninsured, low-income Minnesotans. When the program was enacted, a special fund for the program called the Health Care Access Fund was established. Initially, the Health Care Access Fund was financed through a 2% tax on health care providers, an increased cigarette tax, and premiums paid by enrollees. Today, the program is funded by a 2% tax on health care providers, hospitals, surgical centers, and wholesale drug distributers and a 1 percent premium tax on health maintenance organizations and non-profit health service plan corporations. The program no longer receives funding from the cigarette tax, but still is partially funded by enrollee premiums. In 2011, the total cost of MinnesotaCare was $738 million. Sixty-eight percent of the total costs were funded by the Health Care Access Fund, 27% was through federal programs, and 5% was through enrollee premiums. In the past few years there has been debate over the long-run solvency of the Health Care Access Fund since it started running a deficit in 2011. However, there have been recent opportunities for the state to save money in health care costs through implementation of the Patient Protection and Affordable Care Act (ACA).
Two opportunities Minnesota has to reduce health care costs through the ACA are Medicaid expansion and the Basic Health Program. The Basic Health Program is a federally subsidized option that does not force low-income individuals onto the exchange. It would allow health care coverage for adults under the age of 65 with incomes that do not exceed 200 percent of the federal poverty level and who are not eligible for Medicaid and do not have access to affordable, comprehensive employer-provided insurance. This would help solve the dilemma Minnesota faces with MinnesotaCare enrollees (up to 400% of the federal poverty level) that would now be eligible for the tax subsidy provided for the health care exchanges. The kind of plan most of these individuals would get on the exchanges would not provide the same comprehensive coverage they are receiving on MinnesotaCare.
Another way Minnesota is going to save money in health care costs because of the ACA is through the Medicaid expansion. Minnesota has already moved into the first two phases of the expansion, which moves a large percentage of MinnesotaCare enrollees to Medicaid. The federal government will pay for 100 percent of the costs for the newly eligible Medicaid recipients for the first three years, phased down to 90 percent by 2020. The Minnesota Department of Health and Human Services estimates that the two phases of the expansion will result in $1 billion in savings from 2011-2015.
MinnesotaCare is a central part to Minnesota’s history of providing high quality health care to low-income residents. It is crucial that Minnesota preserves this tradition by implementing the Basic Health Program component of the ACA.