About the MPSP
The Minnesota Premium Security Plan (MPSP), also known as the reinsurance program, helps to protect the affordability and availability of individual health insurance by providing stabilizing secondary insurance for health plans offering individual insurance policies in Minnesota. The MPSP provides reinsurance to the plans in order to cover a portion of the cost for people with significant healthcare expenses—between $50,000 and $250,000 in total annual claims experience. This secondary insurance lowers the amount of total financial liability for health plans offering individual insurance policies. This translates into lower health insurance premiums and more health insurance options for people who purchase their health insurance in the individual market throughout Minnesota.
The MPSP was created by state law in 2017. This enabling legislation will end after the 2019 benefit year and the wrap-up of operations.
The Minnesota statute addressing the Premium Security Plan can be found at: https://www.revisor.mn.gov/bills/text.php?number=HF5&version=0&session=ls90&session_year=2017&session_number=0&type=ccr&format=pdf
The MPSP is funded from four sources, shared in order by draw down: First, a federal grant from the Center for Medicare and Medicaid Services (CMS) provides funding. This is called the State Innovation waiver and for benefit year 2018, Minnesota will receive approximately $85 million in funding from the grant. Second, MCHA has retained a pool of funds remaining from its time as a high-risk pool. These funds are now available to cover part of the cost of the MPSP. In addition, State law allows for additional money to be made available from Minnesota’s State Healthcare Access Fund and the General Fund as a source of last resort.
The State Innovation waiver, sometimes referred to as a 1332 waiver, is a CMS, federal waiver that allows states to innovate in how they provide residents with access to high quality, affordable health insurance while retaining the basic protections of the Affordable Care Act (ACA). This funding protects the state’s Access Fund and the General Fund from bearing the full cost of the program. More information about Minnesota’ 1332 waiver can be found here: https://mn.gov/commerce/industries/insurance/reinsurance/. This waiver is set to expire on December 31, 2022.
No. The health insurance companies only provide MCHA’s contracted actuary, Wakely, with claim information – i.e. how much was paid for health care services covered by their health plan. Each claim also includes a code which indicates the diagnosis of the individual who received the service. Each claim is identified by a unique ID number, but that number is randomly generated and has no relation to the actual member number of the individuals who received the services. The health insurance companies provide this information to Wakely in a securely transmitted file to the actuary.
Neither MCHA, their contracted actuary Wakely, nor any department of the State of Minnesota or the Federal government who regulates or oversees the MPSP has access to any personal information that could be traced back to an individual person.
The MPSP provides two key benefits to Minnesotans seeking coverage in the individual marketplace:
Keeping Premiums Affordable + Stable.
In 2019, health insurance premiums on the individual market decreased for the second straight year because of the MPSP. Premiums declined anywhere from 7 to 27 percent for people buying insurance coverage. The MPSP is a driving factor in this decline because when health insurers are able to manage the financial risk of high-cost care through reinsurance, they’re able to set premiums at a lower rate for everyone in the individual market across the state. As a result, more insurers are staying in the individual health insurance market year-over year and premiums remain more consistent and affordable.
Protecting Access + Choice.
Five health insurance plans offer products on Minnesota’s individual marketplace—up from four insurance options available in 2017. The MPSP helps to protect access to a variety of individual health insurance options in every corner of the state by minimizing the risk of high costs for insurers, and keeping more insurers involved in the market as a result. Without the MPSP, less populated regions of the state may have far fewer insurance options. States without a reinsurance like MPSP continue to see insurers leaving the market and options available to residents shrinking.
It’s impossible to speculate exactly what Minnesota’s individual insurance market would look like without the MPSP. But the condition of Minnesota’s individual health insurance market since the State Innovation Waiver application was submitted by Governor Dayton is telling:
“Choice Has Improved. Minnesota has gone from four to five companies offering health insurance plans on the individual market. More choice is available in every region of the state. These improvements occurred because the MPSP helps manage the potential for high risk in the individual health insurance market. Costs Have Dropped. In 2019, the individual health insurance marketplace will see premiums drop for the second straight year. The exact amount of costs declines varies by insurer, region and age, but the Minnesota Department of Commerce (MDC) projects rates to decline between 7 and 27 percent. These declines come on top of an average 20 percent drop in 2018.”
Based on these results, it’s clear the MPSP plays an important role in protecting accessibility and affordability of healthcare for Minnesota farmers, small business owners and self-employed entrepreneurs that rely on the individual market for coverage.
Reinsurance provided by MPSP helps protect affordability and access of health insurance for all people buying coverage in the individual marketplace by limiting the potential financial risk of very high cost claims to individual health plans. One year into implementation of the MPSP, decreasing the risk of providing insurance has already resulted in more choice, with five instead of four health insurance providers offering individual products.
The MPSP has increased affordability, as well. In fact, health insurance premiums for people buying coverage on the individual market declined by 20 percent, on average, in 2018 and dropped anywhere from 7 to 27 percent for 2019. That’s a stark difference from the group insurance market, where premiums nationwide are projected to jump 5 percent in 2019—the sixth straight year of at least 5 percent increases, according to Kiplinger.1
Today approximately 150,000 Minnesotans rely on the state’s individual health insurance marketplace for healthcare coverage. Almost 1 in 5 of these individuals used to be enrolled in the state’s high-risk pool for people with preexisting conditions who could not access group coverage — if all 26,000 high-risk pool participants are in the current market.
1. https://www.kiplinger.com/article/insurance/T027-C001-S003-cost-of-employer-health-coverage-to-rise-in- 2019.html
No. Individuals enroll in the individual health plan of their choice that offered by health insurance companies in Minnesota. The eligible health insurance companies then submit claims information to MCHA to receive payment of the reinsurance.
An eligible health insurance company is:
- An insurance company licensed under Minnesota statute chapter 60A to offer, sell or issue a policy of accident and sickness insurance as defined in section 62A.01;
- A nonprofit health service plan corporation operating under Minnesota statute chapter 62C; or
- A health maintenance organization operating under chapter 62D that offer individual health plans and incur claims cots for individual enrollee’s covered in a benefit year.
The attachment point is the threshold amount for claims costs incurred by an eligible health plan for an enrolled individual’s covered benefits in a specific benefit year, beyond which the claims costs for benefits are eligible for reinsurance payments.
The Minnesota Premium Security Plan payment parameters for benefit years (i.e. calendar year) 2018, 2019, 2020 and 2021 were:
- an attachment point of $50,000;
- a coinsurance rate of 80 percent; and
- a reinsurance cap of $250,000
The Minnesota legislature changed the payment parameters for benefit 2022 to be:
- an attachment point of $50,000;
- a coinsurance rate of 60 percent; and
- a reinsurance cap of $250,000
Each year, the MCHA board of directors may adjust the payment parameters to assure the MPSP can operate within its’ budget.
For each benefit year, MCHA must notify an eligible health insurance company of reinsurance payments to be made for the benefit year no later than June 30th of the year following the benefit year. By August 15th of the year following the benefit year, MCHA must disburse all applicable reinsurance payments to an eligible health insurance company.
This means that MCHA will notify the health insurance plans of their reinsurance payment by June 30th and pay the insurance companies by August 15th of each year for the prior year’s experience.