Minnesota Health Insurance Claims Assessment Proposed

In the Minnesota Senate, SF 2616 has been introduced by Senators Abeler (R), Jensen (R), Klein (D), and Franzen (D). This bill would create a 2% assessment on each health plan company and third-party administrator (TPA) on the claims paid, also known as a health insurance claims assessment (HICA). “Health plan company” includes a group health plan sponsor, which is also defined in the bill and includes self-insured employer plans. If a group health plan uses a TPA or stop-loss insurer, the TPA or stop-loss insurer is responsible for the assessment payment; however, we know that cost likely would be passed on to the plan in the form of higher premiums or fees. This is very similar to the Michigan HICA that we successfully helped repeal last year.

We have heard from multiple sources in the state that the HICA is not likely to move forward in Minnesota. Most Republicans in the Senate (Republican controlled) would rather not implement a HICA in the state, and instead allow the current provider tax to sunset (more on that below) and look for waste and savings opportunities within the Department of Human Services to make up the difference. The Governor also prefers keeping the provider tax rather than changing to a HICA, even if the provider tax is reduced to a lower percentage. Further, the bill has not been scheduled for any hearings, and legislative deadlines are fast approaching.

Since the mid-90s, Minnesota has had a 2% provider tax on health care goods and services (1.5% from 1998-2003) that it uses to pay for the MinnesotaCare program, which provides coverage for individuals whose incomes are too high to qualify for Medicaid, but not enough to afford private coverage. However, since the ACA became effective, most of the funding has come from the federal government, so now the revenue from the provider tax is being applied to other areas, like the state’s reinsurance program and Medicaid. The state’s medical association has always opposed it, and during a budget impasse in 2011, an agreement was forged to allow the tax to sunset at the end of 2019, with the thought being that with the ACA, they would no longer need it. However, once a state is accustomed to a revenue stream, it’s hard to get rid of it. The current HICA legislation was a concept brought forward by the medical association to make up the difference.

ERIC’s sources tell us that Hospitals (even though subject to the provider tax), insurers, and patient groups want the provider tax to stay rather than switching over to the HICA. One reason given is that the state is used to it and the tax itself has already been passed on to charges, premium rates, etc.

ERIC will continue working with our allies in the state to ensure that this proposal does not move forward by discussing the impact this would have on our member companies. We also encourage you to alert your state government affairs team in the region to this issue and invite them to connect with us.

Please let me know if you have any questions.

Article by Adam Greathouse, Health Care Policy Senior Associate