Minnesota Governor Mark Dayton said Monday that Minnesotans may not renew health plans that are noncompliant with Affordable Care Act (ACA) in 2014, despite the fact that President Barack Obama opened the door to that option.
And while the attention has been focused on the individual market, the announcement may also affect plans offered by Minnesota businesses.
When Obama said last week that he supports giving individuals the option to retain their current health plans for an extra year—even if the plans are not compliant with the ACA—Dayton applauded the move.
Dayton said Monday, however, that Minnesota won’t grant a one-year extension to let people renew non-compliant plans. He made the decision after receiving a letter from Julie Brunner, executive director of the Minnesota Council of Health Plans, an association that counts among its members many of the state’s largest insurers.
The letter implied that Obama’s move came too late to allow Minnesota health plans and regulators to complete the necessary filings, rate approvals, and other tasks “in time to prevent major disruptions for Minnesotans in the individual marketplace.” Brunner also contends that, if Obama’s “fix” is adopted and fewer young, healthy people buy coverage from the exchange, the risk pool increases and would result in higher premiums.
Dayton sided with Brunner and directed Minnesota Commerce Commissioner Mike Rothman to proceed with the rollout of MNsure and other ACA changes as previously planned.
What does Dayton’s decision mean for Minnesotans? The state’s consumer protection laws prohibit insurance companies from actually terminating people’s individual coverage unless the insurer altogether exits the market, according to a spokesperson from the Minnesota Department of Commerce. That requirement is known as “guaranteed renewability.” The rule also applies to the small group market: Insurers must guarantee renewability, but businesses may, of course, elect to terminate coverage themselves.
Individual and small-group plans taking effect January 1, 2014 and thereafter, however, must accommodate reforms—including protection against being dropped by an insurer due to pre-existing conditions, out-of-pocket caps, and so-called Essential Health Benefits. In other words, just like individuals, small groups will be guaranteed renewals, but their previous plans may be replaced by new, and perhaps more expensive, ones.
That said, small groups have not been under the same pressure as the individual market, largely because their plans tend to be renewed at different times throughout the year. Renewing existing plans prior to 2014 was already a key strategy for many small businesses that wanted to lock in more favorable rates, and many had already been able to defer difficult decisions about new plans until late next year.
Nonetheless, plan changes are affecting employee-provided coverage. In fact, a recent report by the Kansas City Star suggests that the number of people whose plans are changing (or already have) may be between 34 million and 52 million nationwide—largely because many employer-provided insurance plans also could change, not just individually purchased plans. (A portion of those changes could be driven by normal year-to-year decisions, like employers switching plans to save money.)
Administration officials have declined to say how many employer-sponsored plans could change, but those numbers could be between 23 million and 41 million, based on a McClatchy analysis of estimates offered by the Department of Health and Human Services in June 2010, the newspaper reported.
Meanwhile, small groups are moving forward with procuring insurance. Thus far, the Minnesota Department of Commerce has approved roughly 600 small-business plans, including 63 sold through MNsure, that are effective January 1, according to a department spokesperson.