Opportunity knocks with federal health care reform

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Among the hot topics at the Capitol in the 2012 Legislative Session is how federal health care reform will be implemented here in Minnesota. The federal Affordable Care Act (ACA) of 2010 lays out a path to address the many problems facing the nation’s current health care system, offering tremendous opportunities to improve health outcomes and reduce health disparities in Minnesota. Over the coming months, we will blog about how our state can best implement federal health care reform to benefit Minnesotans.

Today’s blog highlights an opportunity in federal health care reform that few people are aware of. The ACA allows our state to set up a Basic Health Plan to continue offering working Minnesotans access to affordable and comprehensive health coverage, similar to MinnesotaCare, and would bring more federal money to the state to pay for health care. It’s an option that Minnesota policymakers should keep on the table as they work on implementing health care reform this session.

Let’s take a step back to explain. Starting in 2014, many Minnesotans can begin finding private health insurance through a health care exchange – an online marketplace where individuals and small businesses can shop, compare and purchase health insurance. Many lower- to middle-income Minnesotans will be eligible for federal tax credits to help cover the costs of purchasing health insurance. Unfortunately, even with the tax credits, the lowest-income working Minnesotans will probably not be able to find comprehensive policies that are also affordable. Some people will still fall between the cracks.

Minnesota has a solution in place for these folks right now – it’s called MinnesotaCare. More than 100,000 Minnesotans are able to purchase affordable health insurance through MinnesotaCare each month, including pregnant women, children, parents and adults without children. But once the health care exchange is up and running in 2014, MinnesotaCare will likely be eliminated and these working Minnesotans will need to find private insurance through the exchange. Unless we take a different path.

Thanks to the ACA, states have the option of creating a Basic Health Plan, which would provide health care coverage for adults under the age of 65 with incomes that do not exceed 200 percent of the federal poverty level ($30,260 for a couple), who are not eligible for Medicaid (known as Medical Assistance in Minnesota) and do not have access to affordable and comprehensive employer-sponsored insurance.

Creating a Basic Health Plan could have many advantages for working Minnesotans.

  • A Basic Health Plan allows the state to establish a health care option similar to MinnesotaCare that would continue to provide comprehensive coverage with affordable out-of-pocket costs for working individuals and families.
  • Once the health care exchange is in place in 2014, very low-income Minnesotans whose incomes are on the rise would become ineligible for Medicaid (where they pay very limited out-of-pocket costs for their health care) and find themselves shopping for private health insurance through the exchange. This sudden move could create serious barriers for these Minnesotans trying to move out of poverty, including a dramatic increase in costs and most likely a change in their doctors and clinics. A Basic Health Plan, if integrated with Minnesota’s Medicaid program, could help ease the transition between Medicaid and the exchange.
  • There is also the potential to keep family members enrolled in the same health plan. If the state contracts for the same provider networks for the Basic Health Plan as for Medicaid, parents and children could visit the same clinics and doctors.

And the Basic Health Plan offers a benefit for the state budget too – it would bring in more federal dollars to pay for health care for Minnesotans. Currently, two-thirds of the funding for MinnesotaCare comes from the state, primarily from a tax on health care providers and health plans. With a Basic Health Plan, the federal government would pick up most of the cost of providing health care for these working Minnesotans. That’s not a bad deal.

The Basic Health Plan could be the best way Minnesota can honor its commitment to ensuring equity in health care – helping low-income working Minnesotans access affordable and comprehensive health care coverage. Policymakers should keep the door open to this option as details of implementation are worked out.

If you want to learn more about the Basic Health Plan, check out our recent issue brief on the topic.