Top takeaways for Health Care Finance Task Force from this month’s Health Care Access Fund update

Ben Horowitz
Dec 17, 2015

Minnesota has the resources to get one step closer to being a state where every family knows they won’t have to choose between paying their rent or paying their health care premium. Just like the state’s General Fund, Minnesota’s Health Care Access Fund left its biannual checkup with a report that it is in good financial health, with a projected positive balance of $1.1 billion in FY 2019. The Health Care Access Fund is a part of the state budget that funds key portions of Minnesota’s health care system.

This news from the state’s November Forecast comes just in time to inform the Governor’s Health Care Financing Task Force. The Task Force is a group of 29 policymakers, community members, and workers and executives from the health care industry charged with making recommendations to the Legislature in January on how Minnesota can improve access to affordable, quality health care coverage. The updated balance in the Health Care Access Fund should encourage the Task Force to focus on making quality health care affordable for all Minnesotans.

The Fund’s projected balance is much higher than previously expected due to three big changes since the end of the 2015 Legislative Session. First, the federal government is providing more funding than previously anticipated for MinnesotaCare, Minnesota’s affordable health insurance option for people working at lower incomes. Second, the enrollees in MinnesotaCare are using health care services less than previously expected. Third, the state realized significant savings through a competitive bidding process with the private health insurance plans that provide MinnesotaCare’s coverage options.

Given these changes, the Task Force should support three key recommendations:

  • Maintain health care funding through the provider tax. About 83 cents of every dollar that goes into the Health Care Access Fund in FY 2019 is financed through a 2 percent tax on health care services. Policymakers enacted legislation in 2011 that will eliminate the provider tax in FY 2020. If that happens, the fund will likely be left with a deficit, and no way to sustain the quality, affordable coverage currently offered to working Minnesotans. Therefore, the Task Force should recommend that policymakers undo that major change with a minor stroke of the pen. An automatic trigger already allows the tax rate to shrink if the tax is projected to collect more than is needed. That would occur in FY 2018 if these projections hold true.
  • Reduce health care costs for families in MinnesotaCare. Last year’s budget implemented $65 million worth of state budget savings in FY 2016-17 by raising the price of health care for people who use MinnesotaCare to get health insurance. MinnesotaCare provides an avenue to affordable health insurance for our neighbors who work hard in low-wage jobs but don’t receive employer-based health insurance. The cuts were already unnecessary with last year’s positive Health Care Access Fund outlook. With the Fund even stronger, policymakers can afford to reverse these cost increases on working families.
  • Make health care more affordable for more working families. A family of three loses eligibility for MinnesotaCare when they earn more than $40,180 a year. Families above this income level who don’t have employer-based coverage would turn to MNsure. Even with federal assistance that brings down the price of health insurance purchased through MNsure, health care costs stretch many of those families’ budgets even closer to the breaking point. The task force should recommend lowering health care costs for such struggling families. For example, one potential recommendation would allow a family of three to use MinnesotaCare with earnings up to $55,247.

This year’s Census data showed that Minnesota remained a top state for health insurance coverage rates. If the state enacts the above recommendations, we can both protect our existing pathways to coverage and make health care more affordable for more working families.

-Ben Horowitz