Research Conducted for This Minnesota Health Insurance Study

Research Conducted for This Study

In conducting this study, MDH contracted with Mathematica Policy Research, Inc., for modeling and analysis of a variety of options related to the scope and operation of a health insurance exchange, and their interaction with other potential policy changes to improve access to private health insurance coverage. On behalf of MDH, Mathematica modeled the impact of several policy options (individually and in combination):

Guaranteed issue and removal of health status as a rating factor in the small group and individual insurance markets;
An individual responsibility to obtain health insurance coverage;
Merging the small group and individual health insurance markets; and
Requiring firms with more than 10 employees to offer a Section 125 plan to enable pre-tax payment of health insurance premiums.

Mathematica's analysis estimates the impact of these options on public and private insurance coverage in Minnesota, as well as the impact on the cost of coverage, and any costs to the state (revenue losses as well as direct costs resulting from changes in public insurance program enrollment). The Mathematica study also includes an analysis of the legal and operational issues associated with establishing a health insurance exchange and requiring employers to offer Section 125 plans. This report includes preliminary results of this modeling analysis. Other analyses, including other combinations of policy options and sensitivity analyses, are ongoing and will be available at a later date.

In addition, MDH contracted with the health policy consulting firm Burns & Associates to conduct focus groups with small employers and insurance brokers to identify their concerns related to offering health insurance, the cost of coverage, and potential proposals to establish a health insurance exchange, establish an individual responsibility to obtain health insurance coverage, and/or require employers to offer Section 125 plans.

For small employers, focus groups were conducted with employers that currently offer health insurance coverage, and with those that do not. Major findings from the focus groups included the following:

There are large differences in the level of knowledge about health insurance benefits between employers that offer coverage and those that do not. Employers that offer health insurance had a higher awareness of Section 125 plans;
Small business owners are concerned that the exchange would be too bureaucratic, particularly if it is run directly by the State;
Cost and administrative burden were cited as the main reasons why some small businesses do not offer health insurance. Small business owners that do not offer coverage were attracted to the idea that an exchange could reduce the administrative burden associated with offering insurance, but were more concerned about the high cost of coverage;
Employers that offer coverage are frustrated by high costs as well, and particularly by the volatility in premiums that can occur if just one person in the group has high claims;
The small business owners who participated in the focus groups were not supportive of requiring employers to offer Section 125 plans or requiring individuals to obtain coverage (partly because of concern that this would create additional administrative burdens for employers);
Small business owners also recommended many other strategies to reform health care, including making costs more transparent in the market, promoting prevention of disease, making the system more efficient through the use of information technology, reducing waste and overutilization, and reducing health plan administrative costs.

Insurance agents who participated in focus groups (which were held separately from the small business owner focus groups) were generally not supportive of a health insurance exchange, because of concern about unnecessary government involvement in private markets. The participants in these focus groups also did not support requiring employers to offer Section 125 plans or establishing an individual responsibility to obtain health insurance coverage.

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