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Options and Recommendations for Minnesota Health Insurance

Options and Recommendations

The discussion below addresses each of the issues in the legislative charge to perform this study. Although each issue is addressed separately, it is important to recognize that many of the decisions about these issues are interdependent, and are also dependent on other policy decisions such as whether to enact comprehensive insurance market reforms.

1. Whether a health insurance exchange would provide individuals with greater access, choice, portability, and affordability of health insurance coverage

As noted above, a health insurance exchange by itself does not directly influence the availability and affordability of health insurance plans. Rather, it facilitates better market functioning, and could be an effective tool to improve access, choice, portability, and affordability of health insurance coverage in combination with other reforms.

In recent years, rising health insurance premiums have led employers to search for ways to contain costs, including ways to engage employees to consider cost when making decisions about health insurance coverage and how they use health care services. Some employers have dropped coverage altogether. A health insurance exchange could enable some employers to shift to a "defined contribution" model of employee health insurance benefits; for some, this could be an alternative to dropping coverage entirely. For employees, this type of model would increase choice and portability of coverage. In combination with a requirement that employers offer Section 125 plans, it would improve affordability for people who do not currently have the option of paying for health insurance with pre-tax dollars. This impact on affordability would also affect MinnesotaCare enrollees, who could be given the ability to make premium payments with pre-tax dollars; in addition, savings of 30 to 50% of premium associated with pre-tax payment of premiums (see Text Box on using Section 125 plans to purchase health insurance) could enable some current MinnesotaCare enrollees to shift to private coverage, particularly those at the higher end of the income eligibility scale.