U.S. Supreme Court rules affordable care act subsidies are legal

By Mark Zdechlik

When the U.S. Supreme Court ruled Thursday that nationwide subsidies under the federal Affordable Care Act are legal, supporters of the law in Minnesota celebrated the decision.

“Twenty years ago, when we were working with people without insurance … there were so few options, if any,” said Debra Holmgren, president of Portico Healthnet, a St. Paul-based nonprofit that helps people enroll in health coverage. “I think this is a tremendous step in the right direction, but we’re clearly not there yet.”

State Sen. Tony Lourey, sponsor of the legislation that created MNsure, Minnesota’s online health insurance exchange, was relieved by the news.

“The Affordable Care Act is the law of the land and we’re going to have to work together to make it work, I think, is really the over-arching message here,” said Lourey, DFL-Kerrick.

But making it work has proven challenging in Minnesota, where MNsure has attracted far fewer private plan purchasers than anticipated. That’s meant lower than expected revenue for the Minnesota exchange.

According to federal statistics, as of March about 52,000 Minnesotans were in enrolled in private health plans through MNsure. Half of them qualified for tax credits to help pay for their health insurance.

The health insurance industry lost more than $300 million on individual and family health plans last year. That led insurance companies that have the most business on MNsure to propose major price increases for next year.

Blue Cross Blue Shield of Minnesota, for example, filed a request to increase rates on nine individual plans by an average of 54 percent. HealthPartners is seeking increases of nearly 25 percent on some plans.

PreferredOne, which pulled out of the exchange last year citing costs that were unsustainable, had sought to raise rates more than 60 percent.

HealthPartners CEO Mary Brainerd said she welcomes the Supreme Court’s ruling. But she said it does not mean all is well with the Affordable Care Act in Minnesota.

“The individual market in Minnesota definitely has some problems,” she said. (Brainerd is an MPR board member.)

Minnesotans with expensive conditions figure heavily in those problems, Brainerd said. Before last year, 26,000 high-risk Minnesotans were only able to buy coverage through a subsidized state-sponsored program. Those subsidies came from charges spread across a broad sector of the health insurance market.

Today, people with expensive medical problems are in an insurance pool with a scant 6 percent of all covered Minnesotans. Brainerd said until their expenses are shared more broadly the individual market will be a difficult place for consumers and insurance companies.

“I’m concerned about affordability,” she said. “I think we need a better approach because what happened with PreferredOne two years ago and may happen with very big rate increases this year will continue into the future if we don’t figure out a better solution.”

Lourey disputes that. He said the individual market will come to equilibrium and that the pool is big enough to accommodate the high-cost people in it.

But Lourey also said Minnesota might need a broad-based funding source such as a tax on health insurance companies to help make health care more affordable for everyone in the state.

“My goal is every Minnesotan has access to quality, affordable health care,” he said. “If we need to figure out how to make sure that we have the resources to make that happen, that’s going to be part of the conversation as well.”

Some consumers also are dismayed by high costs. National research shows people with high-deductible plans are forgoing care because of the out-of-pocket costs.

Some say the Supreme Court ruling should lead to the end of MNsure, Minnesota’s expensive and troubled health plan marketplace.

Now that the federal exchange healthcare.gov can continue distributing tax credits for people to buy health insurance, opponents say Minnesota should ditch MNsure and, like most other states, rely on the federal exchange.

State Rep. Tara Mack, R-Apple Valley, said it is time to stop funding MNsure.

“Now that we have the ability to move outside of this broken system, there’s no reason to throw good money after bad at this point,” Mack said at a press conference.

But no changes are likely until a task force state lawmakers called for to map a plan for MNsure finishes its work. The panel has yet to be named.