December 2018, Volume XXXIII, No 9
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ow that all of the votes have been counted following the contentious mid-term elections, it is time to look ahead to the 2019 Minnesota legislative session and the key health care issues that will arise. With the 2018 legislative session ending in deadlock between Gov. Mark Dayton (DFL) and the Republican-controlled House and Senate, many issues were left unresolved when legislators adjourned in May 2018. Deadlock in 2019 is not an option because a new biennial budget is due by July 1, 2019.
The 2018 general election significantly changed the major players at the state Capitol. With the retirement of Gov. Dayton, Rep. Tim Walz (DFL) defeated Hennepin County Commissioner Jeff Johnson (R) by a 53–42 percent margin. Walz campaigned on a platform featuring a single payer health care system and promising a strong public health care option for any Minnesotan who wants it. He also pledged to reduce barriers to mental health care and to make additional investments in medical research.
Minnesotans gave control of the Minnesota House of Representatives to the DFL after Republicans had controlled the chamber for the last four years. DFLers picked up a total of 18 seats, primarily by winning by large margins in the suburbs of Minneapolis and St. Paul. With a majority of 75–59 percent, Rep. Melissa Hortman (DFL-Brooklyn Park) will become the new House Speaker when the Legislature reconvenes.
While the entire state Senate is not up for election until 2020, there was one Senate seat on the November 6th ballot. The seat became vacant when Sen. Michelle Fischbach (R) became lieutenant governor. Republican state Rep. Jeff Howe and DFL Stearns County Commissioner Joe Perske ran for the seat, which Howe won by a 57–43 percent margin. With this victory, Senate Majority Leader Paul Gazelka (R-Nisswa) and the Senate Republicans retained control of the Senate with a 34–33 majority.
Minnesota will have split control of state government.
With the governor and the House in DFL control and the Senate in Republican control, Minnesota will have split control of state government. Agreement across party lines will be necessary to resolve key issues. The biggest responsibility of Gov. Walz, the House, and the Senate will be adoption of a 2020-2021 biennial budget. This need to adopt a biennial budget generally drives resolution of policy issues because key policy language is included in budget proposals. Following are key issues that will likely be addressed in the 2019 legislative session:
Health and Human Services spending. In the current 2018-2019 biennium, Minnesota will spend $13.6 billion for health care costs and human services programming. This number is expected to grow by almost 9 percent to $15.4 billion in 2020-2021. A big cost driver in this spending is the funding for the Medical Assistance (MA) program, which reimburses providers under both a fee-for-service system and a managed care system. Decision-makers will consider numerous proposals for rate increases from provider groups. Success or failure of these proposals will depend on their cost and how broad-based their support is within the Legislature.
Provider tax sunset. As part of the 2011 budget agreement, Gov. Dayton agreed to sunset the provider tax—a 2 percent tax on health care services—on December 31, 2019. The provider tax is the main source of funding for the Health Care Access Fund, which was originally established to fund the MinnesotaCare program. Over the years, the Health Care Access Fund has been used for other programs, such as student loan forgiveness programs and Medicaid coverage. If the provider tax were to sunset, it’s estimated that there would be a sizable deficit in the Health and Human Services budget by the 2022-2023 biennium, which would force the Legislature either to make cuts in health care spending, reinstate the provider tax, or find other sources of funding to pay for health care programs, such as an assessment on health plans or the general fund.
Reinsurance. With the advent of the Affordable Care Act, individual market insurance rates have increased dramatically since 2014. During the 2018 legislative session, the Legislature and the governor passed two measures to help decrease the cost of premiums. First, they spent $325 million on a 25 percent rebate to consumers in the individual market for the 2018 plan year. This was a temporary fix to provide immediate relief in the near term. In an effort to combat further increases, the Legislature passed the Premium Security Plan, which was a state-funded reinsurance plan to offset the high loss claims incurred by the health insurers. The program was put in place for two years at a cost of $542 million. While it came at a great cost, it had the intended effect of reducing health insurance premiums by more than 20 percent in some cases. The Legislature will have to decide whether to reauthorize such a program for the 2019 plan year, as the insurers will begin filing their products early next year and will need to understand the parameter of any reinsurance program for actuarial and pricing purposes.
A new biennial budget is due by July 1, 2019.
Tom Hanson, JD, an attorney with Winthrop & Weinstine, represents clients before the Legislature and regulatory bodies. Prior to joining the firm, he worked for the Republican caucus in the Minnesota House of Representatives for eight years and served for eight years in Gov. Pawlenty’s administration, including four years as the Commissioner of Minnesota Management and Budget.
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John Reich, director of government relations at Winthrop & Weinstine, has extensive experience in lobbying and strategy management. Prior to joining the firm, he worked for the DFL caucus in the Minnesota House of Representatives for five years and served for four years in Gov. Dayton’s administration.