Minnesota proposes shifting ACA reinsurance costs to payers, raising HMO tax

Minnesota Gov. Tim Walz has proposed shifting the cost of managing the state’s ACA reinsurance program from the state to private insurers, along with raising the state’s tax on health maintenance organizations.

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Minnesota’s reinsurance program was initially established in 2017 and helps stabilize high premiums in the ACA individual insurance market. The governor’s proposal would shift the responsibility for the state share of reinsurance to insurers and require the creation of a fund that covers high-cost procedures such as premature births and cancer treatments for people on the individual market.

The proposal would also increase the state’s HMO tax from 0.6% to 1.25% of a company’s total premium revenue. The new insurance plan comes after House Republicans passed a budget resolution Feb. 25 directing the Energy and Commerce Committee, which oversees Medicare and Medicaid, to cut $880 billion in federal spending between fiscal years 2025 and 2034.

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