WASHINGTON — Minnesota will not create and run a temporary high-risk insurance pool as outlined under the new health reform law, choosing to pass on the federal government’s offer to help run a new pool in exchange for subsidies to offset costs.
Today was the deadline for states to decide of they would run the plans or if they’d decline and have the federal government manage the pool instead. Gov. Tim Pawlenty picked option B.
Pawlenty, in a letter to Health and Human Services Secretary Janet Napolitano, cited doubts that the $5 billion allocated to help states would be enough to cover costs through the projected end date of 2014.
“The identified risk suggests the potential for creating a program and financial obligations for our state that are simply unsustainable and otherwise unwise,” he wrote. “Minnesota along with most other states, is managing its budget through challenging fiscal times. In light of this and the risk stated above, we cannot afford to expose Minnesota taxpayers to added potential costs and administrative burdens now.”
Having not yet passed the official deadline, it’s too early to say what the trend is, but several states have taken up the feds’ offer while several others have declined. California, Michigan, Washington state and New York are among those that will set up the pools, while Nevada, Nebraska, South Carolina and Wyoming are among those that won’t.
The new federally-run pools are expected to offer lower rates than existing insurance-of-last-resort pools (Minnesota is among 35 states that already has one of those), but a loophole in the legislative language will prevent people from switching to the less-expensive new plan.
Federal requirements state that someone must be uninsured for at least 6 months before signing up for the fed plan, and that high-cost, high-risk pool coverage counts as insurance. In fact, California and Texas are actually encouraging people not to sign up for their own existing plans, in hopes that they’ll be able to tough it out until the new, cheaper federal plan arrives on July 1.