New Report: MinnesotaCare Public Option Could Come With ‘Large Risks’ For Access To Hospital Care

Apr 16, 2024

As some Minnesota politicians propose creating a new state government-designed “public option” health insurance system, a report by Lanhee J. Chen, Ph.D., Tom Church, and Daniel Heil sheds additional light on the potential negative consequences for Minnesotans.

The authors note that evidence suggests MinnesotaCare’s reimbursement rates to health care providers are significantly below those of commercial plans, and “as a consequence, any significant shift in exchange enrollment to a MinnesotaCare public option would result in significant cuts to providers … This could reduce payments to Minnesota hospitals by $2.3 billion over 10 years, with large risks for critical access hospitals and hospitals in rural areas.”

The report also shows that the public option has failed to deliver on its promises in the states where it has been tried. Its key findings include:

  • Washington State and Colorado, the only two states to implement public options so far, have both failed to meet their respective premium target goals:
    • After three years, only four of Washington State’s 39 counties have public option plans that have met the state’s premium targets for bronze-level plans; only one county has met the target for silver-level plans.
    • In Colorado, only 15 percent of plans met the state’s initial-year premium targets, and even fewer plans met the state’s second-year targets.
    • In 2022 and 2023, aggregate premiums for Washington State’s public option plans were $2 million more than if enrollees had chosen the lowest-cost non-public option. In Colorado, the figure in 2023 was $13.3 million. 
  • The public option has proven unpopular amongst consumers, attracting meager enrollment and failing to increase the number of people with individual insurance, one of its primary goals.
    • Washington and Colorado public option plans have enrolled less than one percent of their states’ respective populations.
    • State-sponsored actuarial analyses suggest Nevada’s public option will have little effect on total exchange enrollment, even if insurers meet the state’s aggressive premium targets.
    • In 2023, Colorado witnessed a seven percent increase in enrollment in individual plans, which far lagged the nationwide exchange population growth rate of 12.7 percent, which was nearly double.

To read the full report, which was supported by the Partnership for America’s Health Care Future, CLICK HERE.