How Gov. Walz's health care buy-in plan works

After talking about it on the campaign trail last year, DFL Gov. Tim Walz this week pitched a way for Minnesotans to buy into a public health insurance plan.

The idea is that farmers and others who buy health insurance on the individual market would get a public option that competes with the coverage available through traditional health plans.

Walz calls it the ONECare Minnesota plan — playing off the governor's "One Minnesota" maxim — and it's designed to bring certainty to people who faced skyrocketing premiums or insurers unwilling to compete in the individual market.

To be clear, the buy-in option isn't the same thing as single payer health care, and it's considerably different from plans pitched before Walz became governor. It's also different from the "reinsurance" program the state used last year, which took the risk of the most expensive claims off insurers and put it on taxpayers.

And Walz's plan could face significant opposition in the Republican-controlled Senate.

How does it work?

The plan from Walz would allow all Minnesotans to buy into a public option on the state's individual insurance marketplace, MNsure, and pay monthly premiums. Under the plan, Minnesotans across the state could buy-in to ONECare at the platinum level, which has higher monthly premiums but covers roughly 90 percent of what a consumer pays for care.

His plan would also offer two other buy-in options — the equivalent to silver or gold level plans, which have lower premiums — if certain triggers are met. The triggers include a so-called "market failure," or zero plans available on the marketplace in a county or region.

Under the plan, the Walz administration would streamline administration and leverage the state's purchasing power to lower the cost of dental care and prescription drugs — one of the main factors driving rising healthcare costs.

"This buy-in option will offer a high-quality, affordable plan to Minnesotans with more services, lower deductibles and lower copays than what is currently available within the individual market," Walz said Tuesday. "When the market fails to offer enough choice for Minnesota families, Minnesota's public option will bridge that gap."

How soon would these options be available?

The Walz ONECare plan is phased in slowly.

The statewide, platinum plans would be offered starting in 2023, with the other two plans offered in 2024 wherever there are no other insurance options.

Is he proposing anything in the near term to address healthcare costs?

Before his ONECare plan kicks in, Walz pitched the creation of a subsidy program to reduce monthly premium costs for Minnesotans who get their insurance through MNsure and don't qualify for federal tax credits by 20 percent. That will be available starting in 2020.

His plan would also establish a state-based tax credit for some Minnesotans starting in 2021 designed to keep the costs on MNsure at 10 percent of their income.

Is there a state cost to the plan?

Creating the ONECare would require some money to get it off the ground. Walz taps $112 million from a state healthcare fund to help pay for it, but his administration said ongoing costs will ultimately be covered by individual premiums.

How is this different from previous buy-in plans offered at the Capitol?

The Walz administration is stressing this is a "measured" approach to establishing a buy-in option.

His predecessor, former Gov. Mark Dayton, pitched a public option in 2017 that would lift income restrictions on MinnesotaCare, a state subsidized health care plan for low-income individuals and families, and allow anyone buying insurance on the marketplace the option to buy into the program.

While Walz's ONECare plan would provide similar benefits to those on MinnesotaCare — including doctor's visits, hospitalization, prescription drugs and therapy services — it's not expanding it in the way Dayton proposed.

How much will monthly premiums cost for Minnesotans who pick the buy-in option?

The Department of Human Services hasn't determined how much this could cost yet, but Commissioner Tony Lourey said it will be "much cheaper" than any other plan with similar benefits. That's because the state would leverage it's purchasing power on drugs as well as all the more than 1 million individuals in the state currently on Medical Assistance and MinnesotaCare.

"We're going to be using our economies of scale to negotiate better deals," Lourey said.

How does the buy-in option differ from single-payer health care?

The ONECare buy-in option is different from single payer, government-administered healthcare program because it's not mandatory or the only option. It would be one selection available to people seeking a plan on the individual market. But some have criticized buy-in plans as precursors to single payer, because a public option means anyone could drop their commercial plans and buy in.

Does this require any support from the federal government?

Yes, making these changes would require a waiver from federal officials in order to tap funds to help offset costs. But Lourey thinks that it's a good fit. Under the Affordable Care Act, states are encouraged to develop creative strategies for providing affordable healthcare coverage, he said.

Will the Legislature approve?

His plan could get support from Democrats in control of the state House, but it will have a tougher go in the state Senate, where Republicans hold a slim majority.

On Wednesday, Senate Majority Leader Paul Gazelka expressed concerns about the impact on rural hospitals because programs like MinnesotaCare have a lower reimbursement rate than commercial insurers. Those hospitals that could end up paying the price for the program, he said.

"We think that would totally decimate the rural hospitals, rural doctors," he said. "I've heard from a number of rural hospitals and doctors that that would be the worst thing that they could possibly have. Doctors have told me that if wouldn't even be worth it for them to be in Minnesota, and if you think about shortages we have in Minnesota, that's a real problem."