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December 2009 St@teside

Pawlenty Proposes Trio of Health Reform Initiatives Focused on Competition and Quality

In October, Minnesota Governor Tim Pawlenty unveiled a series of health reform initiatives that would allow Minnesota residents to be the first in the nation to purchase insurance across state lines, introduce provider tiering in MinnesotaCare and Medical Assistance programs, and provide financial incentives to MinnestaCare enrollees to choose higher quality, lower cost providers. Details of these initiatives include:

  • Allowing Minnesota residents to purchase health insurance across state lines—Current Minnesota law prohibits residents from purchasing health insurance in other states. In Minnesota, three companies control more than 80 percent of the health insurance market. To introduce more competition, Governor Pawlenty has proposed creating an interstate health insurance compact modeled on the Interstate Insurance Product Regulation Compact, which eases the purchase of life insurance across state lines. According to the governor’s proposal, the new health insurance compact would enable states to share common insurance regulations to facilitate interstate competition. However, certain criteria would have to be met for any product being solid in Minnesota, including:
    • The state insurance regulator where the company is domiciled must be accredited by the National Association of Insurance Commissioners.
    • The insurance company must have a certificate of authority in Minnesota.
    • The insurance regulator in the state of domicile must review and approve policy forms and the state must also meet various consumer protection and healthcare outcome criteria.
    • The insurance company must agree to abide by Minnesota’s claims practices and other consumer protection laws.
    • The insurance company would be subject to standard Minnesota fees and taxes.
    • Only policies approved for sale in states that meet the above criteria will be offered to Minnesota residents.

  • Encouraging States to join an interstate compact for health insurance. Currently, 36 states belong to the Interstate Insurance Product Regulation Commission (IIPRC). The IIPRC serves as a central point of electronic filing for certain insurance products—including life insurance, annuities, disability income, and long-term care insurance— in order to develop uniform product standards which in turn affords a high level of protection to purchasers of asset protection insurance products. Similarly, an interstate Compact for health insurance would allow companies to file their products with one entity and then market those products on a national basis.
  • Mandating MinnesotaCare and Medical Assistance programs price their offerings based on quality and cost. Governor Pawlenty has proposed that providers in the MinnesotaCare and Medical Assistance programs be tiered according quality and cost of their offerings. These tiers would be based upon peer grouping results as dictated by (state?) health reform legislation passed last year. Enrollees would then be incentivized to choose providers with higher quality and lower costs by paying higher out-of-pocket costs for those providers that are of a lower tier.

  • Create a Modern MinnesotaCare program. Governor Pawlenty has proposed the creation of a MinnesotaCare program for parents with incomes between 133 percent and 275 percent of the Federal Poverty Level that would offer a higher deducible insurance product coupled with state contributions to an electronic benefit card, which would be used for out-of-pocket health expenses. To maximize the value of the state contribution, the aforementioned tiering would provide enrollees a financial incentive to select higher quality, lower cost providers.

A press release on the governor’s proposal can be found here.