Lawmakers Differ Over Reinsurance Funding

March 13, 2025

Minnesota is regularly awarded with state innovation waivers from the U.S. Department of Health and Human Services for its Premium Security Plan, a program designed to reduce premiums for residents who buy their insurance on the individual marketplace.  

Minnesota will reapply for a waiver effective in 2028, but legislative action is needed for the final two years of the state’s waiver program through 2027. 

The legislation - SF 333 (Dahms, R – Redwood Falls) and HF 837 (O’Driscoll, R – Sartell) - includes a one-time $512 million allocation from the General Fund to the Premium Security Plan account. Although the General Fund is listed as the funding source in both bills, that may change by the end of session. A separate funding source will likely be needed following last week’s announcement that the projected budget surplus for the 2026-27 fiscal biennium dropped to $456 million, and the long-term projected deficit grew to nearly $6 billion. Other options to fund reinsurance include proposals from DFL lawmakers to assess health insurance companies or members of the Minnesota Comprehensive Health Association, rather than relying on the state’s General Fund to pay for reinsurance. 

The MMA joined other organizations in agreement that reinsurance must be addressed this session. In a joint letter, the MMA urged legislators to expedite passing funding for the reinsurance program early this session to avoid uncertainty and sticker shock for Minnesota families when shopping for insurance in 2026.  

Estimates suggest that without the waiver, premiums in the individual health insurance market would increase by 25%. The reinsurance program impacts about 160,000 Minnesotans. Without legislative action this session, these patients would potentially drop their health insurance altogether or face a significant increase in healthcare costs.