Minnesota lawmakers are racing to extend the state's reinsurance program before a looming waiver deadline, even as the departure of four senior legislators threatens to drain decades of institutional knowledge on the issue.
The Minnesota reinsurance program, known as the Premium Security Plan, offsets high-cost claims for insurers and reduces premiums for roughly 187,000 residents who buy coverage on the individual market.
It operates under a Section 1332 waiver, which allows states to redirect federal savings generated by lower premiums back into their own reinsurance programs. Without such a waiver, the federal government simply keeps the savings. Twenty-one states had received approval for similar waivers as of last year.
Rep. Tim O'Driscoll (R-Sartell) (pictured above, left), co-chair of the House Commerce Finance and Policy Committee, warned that without action, "the cost of individual premiums will go up substantially."
He is sponsoring HF3388, which would extend the assessment mechanism funding the reinsurance program beyond 2027 and direct the Department of Commerce to apply for another waiver by December 31, 2026. The bill was laid over Thursday for possible omnibus inclusion.
The stakes are not abstract. The Minnesota Department of Commerce said last October that individual market rates for 2026 would rise 21.5% on average with the program in place.
Without it, Commerce Commissioner Grace Arnold said at the time, rates "would have soared to nearly 70%." The department has separately estimated that a lapse would add an average of 25% on top of usual annual increases going forward.
The threat is compounded by uncertainty over enhanced federal premium tax credits. A study commissioned by Minnesota's four largest nonprofit health insurers warned in late 2024 that premiums could jump 55% and about 93,000 residents could lose coverage if both the reinsurance program and enhanced credits were to lapse simultaneously.
Dan Endresen (pictured above, right), senior director of policy and government affairs at the Minnesota Council of Health Plans, said the program lowered premiums by 47% this year and called its continuation necessary to stabilize the market.
All four leaders of the House and Senate commerce committees have announced they will not return. O'Driscoll estimated the departures represent close to 60 years of combined experience on the issue.
He noted that individual market enrollees are often described as "the sickest of the sick," but the pool also includes early retirees, people in career transitions and individuals unable to access employer-based coverage.
The waiver deadline adds urgency. Minnesota has drawn $785 million in federal pass-through funds to date, according to the Department of Commerce, making the program's federal component critical to its financial viability.
