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Minnesotans get lowest rate of ObamaCare tax breaks, but don't freak out

Why getting fewer health insurance tax breaks doesn't necessarily suck for Minnesotans.

Why getting fewer health insurance tax breaks doesn't necessarily suck for Minnesotans.

Since the ink dried on President Obama's Affordable Care Act in 2010, critics have railed against the landmark healthcare system overhaul. The small-government battalion has decried it as a public takeover of the healthcare industry, while locally MNsure's junky website has given aspiring insurance card carriers fits.

Now, new federal data shows that Minnesotans buying plans through the insurance exchange receive the lowest rate of ObamaCare tax breaks in the country. The eyebrow-raising stat from the Centers for Medicare and Medicaid show Minnesotans copping plans get nearly 36 percent fewer premium-shaving tax credits than the national average.

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[jump] “I haven't looked at the data yet, but I'm not surprised,” says Roger Feldman, a health policy and management prof at the University of Minnesota.

Through the end of March, less than half of Minnesota plan purchasers received a federal tax discount through MNsure. However, due to the state's low, low insurance prices a lot of people simply didn't qualify, Feldman notes. According to a MNsure spokesperson, in many counties the premium for a standard plan is “low enough that tax credits will not apply.”

During 2014, MNsure's inaugural year, Feldman says PreferredOne in particular was slinging policies for peanuts. The Golden Valley-based health insurer reportedly lost $139 million selling cheapie individual plans last year, attracting a large number of “high-risk” people and comprising more than half of MNsure's business, according to the Star Tribune. Since bleeding money is bad business, PreferredOne pulled out of the exchange this year.

“But even with the withdrawal of PreferredOne, Minnesota was still very cheap in 2015 compared with the rest of the country,” Feldman says. “So, it still provided an attractive alternative for middle-income people to purchase individual coverage without a subsidy.”

MinnesotaCare – the state's subsidized insurance option for those too rich for Medicaid (like $20,000 a year “rich”), but too broke to afford full-price health insurance – adds another caveat to Minnesota's lowest-in-the-nation ranking. In the latest enrollment period, more than 43,900 people who would have qualified for some of the biggest Affordable Care Act tax breaks landed in MinnesotaCare.

It might not show up in these stats, but the low-income folks on MinnesotaCare are indirectly scoring ObamaCare bucks. While the unique program for the poor, but not poor enough has been around since 1992, last year the state tweaked it in order to tap a new line of health reform cash. Minnesota became the first state to get approval for the so-called Basic Health Plan money, which reimburses states for 95 percent of the tax breaks those consumers would have otherwise been entitled to.

Few other states have reached for the Basic Health Plan pot, making Minnesota an outlier. On the flip side, nine of the 10 states nabbing the most tax credits, including Wisconsin, have rejected a separate Medicaid expansion that makes Republicans cringe.

A recent six-month MNsure snapshot indicated 75 percent of Minnesotans enrolling through the exchange got coverage through Medicaid or MinnesotaCare, instead of purchasing a plan that might have been eligible for the tax breaks.

While no one likes to finish last, not everything shows up in the box score.

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