Committee lays over bipartisan plan for state to defray future health-insurance mandate costs

The House Commerce, Finance and Policy Committee on Feb. 20 laid over House File 400 after an extensive discussion about health-insurance mandates, the Department of Commerce's review process and the potential premium effects of new coverage requirements. Representative Perryman introduced the bipartisan measure and said the bill would require the state to defray costs for any new health-benefit mandates placed on the fully insured market (individual, small-group and large-group) after a Commerce review determines whether a mandate is defrayable.

"One of the ways in which the legislature can help to address concerns about the cost of health insurance is taking a different approach to health insurance mandates," Perryman said. She emphasized that mandates help people but also add cost, and described HF 400 as a tool to protect enrollees from paying higher premiums when the Legislature imposes new required benefits.

Julia Dreyer, deputy commissioner of insurance at the Minnesota Department of Commerce, described the department's existing mandate-review and federal defrayal process under the Affordable Care Act. "We follow the defrayal process as outlined in the Affordable Care Act," Dreyer said. The department reviews proposed mandates the Legislature asks it to study, estimates per-member-per-month costs, assesses public-health impacts and advises whether a new state mandate would be eligible for defrayal under federal rules. Dreyer told members she did not have comprehensive historical counts or cumulative defrayal totals on hand and offered to follow up with staff.

Industry and business groups testified in support of HF 400. Bentley Graves of the Minnesota Chamber of Commerce told the panel that roughly three-quarters of chamber members who offer insurance do so through fully insured plans and that cumulative mandates enacted in recent years have increased premiums. Dan Andresen of the Minnesota Council of Health Plans said insurers estimate that the mandates enacted over the past two years have raised premiums by about 2 to 5 percent in aggregate and explained how defrayal works in practice: after a mandate goes into effect plans track the costs and submit claims to Commerce, which reviews and reimburses eligible expenses. John Beshey, state director of the National Federation of Independent Business in Minnesota, said small employers see rising premium costs as their top business concern and supported HF 400 as a means to avoid passing mandate costs to workers and customers.

Committee members pressed the department and industry on gaps in available data. Representative Smith asked how many defrayal requests Commerce receives each year; Dreyer said she did not have that on hand but offered to provide it. Members asked whether retrospective analyses could estimate how previous mandates would have affected premiums had the state defrayed costs; Commerce staff and industry witnesses said some retrospective work is underway but commended additional data collection and analysis. Representative Elkins urged a process for defining "standard of care" where applicable so benefit scopes are not inconsistent across plans.

The committee did not advance the bill; the chair laid House File 400 on the table for further consideration as part of a broader discussion about mandates. Proponents said they intend to work with the department and stakeholders to produce additional data and clarify implementation questions.

Why it matters: House File 400 would change how Minnesota treats new state-level benefit mandates by requiring state defrayal for qualifying mandates, potentially limiting premium increases in the fully insured market. The discussion highlighted gaps in retrospective data on mandate costs, interactions between different insurance markets (ERISA, Medicare, Medicaid), and how mandate costs are distributed across employer sizes and plan types.