Under the 2010 health law, millions of Americans will gain access to affordable health insurance. But in Minnesota, many are concerned that an affordability gap will leave about 100,000 low-income Minnesotans struggling to pay for health care.
These are people whose household incomes are slightly above the threshold to qualify for Medicaid's free or low-cost coverage. Yet their incomes are low enough that the deductibles and co-pays of commercial insurance plans could cause hardship -- even with the subsidies that will take effect under the federal health law.
Individuals who fall into this category earn less than $2,000 a month.
But, according to the Henry J. Kaiser Family Foundation, their out-of-pocket costs for the health care overhaul's benchmark plan could run as high as $220 per month. (KHN is an editorially independent program of the foundation.)
This amount includes their monthly premiums, which would run about 3.3 percent of their incomes, or about $45 per month to buy insurance in the commercial market. They would also be responsible for other costs such as copays and deductibles, which could reach more than $170 per month.
Jonathan Watson, public policy director of the Minnesota Association of Community Health Centers says that's unaffordable for many low-income people.
"That's a significant percentage of their income that can be used for ... necessities of their life in terms of food, utilities and rent and housing."
Congress gave states the option of creating a so-called Basic Health Plan, a Medicaid-like plan designed for this income group, which would complement the health care law's main program, a health insurance exchange. That's an online market place where individuals and small businesses can compare and buy commercial health plans, starting in 2014.
The basic plan idea is patterned after a program in Washington state.
Minnesota needs the basic plan option, says Christina Wessell, the deputy director of the Minnesota Budget Project, a group that advocates on behalf of low income residents and which supports a basic health plan. Without one, she says, people in the gap must use the exchange, sort through plans with a confusing array of co-pays and deductibles – and they may find themselves with a bill they didn't expect and can't afford.
"If you take these people and then all of a sudden push them into a health care exchange where they have all the options, all the choices, and all the responsibility and are suddenly exposed to a lot of cost sharing that they are not used to, it's going to be a very, very dramatic transition. And we're worried they're just not going to make that change very successfully."
For states considering the option of the basic plan, the task is to figure out the economics. Federal dollars would pay for most of the cost of the basic health plan. But there are so many moving parts that calculating the cost to the states still requires a lot of guesswork.
State officials say the state's share of the basic health plan could swing widely -- anywhere from saving $50 million a year to costing $460 million per year, based on an analysis by Massachusetts Institute of Technology economist Jonathan Gruber.
Under the health law, states will receive 95 percent of what the federal government would have provided in subsidies to this population had they bought insurance through the state exchange. There are concerns that these same Minnesotans might be sicker and be more expensive to insure, and that, consequently, the federal government's portion for the basic health plan might come up short.
"Is that 95 percent really going to be enough to provide the coverage? That's a real question mark," says Lucinda Jesson, Minnesota's human services commissioner.
There's also the question of how long the federal government will continue to provide a 95 percent subsidy. State Rep. Steve Gottwalt, Republican chairman of the Health and Human Services Reform Committee, says signing on to too much of the federal health care law -- including the basic health plan option -- would be a step backwards. He says Minnesota already has many great approaches to health care reform that other states don't.
"We could get to the goal quicker with more assurance, with less cost, and with a higher level of quality -- without completely redoing the system and forcing it into the federal guidelines that are being spelled out from Washington right now."
This story is part of a reporting partnership that includes Minnesota Public Radio, NPR and Kaiser Health News.