Sen. John Hoffman Update: March 17, 2017

Welcome to week 11 of my updates. This marks the second deadline week and it was full of committee activity, some meeting into the evening. There was also activity on the Senate Floor that went into the early evening.  

On Wednesday night there was a long floor session where we debated a reinsurance bill. This legislation spends $600 million to temporarily fix some of the state’s health insurance problems by giving insurance companies money to help offset the costs of insuring some of the state’s sickest Minnesotans. I voted against this bill as it is government bailout spending and an ineffective bill that doesn’t guarantee lower premiums for anyone.

The Senate has just released their budget targets(SenTargets.pdf) and the house will be doing so very soon. These targets will allow individual committees to put together their budget bills.

John Hoffman

What’s happening at the Capitol?

Reinsurance bill passes Senate

This week the Senate approved a $600 million reinsurance bill on a near party-line vote.

With the implementation of the ACA and guaranteed coverage to individuals regardless of their medical history, MCHA, the state’s former high-risk health insurance pool, was phased out in 2014 and over 25,000 members of the program entered Minnesota’s individual market. Reinsurance has the same goal as the MCHA program to remove high-cost, high-risk enrollees from the individual market to keep rates low for the remaining individual market enrollees. The major difference with a reinsurance program is that high-cost enrollees remain in the individual market, with a portion of their high-cost claims covered by the reinsurance program. 

Under the bill, when an enrollee reaches $45,000 in insurance claims, 80% of claims would be paid by the Minnesota Premium Security Plan until those claims hit $250,000. Health insurance companies would cover all claims up to $45,000, 20% of claims from $45,000 to $250,000, and all claims over $250,000.

Minnesotans need long-term stability in health insurance reform. This bill costs $600 million while only providing temporary relief for two years. This proposal takes funding from the Health Care Access Fund (HCAF) that is intended to be spent on health care for low income Minnesotans and gives it back to insurance companies. Under the bill, insurance companies get paid for high cost claims, but there is no guarantee from insurance companies that they will make their rates more affordable or expand their provider networks and there is nothing in the bill that prevents them from offering the same plans they previously offered.

The state legislature must have something in law by the end of the month of March to be meaningful and have an effect on the 2018 insurance market. Health plans are making decisions about whether or not to stay in the market now, and the deadline for rate filings is later this spring. The bill will now move to conference committee to work out the differences with a similar bill in the House. If there is absolutely no fix then join me in asking the Governor to veto it. 

Student loan debt counseling program would be made permanent, receive funding

Legislation to make permanent a pilot project to help students manage loan debt will be considered for possible inclusion in the Senate’s Higher Education Omnibus Bill to be proposed later this month.

The bill establishes a permanent program to be managed by the Office of Higher Education (OHE) to provide a grant to one non-profit organization offering student loan debt counseling. In 2015, $150,000 was appropriated to OHE for a temporary student loan debt counseling pilot program. The pilot program grant was awarded to Lutheran Social Services (LSS) of Minnesota.

In the first year of the program, LSS reported they served 981 borrowers from 60 counties across Minnesota. As part of the program, 99.4% of the borrowers stayed current on their loans. Fifty % of the delinquent borrowers brought their loans into good standing and 97% developed a monthly budget plan. Also, 119 Minnesota higher education institutions were represented as part of the program.

Minnesota has the fifth largest average student loan debt in the country, with more than 14,000 student defaulting on their federal student loans in 2013. Borrowers who become delinquent on their payments can find their credit scores drop by 100 points or more. Student loan debt also disproportionately affects students of color, low income students, and first generation college students. Between 2000 and 2004, half of black college graduates reported graduating with a student debt of more than $25,000, which is 16% higher in comparison to white graduates over the same period. Eighty % say their payments are more affordable after implementing changes with counseling

This bill sets a goal that the counseling program provide at least two counseling sessions to 75% of borrowers receiving counseling, requires a grant recipient to submit a report to OHE every two years, and requires the Commissioner of Higher Education to submit a report on the program to the Higher Education Committees of the Legislature every two years.

Taxpayer dollars for private schools moves to tax committee

The K-12 Education Committee considered a bill this week that would allow businesses or individuals to make donations toward private- and religious-school scholarship funds. The legislation sets aside $35 million a year for Equity and Opportunity Tax Credits for corporations or taxpayers who donate to non-profit groups that, in turn, would provide private-school scholarships to select students.

Businesses and individuals already are eligible to receive tax deductions for nonprofit charitable contributions. Families choosing private school also may count tuition toward expenses that qualify for the state’s K-12 education tax subtraction. This bill would commit additional state dollars for another tax benefit available to donors.

The bill commits $70 million of taxpayer dollars each budget cycle. Members of the education committee raised important questions about potential return on this substantial investment. Because Minnesota is a rural state, many students would not be able to access private schools and utilize tax credit scholarships. This could actually increase disparities in metro-rural educational opportunities. DFL members believed $70 million could be better used in direct classroom investments in public schools across the state.

Another concern is that creating an enhanced tax credit for a specific charitable purpose would place greater value on donations to private schools than other charitable donations. In other words, other types of nonprofits and charities could suffer as donors choose the more profitable donation option. 

Additionally, an out-of-state corporation could be eligible to receive these Minnesota-funded tax credits. The donation may support a very select group of Minnesota students, but the state would not be able to guarantee the bulk of the $70 million investment actually remains in the state. Overall, the DFL Senate will be advocating to keep Minnesota tax dollars in Minnesota, and to increase direct investments in kids and classrooms across the state.

I still question who will hold the schools accountable to section 504 of the rehab act and assure no discrimination under that law. 

The bill was passed to the Senate Tax Committee.

Bill could require study of Minnesota’s early education programs

An early childhood education bill that would have brought sweeping changes to the Minnesota’s early education programs was amended in the State Government Committee Thursday, requiring a study and report to the legislature. An early education access fund to consolidate the funding will be created by July 1, 2020. Under the amendment, the Legislative Coordinating Commission will design a request for proposal process to select a vendor to conduct the study.

The original bill heard earlier this week in the Education Policy Committee would have consolidated all early education funding into one agency under the direction of an executive director that would have power to develop early learning programs and allocate funding. The bill would have also capped funding for certain programs, in particularly Head Start and Early Head Start, and potentially cut early education options for Minnesota’s most vulnerable children. The executive director, who would be appointed by the Governor, would have the power over programs in the Departments of Education and Human Services and serve as the Executive Director of the Children’s Cabinet.  

The amended bill was referred to the Education Finance Committee for further discussion.

Please let me know your thoughts about this!

Education policy bill contains private school provisions

The Senate Education Committee has approved an education policy bill that contains many of the bills heard over the legislative session and includes some language suggested by Governor Dayton

The bill also contains provisions including a provision that would change Minnesota’s school attendance laws, allowing public school students in grades 9-12 to attend a private school and receive credits for those classes. Students would be allowed to take courses at private schools for up to one-third of minimum hour requirements. School districts could accept the credits only for non-sectarian coursework. Students would be allowed to attend religious courses, but would not be allowed to receive credit for them. Students can currently participate in “shared time” requirements for up to three hours per week.

Another provision would enhance third grade reading proficiency provisions that give districts more discretion on holding back students who can’t read up to grade standards and that would require student personal learning plans be designed for students. This new requirement could increase teacher time by about 22,000 hours per year.

Other provisions include:

  • Modifications to the All Kids Count Act by extending the implementation date, authorizing six program pilot sites and community engagement requirements
  • Charter school changes
  • Federal funding encouragement for STEM education
  • Removing a reference to GED tests in state law
  • Changing school district referendum notification requirements
  • Clearly defining concurrent enrollment
  • Changing physical education standards requirements

Prior authorization bill heard in HHS Committee

A bill to modify the state’s process for prior authorization for certain prescription drugs was recently heard in the Senate HHS Committee. Prior authorization is a process by which health plans require prescribers to submit prescriptions for approval before they are covered. It is an extra step health plans and public programs require before a prescription is covered under the formulary. However, for many physicians this process takes up a lot of time and can be confusing, as they are not made aware of what drugs are and are not on the formulary, formularies are different across all health plans, and plans can eliminate and add drugs to a formulary at any time.

The bill modifies the prior authorization process by:

  • Specifying that any authorization for a prescription drug must remain valid for the duration of an enrollee’s contract term.
  • Requiring health plans to make available to consumers which drugs are covered and what the cost sharing requirements will be.
  • Limiting formulary and medication coverage changes during the enrollment year.
  • Requiring notice to consumers when utilization review requirements change or when drugs are moved to a different benefits category.

Advocates for this change contend that patients will be able to get the medications they need when they need them, instead of waiting days for a prior authorization to go through and the prescriber to find another medication that will work. 

The bill was laid over in committee for further consideration when the HHS Budget Bill is assembled.

Nonprofit to for-profit health care conversion guidelines

The Senate Health and Human Services Committee heard a bill that outlines a process for nonprofit HMOs to convert into a for-profit entity. This is needed because part of SF 1, the bill that intended to alleviate some of the high premiums Minnesotans were paying for health care, allowed nonprofit HMOs to convert into for-profit entities. The bill will help provide taxpayers the protections and tools necessary to safeguard the billions in nonprofit assets that Minnesota health plans hold in trust for the benefit of the public health in the event of a conversion.

The bill requires HMOs to notify the attorney general, and the attorney general must approve of the proposed conversion of assets transaction. Before entering into a conversion transaction, an HMO must notify the attorney general and include an itemization of assets the HMO has identified as public benefit assets, a plan for distribution of those assets, and other information necessary for the attorney general to review the transaction. A copy of the notice of conversion must also be provided to the commissioner of health and the attorney general must consult with the commissioner of health in making the decision whether or not to approve a transaction. The attorney general has 90 days from the day of the notice, with a possible 60-day extension, to make a decision in writing approving or disapproving of the transaction.

Eliminating MPCA rulemaking authority

The Environment and Natural Resources Finance Committee heard a controversial bill Wednesday brought forward by the Coalition of Greater MN Cities (CGMC) that makes significant changes in Minnesota Pollution Control Agency (MPCA) rulemaking. These include making water quality standards reviewable by administrative law judges, requiring independent scientific review of certain proposed rules, and prohibiting the MPCA from enforcing rules that have not been formally adopted. The bill is strongly opposed by MPCA and environmental organizations.

Supporters argue that in some cases the MPCA has used flawed science when developing water quality regulations. Cities must spend millions of dollars to upgrade water infrastructure to comply with regulations that, supporters say, in many cases provide little benefit to the state’s waters. They argue the MPCA is not currently required to perform external peer review of its science, and some cities have felt ignored when they have raised scientific concerns with the agency. And, they say, the MPCA has been using internal guidance documents to make or amend rules, and, in some cases have made rules more restrictive than as adopted, without following required procedures. Prohibiting enforcement of un-adopted rules, they say, would address this issue.

Opponents say it gives powerful interests that oppose water quality standards the ability to force an independent “do-over” of rulemaking, based on their own determinations about which scientific issues and data matter. It asks administrative law judges (ALJs) without expertise in water quality issues to do the complex work of agency scientists, and allows ALJs to independently decide what scientific issues and data are needed to uphold or invalidate a rule. They say it duplicates the rulemaking process that already exists, greatly increasing the cost, delay, and uncertainty of developing water quality standards. In addition, they argue, the bill undermines public input into rulemaking as well as transparency to the public, and reduces agency accountability to the legislature and the public.

The bill was laid over for possible inclusion in the Environment Finance Omnibus Bill.

Environment policy omnibus moves to Finance

The omnibus environmental policy bill was heard in the Senate Environmental Policy Committee this week. The bill includes several policy proposals, including:

  • Expanding the use of scopes on muzzleloaders during the muzzleloader dear season. Only hunters over 60 years of age are currently allowed to use scopes; this bill would allow anyone hunting during the muzzleloader deer season to use a scope.
  • A provision that would add blaze pink to the list of authorized colors that can be worn when hunting. This would increase clothing options especially for female hunters.
  • The Governor’s Water Improvement Initiative, which sets a water quality improvement goal of 25% by 2025, lists agencies that will be involved, and sets the scope of public and stakeholder input.

For a full list of the provisions included in this bill, please see the Senate Counsel bill summary. The bill will be heard next in the Environment and Natural Resources Finance Committee.

Net metering oversight changes passes Senate

Legislation to end state oversight of small utilities’ fixed fees for net metering passed the Senate floor this week. Net metering allows residential and commercial customers who generate their own electricity from solar power to feed electricity they do not use back into the grid. 

This legislation prohibits state regulators from overseeing fixed charges paid by distributed generation customers of cooperatives and municipally owned power companies. Under this bill, cooperatives can be exempt from the fixed fees if they do so by resolution and adopt their own rules for implementing net metering. Under this legislation, there also has to be a process for resolving disputes which are currently resolved by the Public Utilities Commission (PUC).

For context, legislation was enacted in 2015 that allowed electric cooperatives to charge fees to customers for net metering, if they were fair and reasonable. Since the legislation was passed, several co-ops have proposed fees for net metering, and the PUC is currently reviewing them.

Advocates for the bill have sided with electric cooperatives and municipal electric utilities, arguing the PUC should not have a role in regulating net metering for cooperatives as it does for investor-owned utilities. Co-ops and municipals also maintain that serving distributed generation customers is costlier in rural, sparsely populated areas and they have a long and successful history of self-regulation.

Opponents of the bill have argued that the bill removes an important protection for customers who participate in net metering. Solar and small-wind proponents also argue this legislation will curtail the growth of distributed generation.

If you have any questions or concerns feel free to call my office at 651-296-4154 or by e-mail at