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RELEASE: House passes Rep. Olson’s bill updating and stabilizing PEIP

Monday, April 29, 2024

SAINT PAUL, Minn. – Today the Minnesota House passed legislation – SF 3204, authored by Rep. Liz Olson (DFL – Duluth) – updating laws regarding the Public Employee Insurance Plan (PEIP). Since 1989, PEIP has been a voluntary health insurance pool available for school district, city, and county employees. The bill incorporates some changes recommended following an analysis performed by Minnesota Management and Budget – the agency that oversees PEIP – comparing its structure to other states with similar plans for public employees.

“Many of our state’s educators are facing a crisis with high health care costs, threatening the economic security of themselves and their families. Stabilizing the PEIP insurance pool will result in lower health care costs for employees and save money for the state,” Rep. Olson said. “Because a share of these costs are covered by the state’s general education formula, the changes will also make additional resources available for Minnesota classrooms from which our students can benefit.”

PEIP currently contains 289 groups – including Duluth Public Schools – representing approximately 17,000 employees and 35,000 individuals, of which 20,000 are insured through school districts. By pooling small groups together, PEIP seeks to lower the shared risk by creating a larger and more stable group. However, the pool has had significant volatility in recent years with more groups entering and exiting the plan annually. 

Rep. Olson’s bill makes two significant modifications to the law governing PEIP. First, it requires participation in the program for a four-year team, an increase from the current two-year minimum. Secondly, it allows groups to withdraw if premiums increase more than 20% from one year to the next. The current threshold is 50%. Each of these changes will increase stability by limiting the recent revolving door of groups entering and exiting the plan, while still allowing members an opportunity to depart if faced with a significant rate increase.

The Minnesota Senate previously passed the bill on April 18, and it now goes to Governor Walz for his anticipated signature.