Legislation under review in Minnesota would establish a state-run automobile insurance program aimed at providing low-cost coverage to eligible low-income drivers.
Known as the Minnesota Lifeline Insurance Program, the proposal would create a residual market mechanism funded by participant premiums and administered with the goal of reducing the number of uninsured drivers in the state.
Supporters of the bill argue the program could improve road safety and access to insurance by removing rate-setting factors such as ZIP code and marital status, which are commonly used in the traditional market.
Anna Odegaard (pictured above), senior advocacy and campaign strategist for the Midwest region at the Fines and Fees Justice Center, said the program would maintain safe-driving eligibility requirements and remove the profit component from rate structures, helping to control premium increases.
The proposal would also allow eligible drivers to opt out of the state’s mandatory personal injury protection (PIP) coverage, provided that every licensed driver in the household has comprehensive health insurance.
Odegaard noted that PIP coverage accounts for roughly one-third of minimum-limits auto policy premiums.
Outside of this planned program, Minnesota also has MinnesotaCare, a longstanding program offering subsidized health coverage to residents with incomes above the threshold for Medicaid eligibility but still considered low-income.
Established in 1992, MinnesotaCare provides free or low-cost insurance to those who meet specific income criteria. Notably, starting January 12 this year, MinnesotaCare extended its eligibility to undocumented immigrants who meet all other program requirements.
This expansion is anticipated to benefit over 40,000 undocumented individuals residing in Minnesota.
Opposition to the proposed Minnesota Lifeline Insurance Program has come from the insurance industry, including the Insurance Federation of Minnesota, which has raised concerns about cost-shifting and rate impacts on the broader market.
Aaron Cocking, president and CEO of the federation, told lawmakers that policyholders in the standard market would ultimately subsidize the Lifeline program if it runs a deficit, which he expects it will.
He said the costs assessed to auto insurers would likely be passed on through higher premiums for other drivers.
Cocking also pointed to provisions in the bill that cap premium variation at 25%, arguing that such a restriction could lead to rural drivers subsidizing higher-risk drivers in urban areas, despite differences in exposure.
He also said that the proposed policies do not require physical damage coverage, limiting their usefulness for drivers with vehicles under loan or lease agreements.
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