Almost immediately after the state’s insurance regulator earlier this month announced that rates for plans sold through MNsure would rise 4.5 percent on average, Republicans, health policy experts and other critics decried the figure as bogus and misleading.
The state Commerce Department has steadfastly defended the figure — a straight average of rate changes reported by the four returning carriers to MNsure — acknowledging that some consumers will see higher or lower rate changes. State agency officials said consumers can shop around once open enrollment begins Nov. 15 “to find the best option that fits their individual health and financial needs.”
But other states, like California, Colorado and Washington, report their increases in premiums for their respective exchange plans as weighted averages.
Calculated that way, Minnesota’s figure for next year is not 4.5 percent, but 11.8 percent.
A weighted average is considered by some experts to be a more accurate depiction of complex plans because it takes into account the percentage of enrollees distributed across the returning insurance carriers, which can have varying rates.
Commerce Department Commissioner Mike Rothman said Minnesota is unique because it saw the departure of PreferredOne from next year’s exchange, an insurer that covered 60 percent of MNsure enrollees before it decided to pull out of the market. Moreover, Rothman said, Blue Plus, an HMO-plan and affiliate of Blue Cross, would be new to consumers once open enrollment begins.
“The Commerce Department put out a calculated straight average for people to be able to compare the average that was per company,” Rothman said, listing the rate changes reported by the four returning firms, 1.8 percent, 8.1 percent, 17.2 percent and -9.1 percent.
The agency did this “so that people understood that for those companies going back, that that’s what the average was, just straight up, that’s what it was,” Rothman said.
Earlier in the year, Gov. Mark Dayton said rate increases would not be released until mid-November, giving rise to accusations by Republicans that he was hiding bad numbers until after the election. Dayton relented. When the unweighted figure showed the average increase to be 4.5 percent, Dayton boasted of having one of the nation’s lowest insurance premiums.
His Republican challenger, Jeff Johnson, immediately said the figure was distorted and called Dayton a liar. Republican attacks became even more fevered on Thursday, after the Star Tribune reported that the Commerce Department last year had asked Golden Valley-based PreferredOne to lower its initially proposed rates. PreferredOne, which had nabbed nearly 60 percent of MNsure enrollees through its super-low premiums, pulled out from the 2015 exchange because it said its continued participation would be unsustainable. Premium rates are expected to rise an average of 63 percent for PreferredOne plans next year.
For all of its troubles, including a glitchy rollout of the state’s online health exchange, MNsure has helped boost the rate of insured Minnesotans to about 95 percent, among the highest level in the country, according to a University of Minnesota study.
An uneven distribution
Critics’ chief complaint about the 4.5 percent average rate increase is that the figure is skewed by the uneven distribution of enrollees across the four returning insurance carriers: Blue Cross Blue Shield of Minnesota, UCare, Medica and HealthPartners.
UCare, for instance, was the only carrier to report its premium rates would fall next year, decreasing by 9.1 percent on average. But UCare enrolled only 549 of the more than 55,000 Minnesotans who purchased commercial coverage through MNsure last year.
By including UCare’s premium decrease in an unweighted average, it served to dramatically reduce the average rate increase. If each insurer’s average premium rate were weighted to account for their percentage of the market, the overall figure would be the higher 11.8 percent, excluding Preferred One.
That would make Minnesota’s average rate increase more in line with rate changes reported in four other states, including Iowa and Indiana, according to data compiled by accounting firm PricewaterhouseCoopers. Three other states, Pennsylvania, Kansas and Louisiana, all reported average rate hikes of more than 15 percent for 2015.
“In theory, yes a weighted average would be more accurate,” PricewaterhouseCoopers said in a statement supplied to the Star Tribune. The accounting firm has a team of researchers tracking state-by-state exchange rates and updates its Web page as states publish rate changes.
The firm cautioned that weighted averages can be tricky because some states’ rates are calculated in part by using 2014 enrollment projections and it’s difficult to determine what final enrollment figures will be once the open-enrollment period ends.
Though rates are rising for some individuals, not all Minnesotans will bear the full brunt of the increases. Many low- to middle-income residents qualify for federal subsidies that help keep monthly premium payments low.
A Star Tribune analysis of approved rate filings by the four returning carriers found wild swings in rate changes. The analysis looked only at the products by the four carriers that were offered in both 2014 and 2015, to provide the most direct comparison.
Blue Cross, which reported an average rate increase of 17.2 percent, had two products returning in 2015. Of the four carriers, the analysis showed the largest premium increases across different geographic regions and age groups. A 54-year-old in the Twin Cities in 2014 was able to purchase a “bronze”-graded policy for $227.35 a month in 2014. Next year, a similar “bronze”-graded plan is projected to cost $307.36 a month, a 35.2 percent rate increase.
Medica, which reported an average rate increase of 1.8 percent, had 21 products returning in 2015. But premium increases will be much higher for many individuals. A 38-year-old nonsmoker in northeastern Minnesota who purchased a “bronze”-graded policy paid $197.28 a month in 2014. That plan’s premium will rise 14.6 percent next year.
UCare’s rate changes are at the other end of the spectrum. A 25-year-old nonsmoker in the Twin Cities could purchase a high-deductible UCare “Choices Core” plan in 2014 for $131.04 a month. For 2015 that plan’s premium will fall 28.5 percent, to $93.64 a month.
Rothman declined to comment on the data analysis without first receiving a copy to review before publication. The Star Tribune offered to share the analysis in person, but the Commerce Department declined.
House Minority Leader Kurt Daudt, R-Crown, has been among the administration’s most vocal critics, arguing that the 4.5 percent was touted for politically motivated reasons, a charge the Dayton administration vehemently denies.
“The bottom line is 4.5 percent is grossly misleading Minnesotans for Gov. Dayton’s political gain,” Daudt said. “It’s just a matter of what’s more accurate.”
A spokesman for the Dayton campaign said it had no further comment.
Data editor Glenn Howatt contributed to this report.