Losses narrow for Minnesota health plans, but customers head for exits

Health plans saw less red ink in the state's troubled individual market during 2016, according to a new report, but there also were concerning signs that healthy subscribers have been dropping coverage due to hikes in premiums.

The numbers from the state Commerce Department show that Minnesota's individual market isn't immune from pressures being felt in states like Ohio, where Anthem Inc. announced this week it won't return to a market that's undergoing fundamental change with the federal Affordable Care Act.

For 2016, health plan premiums in Minnesota's individual market fell about $60 million short of claims, compared with a shortfall of $166 million in 2015, according to a Star Tribune analysis of Commerce data. Meanwhile, the number of people buying individual coverage in 2016 dropped by more than 50,000 people, to 237,202, a decline of about 19 percent.

"The loss of enrollment is an issue, because obviously it was healthier enrollment," said Gary Claxton, a vice president with the California-based Kaiser Family Foundation. "When you raise premiums, you lose the healthiest people."

The red ink and declining enrollment is confined to the individual market, which is the source of coverage for self-employed people and those who don't get health insurance from their employer or the government. Fewer than 5 percent of Minnesotans currently are covered through individual policies.

Across the country, insurers have announced exits for 2018 from the individual market in a growing number of states due to red ink and uncertainty over the future of the federal Affordable Care Act (ACA).

Insurer exits for 2018 announced this spring in Kansas, Iowa and Nebraska, for example, mean that Minnetonka-based Medica could be the last health plan standing for individuals in parts of all three states.

The ACA brought sweeping changes to the individual market by eliminating pre-existing condition exclusions that helped insurers control costs but were widely unpopular. Since the exclusions went away in 2014, insurers across the country have struggled to make the business profitable and in many cases have dropped out.

This year, insurers have complained about uncertainty for 2018 as Republicans in Washington, D.C., try to repeal and replace the ACA.

It's unclear how the Trump administration, for example, will enforce the current health law's individual mandate, which imposes a tax penalty for those who lack coverage. The administration also hasn't decided whether to continue funding certain subsidies called "cost-sharing reductions" that reduce enrollee out-of-pocket costs. Insurers believe both provisions help the market by driving people to get insurance.

President Donald Trump, however, has blamed Democrats in Congress for getting in the way of the Republicans' replacement plans.

The Commerce Department numbers show that since 2014, individual market premiums in Minnesota haven't covered the cost of medical services, according to the Commerce data.

"The plans are still losing money, even though the loss ratio is headed in the right direction," Feldman said. "The second [troubling sign] is that per capita claims seem to be continuing their very, very rapid increase."

The Star Tribune analysis shows per capita claims increased 18 percent between 2015 and 2016, to $5,009.

Jim Schowalter, chief executive of the Minnesota Council of Health Plans, said total medical claims in the individual market were down a little bit in 2016, but the decline in enrollment was much steeper. So, per-person medical costs continued to increase.

"This isn't a normal market," Schowalter said. "It needs help in order to work."

Minnesota lawmakers are helping, Schowalter said, with a "reinsurance" program that would spend up to $542 million over two years to help cover the cost of certain individual market enrollees. That program is contingent on the state receiving a waiver from the federal government that would cover a large chunk of the costs.

But history shows it's too early to say whether carriers in Minnesota will compete next year. When Eagan-based Blue Cross and Blue Shield of Minnesota announced major changes for 2017, word didn't come until late June.

When Golden Valley-based PreferredOne dropped out of the MNsure exchange for 2015, the health plan provided notice in September 2014.

Christopher Snowbeck • 612-673-4744