Health insurers in Minnesota’s individual market say they want to cut premiums next year — the latest sign of stability in a market that for several years was plagued by premium spikes under the federal Affordable Care Act.
The Minnesota Department of Commerce on Friday released data showing the four largest carriers in the market are seeking average rate decreases that generally range from 7 to 12 percent, depending on the insurance company.
The rate proposals reflect a newfound profitability for insurers in the market during 2017, plus the impact of a state-funded reinsurance program that’s helping to cover the cost for subscribers with unusually expensive medical conditions.
“I have yet to see a state report across-the-board decreases as Minnesota has,” said Sabrina Corlette, a researcher at the Center for Health Insurance Reforms at Georgetown University.
The numbers released Friday apply only to the individual market, which primarily serves people under age 65 who are self-employed or don’t get coverage from their employer. This spring, 162,000 Minnesotans were buying coverage in the market, where consumers can purchase via the state’s MNsure exchange or directly from some carriers.
The information on requested rates comes as new questions are brewing at the federal level about the future of the Affordable Care Act.
Last week, the Trump administration said it would no longer defend key parts of the ACA in an ongoing legal challenge to the law. Yet Thursday, officials with MNsure — the health insurance exchange created by Minnesota as part of ACA law — advised consumers to look at the rate requests and see how much they could save via ACA tax credits available through the exchange.
While the individual market is relatively small, it’s been the focus of sweeping change — and intense political debate — with the ACA. Among other things, the health law starting in 2014 eliminated pre-existing condition exclusions widely unpopular with consumers.
The premium information released Friday is not final, since Commerce must still review the preliminary rate requests. The state agency says final 2019 rates with more detailed plan and provider network information will be available no later than Oct. 2, 2018.
While Commerce released information about the average rate of decrease being sought by carriers — ranging from a drop of 7 percent at Minneapolis-based UCare to a 12.4 percent decline at Minnetonka-based Medica — it did not specify actual premiums prices.
Premiums vary by age, geography and smoking status. One healthy plan from Bloomington-based HealthPartners with a monthly premium of $346 for a 40-year-old metro nonsmoker would drop 9 percent to $315 per month, according to a Star Tribune review of filing details.
At HealthPartners, the proposed rate decreases likely would flip to increases were it not for the state’s reinsurance program, said Donna Zimmerman, senior vice president of government and community relations. But the rates also are more stable, she said, because carriers have a better handle on how much care consumers use in a given year.
When ACA changes began in 2014, Minnesota had some of the nation’s lowest individual market premiums, and carriers amassed red ink as medical costs far outpaced premium revenue. Carriers hiked rates for 2015 through 2017, and thousands fled the market.
“We still need to work on making health care more affordable because obviously it’s a very delicate market subject to a lot of forces,” Zimmerman said. “And it has shrunk considerably since the ACA.”
Jim McManus, a Blue Cross spokesman, said that were it not for the state’s reinsurance program, the carrier’s Blue Plus HMO would be seeking an average individual market premium increase of 4.8 percent as opposed to the 11.8 percent decrease cited Friday by Commerce.
Enacted in 2017, the reinsurance program is in effect for 2018-19, with state law authorizing up to $542 million in spending. The program offsets 80 percent of an individual’s total annual medical claim costs between $50,000 and $250,000.
Legislation for the reinsurance program was passed by the GOP-controlled House and Senate. DFL Gov. Mark Dayton let the measure become law without his signature and later signed an agreement with the federal government on funding for the program.
“Minnesotans can breathe a little easier knowing that their health care rates will likely go down next year,” said House Speaker Kurt Daudt, R-Crown, in a statement.
In a statement, Dayton called the rate reductions “are very good news for many Minnesotans, but very expensive for others.”
The Trump administration is developing a proposal to make it easier for consumers to buy coverage via short-term and association health plans, which some analysts think could pull healthy consumers from the ACA-regulated individual market. Tax legislation signed into law by Trump late last year means the federal government starting next year won’t enforce ACA tax penalties for those with no coverage.
In other states, some insurers have cited both developments as factors that argue for rate increases, said Michelle Long, a policy analyst with the California-based Kaiser Family Foundation.
“It may be also the case in Minnesota that possibly rates could have decreased even more if it weren’t for the repeal of that mandate” and the “proposed expansion of very loosely regulated plans,” Long said.
Zimmerman of HealthPartners said she didn’t think the repeal of the individual mandate penalty, or the proposed expansion of alternative health plans, were significant factors in her company’s rate request. Geoff Bartsh, a vice president at Medica, said his health plan will be carefully watching whether the changes make a difference. Medica is one of the few plans that has expanded into new states under the ACA.
Earlier this month, the Kaiser Family Foundation issued a report tracking proposed rate changes in eight states and the District of Columbia for 40-year-old men buying the second-lowest-cost “silver” health plan. The report found that insurers were seeking rate increases for these “benchmark” policies ranging from 7 percent to 36 percent, that would push monthly premiums to between $336 to $645 depending on the market. The foundation hasn’t yet incorporated the new Minnesota numbers, but said the 2018 benchmark premium in the Twin Cities was $325 per month.
“While people in other states are seeing double-digit increases in health insurance premiums for 2019, we aren’t,” Jim Schowalter, chief executive of the Minnesota Council of Health Plans, said in a statement.
With the reinsurance program scheduled to go away after 2019, Schowalter called on lawmakers to extend the program. Dayton indirectly addressed the idea in his statement by saying: “Minnesota taxpayers should not have to keep subsidizing insurance companies to hold down health care costs.”