People who buy health insurance on their own are about to experience what’s become a dreary summer ritual — the first look at next year’s premiums.
The state Commerce Department on Monday is scheduled to release preliminary rate requests from health insurers for the roughly 170,000 people who buy individual policies.
Insurance agents say they aren’t expecting a repeat of the 50 percent increases posted last year. But they do anticipate large premium jumps in the market, while pointing out the increases could be knocked back by a new state program designed to cushion insurers from expensive medical claims.
The sneak peek at premiums promises to shift attention back to Minnesota after many in the state’s insurance market followed Republican attempts last week to repeal the Affordable Care Act, the federal law that has brought sweeping changes to the coverage that individuals purchase.
“There is so much uncertainty from year to year, we have no idea what to anticipate,” said Judith Kissner, 57, a Chisago County resident who’s purchased individual policies for more than a decade. “I haven’t seen anything at the state or federal level to suggest premiums will go down or that choices in coverage will improve.”
The individual market primarily serves people under age 65 who are self-employed or work for an employer that doesn’t provide coverage. The premium proposals scheduled for release Monday are preliminary, since the Commerce Department has yet to review the rates.
Final rates are expected by Oct. 2.
If approved by the federal government, the state’s reinsurance program promises to help stabilize premiums by covering a portion of health plan costs should they attract enrollees with unusually high medical bills. At a cost of $542 million over the next two years, the program is projected to reduce the entire market’s premiums by an average of over 20 percent from where rates otherwise would be.
“We expect you’ll see two rate requests — one with [reinsurance] help and one without,” said Eileen Smith, spokeswoman for the Minnesota Council of Health Plans, a trade group for insurers. “With that comparison, you’ll clearly see how work by the Legislature and administration earlier this year will directly help Minnesota families, if the federal government gives the state the go-ahead.”
In advance of Monday’s release, shoppers who have purchased individual coverage in the past expressed not just uncertainty, but also dread, dismay — and even some hope.
“I’m terrified,” said Teresa Boardman, a real estate agent in St. Paul. “The health insurance is so expensive, it makes me sick.”
“My guess is that in the wake of the Legislature passing the reinsurance bill, the insurers are going to try to keep the increases pretty modest this year,” said Brian Freeman, an author who lives in Woodbury.
Starting in 2014, the federal Affordable Care Act eliminated pre-existing condition exclusions that insurance companies previously used to control costs. The law also created new government-run health insurance exchanges where consumers can buy private coverage and tap federal tax credits under the ACA, so long as they meet certain income requirements.
Ever since the changes, many health plans have struggled to make the individual market business profitable, and some have dropped out as a result.
Nationally, Minnetonka-based UnitedHealthcare dropped 31 of the 34 state exchange markets where it competed last year, and other large carriers have followed suit. In Minnesota, financial losses drove Golden Valley-based PreferredOne from the state’s MNsure exchange for 2015, and prompted Blue Cross and Blue Shield of Minnesota to drop its most popular individual health plans for 2017.
Regulators say the Minnesota individual market nearly collapsed following the Blue Cross move, and it continues to suffer from enrollment declines. In February, the Minnesota Council of Health Plans said the number of people buying individual policies dropped 30 percent from roughly a year earlier.
“I think it was healthy people leaving, not sick people,” said Joshua Haberman, an insurance agent in Bloomington. “I’m still expecting the rate increases to be large.”
To help people in the individual market, state lawmakers this year provided one-time premium relief for shoppers with incomes that are too high to qualify for federal tax credits. In addition, the Legislature created the reinsurance program, which “should be approved in an expedited manner,” said state Sen. Michelle Benson, R-Ham Lake. “Rates are coming out on Monday. We do expect increases.”
The Trump administration has encouraged state flexibility under the law, and “remains committed to improving our health care system,” according to a statement from the U.S. Department of Health and Human Services issued after Republicans in the U.S. Senate failed in three separate votes to advance a bill for repealing the health law.
The last of the three bills, which failed early Friday by just one vote, would have immediately eliminated the health law’s mandate for most Americans to have health insurance or pay a tax penalty. The measure would have torpedoed insurance markets, health plans say, by removing a key incentive for healthy people to buy coverage.
Insurers complain that the market is still clouded by uncertainty since the Trump administration hasn’t committed to continuing “cost-sharing reduction” subsidies for low-income consumers. In addition, health plans aren’t clear how actively the administration will enforce the individual mandate.
“As I said from the beginning, let Obamacare implode, then deal. Watch!” Trump tweeted on Friday.
There are signs of improvement in the individual market.
A Star Tribune analysis of regulatory filings shows that premiums in the first quarter of 2017 did a better job than during the same period last year in covering claims costs for people with individual policies from Minnesota health plans. In a statement, officials with Minnetonka-based Medica agreed with the analysis, but cautioned: “Most medical claims come in the third and fourth quarters of the year, so it’s still a little early to draw concrete conclusions.”
A report this summer from the California-based Kaiser Family Foundation also documented financial improvements during the first quarter for health insurers in individual markets across the country.
“We support the [reinsurance program] to help contain — and potentially reduce — premiums for Minnesota consumers,” the Minneapolis-based health plan UCare said Friday in a statement. “We believe the current Minnesota marketplace has begun to stabilize for consumers and carriers, while recognizing federal changes are still possible.”