The number of Minnesotans covered through small group health insurance policies jumped by 15 percent last year — roughly 40,000 people — halting a string of year-over-year enrollment declines stretching back to 2004.
Insurers say the increase is the latest example of how consumers have been moving back and forth between the markets for individual and small employer coverage as they try to handle price increases since major Affordable Care Act changes kicked in during 2014.
For those caught up in the shuffle, it's not a feel-good story.
"When care is so expensive, people will do whatever they can to make do," said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for health insurers.
During the first year under the law, many consumers shifted from small group health plans to insurance policies for individuals, because non-group plans at the time were underpriced and much less expensive than comparable coverage for small employers, said Paul Crowley, a senior vice president with Medica, a health plan based in Minnetonka.
Last year, the reverse was true. Price hikes and tight limits on doctor and hospital choices in the individual market prompted consumers to look for ways to jump back into the small group market.
"The smaller small businesses that dropped group coverage … a portion of them started coming back," Crowley said. He added that 2017 was "the first year since 2013 that individual prices for similar types of products were more expensive than small group."
The individual market primarily serves people under age 65 who are self-employed or work for a company that doesn't offer group coverage. It's a market that's seen major changes under the ACA, which stopped insurers from denying coverage to people with pre-existing conditions.
The individual market has seen a series of premium hikes in recent years, including average jumps of 50 percent or more in 2017. Beyond big price increases, insurers dropped the remaining "broad network" health plans in the individual market, leaving consumers only with plans that limited their selection of in-network doctors and hospitals.
Individual market enrollment in 2017 declined by about 80,000 people to 151,000 enrollees, according to the Minnesota Council of Health Plans.
The small group market serves employer health plans that provide coverage to groups of 50 people or less. In 2004, about 462,000 people in Minnesota were covered in small group plans, the trade group for insurers says, but the tally declined to a low in 2016 of 268,577 people.
For years, the small group market has been shrinking as employers struggling with the never-ending rise in health care costs simply stop providing coverage. Then, in 2017, the small group tally jumped back up to about 310,000 people.
Insurers pointed to the state's stronger economy and tight labor market as driving some of the increase, with employers working to recruit and retain talented employees. They also saw small employers re-form groups to avoid troubles in the individual market for 2017.
Crowley, the Medica official, said a lesser factor was the availability of coverage for "groups of one" — meaning self-employed people who in certain situations could fit the insurer's definition of a small group, even though the health plan they purchased only covered themselves.
Carriers that allowed "groups of one" or "owner-only" policies in 2017 changed their rules for 2018 in ways that effectively tightened access to small group coverage, said Allison Kraus, the owner of Shoreline Insurance Group in Wayzata. While that means some have moved back into the individual market this year, Kraus said, other owners have expanded coverage to employees in order to preserve the small group status.
"They realize the benefit of offering benefits now," she said. "Because if you don't, the conversations are very different when you're trying to attract the right kind of talent."
The fact that small group coverage expanded last year doesn't mean cost concerns among small employers have diminished, said Bentley Graves of the Minnesota Chamber of Commerce. On the contrary, small employers still feel caught, Graves said, between the financial pain of offering coverage and the knowledge that providing benefits is important for recruiting and retaining talent in a tight labor market.
"Employers are going to do almost anything they can to continue to maintain this benefit," Graves said. "The labor market is getting tighter and tighter."
Another trend keeping employers in the small group market, despite the cost pressures, is the move to "self-insured" plans, where employers take the risk for the cost of medical claims.
Large employers have used the strategy to control costs for decades, figuring they are large enough that they don't need to pay an insurer to take the financial risk for claims. More small employers have been adopting the strategy by coupling their self-insured plan with a "stop-loss" insurance policy that limits their financial exposure.
By self-insuring, small groups can avoid certain taxes and benefit mandates, although the health plans aren't the answer for all employers, said Schowalter of the Minnesota Council of Health Plans. The trade group says the number of people covered through self-insured small groups has more than doubled since 2015 to 8,439 last year.
Whatever option they're moving to, those caught up in the annual health plan shuffle aren't having much fun, insurers say, and it's not clear when it will end.
"It's tiring," said Kraus, the insurance agent in Wayzata. "Every year people are going: 'I wish this wasn't the case.' It would be great to have some stability, but I don't know if we're going to see that for another year or two."