A new study shows that people who buy individual health insurance policies in the Twin Cities could be facing some of the lowest premium increases in the country next year — and that’s before any benefit from a state program that might knock down rates even further.
The report Thursday from the California-based Kaiser Family Foundation says current rate requests from insurers would boost the monthly “benchmark” premium in the Twin Cities by 5 percent next year.
That’s a slower growth rate than in 17 of 21 metropolitan areas surveyed by researchers and a shift from the past three years when big hikes meant premiums grew faster in the Twin Cities than in most parts of the country.
“It might be that Minnesota’s market is finally stabilizing, at least in the urban areas,” said Cynthia Cox, a researcher with the Kaiser Family Foundation. “Minnesota has had several years in a row of having among the steepest premium increases. This year is different.”
Minnesota health insurers, however, cautioned that it’s too early to draw conclusions, since proposed rates for 2018 aren’t final. Plus, there’s considerable uncertainty about how the federal government will handle Affordable Care Act rules that are meant to drive healthy people into the market.
“We still don’t have the rules for 2018 from Congress,” said Eileen Smith, a spokeswoman for the Minnesota Council of Health Plans, a trade group for health insurers.
The Kaiser Family Foundation study focused on premium trends in the individual market, which primarily serves people under age 65 who are self-employed or don’t get health benefits from their employer. Currently, about 170,000 people get coverage via Minnesota’s individual market, which is less than 5 percent of all state residents.
The individual market is small but has undergone significant change since 2014 with the federal Affordable Care Act (ACA). The ACA banned insurers from denying coverage to people based on pre-existing health problems and gives federal tax credits for people at certain income levels who buy through government-run insurance exchanges such as MNsure in Minnesota.
The Kaiser report looked at the cost of the monthly premium for the “benchmark” health plan, which is the second-lowest priced “silver” insurance policy in a region. This year, the benchmark plan for a 40-year-old nonsmoker in Minneapolis costs $366 per month. Under rate proposals released July 31, that rate would increase about 5 percent to $383 per month.
In terms of dollars, the proposed premiums in the Twin Cities would fall in the middle of the pack among the 21 markets surveyed by the Kaiser Family Foundation. The study found the most expensive monthly benchmark premiums for a 40-year-old nonsmoker in Wilmington, Del., ($631) and Philadelphia ($515). The least expensive monthly rates would be in Detroit ($244) and Providence, R.I. ($248).
“A number of insurers have requested double-digit premium increases for 2018,” the report states. “Based on initial filings, the change in benchmark silver premiums will likely range from -5 percent to +49 percent across these 21 major cities. These rates are still being reviewed by regulators and may change.”
On Thursday, Minnesota health insurers cautioned that it’s too early to say whether the state’s market has stabilized, particularly given uncertainty over federal health insurance rules.
It’s not clear, for example, whether the Trump administration will enforce the ACA’s “individual mandate” that requires almost all Americans to have health insurance or pay a tax penalty. It’s also unclear if the administration will continue the health law’s “cost-sharing reduction” payments that help low-income people afford coverage.
The Kaiser study on Thursday noted both issues, citing examples from other states where insurers are seeking rate increases of anywhere from 1 percent to 20 percent solely due to uncertainty about the mandate and/or the payments.
“It’s way too early to make comments with any certainty,” Smith said.
In Minnesota, the Commerce Department expects to issue final rates by Oct. 2. The premiums quoted by the Kaiser study do not include the anticipated impact of a “reinsurance” program that Minnesota lawmakers created earlier this year with $542 million in funding over two years.
If approved by the federal government, the program would provide a financial cushion to insurers that happen to attract subscribers with expensive medical conditions. Whereas proposed average premiums statewide would increase anywhere from 3 percent to 32 percent, the range would shift downward significantly with the reinsurance program and generate double-digit premium reductions in some cases.
Back in 2014, the benchmark plan for a 40-year-old nonsmoker in Minneapolis was just $162 per month — the lowest such rate available on the ACA’s new health insurance exchanges. Rates have skyrocketed since then, with Kaiser putting the average annual rate of change from 2014 to 2018 at 24 percent.
While the report Thursday suggests premium increases could be modest next year in the Twin Cities, the story might be very different in greater Minnesota. A Star Tribune review of insurer filings with the Commerce Department suggests that some of the biggest increases being sought by insurers next year are in regions beyond the Twin Cities metro.
Cox said a geographic split is emerging across the country with individual market rates.
“Not only are premiums higher in many rural areas compared with urban areas, the costs are growing faster in many rural areas, too,” she said. “So, there could be a growing divide between urban and rural areas.”