Premiums for individual market health plans will decline in many cases or hold relatively steady next year, state regulators said Monday, due in large part to a short-term program lawmakers created to hold down rates.
Statewide, average premium changes for the market's largest carriers in 2018 will range from a 13 percent decrease to an increase of less than 3 percent, the state Commerce Department announced, noting that the numbers are a dramatic switch from last year's increases of 50 percent or more.
"Last year at this time, we had a near-collapse of Minnesota's individual health insurance market," Mike Rothman, the state Commerce Commissioner, said during a news conference at the Capitol. "Minnesota's policymakers saw the flashing red lights and heard the sirens, and they took action."
But those emergency fixes add some important asterisks to Monday's rate release, which applies to individuals who buy via agents and carriers or utilize the state's MNsure health insurance exchange.
State officials said a new "reinsurance" program will play a big role in holding down rates next year, but Gov. Mark Dayton hasn't yet signed the agreement with the federal government that helps fund the program. At a cost of $271 million next year in state money, the program provides a financial cushion for health plans that enroll people with expensive health problems and thereby lowers premiums 20 percent from where they otherwise would land.
Plus, the 2018 premiums announced Monday will kick in just as the state's other one-time measure to rescue the individual market — 25 percent premium rebates for many who buy the coverage — is scheduled to shut off. That means tens of thousands of consumers could be paying more next year, even though their premiums on paper will be holding steady or going down.
"Because they had a 25 percent discount, their actual experience will have a net effect of feeling like ... they have to pay more," Rothman said. More than 90,000 people per month in the market have been receiving the rebates.
The rates released Monday apply to the roughly 166,000 people in the state's individual market, which primarily serves people under age 65 who are either self-employed or don't get coverage from their employer. The individual market has undergone sweeping change since 2014 with the federal Affordable Care Act (ACA), which launched MNsure and eliminated pre-existing condition exclusions.
Monday's rate release comes as uncertainty continues at the federal level about the future of the ACA, which Republicans in Congress have unsuccessfully sought to repeal for much of the year.
The Trump Administration has not committed to continuing certain ACA payments to health plans called "cost-sharing reductions" that insurers pass on to low-income consumers in the form of lower deductibles and out-of-pocket spending requirements. When Minnesota health plans proposed premiums this summer, they were required by the Commerce Department to assume that these payments would continue, but the final rates assume the "CSR' payments are going away, Rothman said.
The change is one factor, he said, that explains why Bloomington-based HealthPartners this summer proposed average premium decreases of about 13 percent to nearly 15 percent, but in the end will reduce premiums on average by 7.5 percent.
Commerce approved an average 2.8 percent increase for HMO customers at Eagan-based Blue Cross and Blue Shield of Minnesota. The average rate change at Minnetonka-based Medica is a decrease of 0.4 percent; at Minneapolis-based UCare, the average rate change is a decrease of 13.3 percent.
The impact of the averages, however, plays out differently in different parts of the state.
Commerce said the "benchmark" premium for a 40-year-old buying individual coverage in Hennepin County will decline by 11 percent to $327 per month next year. In St. Louis County, the benchmark plan — which is the second lowest-cost "silver" plan being sold in the area — will sell at a monthly price of about $426, down about 4 percent from this year's rate.
In Olmsted County, however, the benchmark plan for a 40-year-old will sell for about $596 per month, which is up 7 percent from a monthly cost of $555 this year.
A little more than half of all individual market consumers currently buy through MNsure, and many of those consumers qualify for federal tax credits that cap their premium costs. The subsidies are available to people with household incomes of up to 400 percent of the federal poverty level, which in 2018 is $48,240 for an individual and $98,400 for a family of four.
Those with incomes above the tax credit cutoff, as well as those who buy off-exchange policies, would be the primary beneficiaries of the new reinsurance program, since they will be paying the market price for coverage next year.
While Dayton hasn't yet signed the agreement to create the reinsurance program, he issued a statement last month saying his administration is legally required to do so. Dayton has been upset about terms of the federal agreement, however, because it includes a large cut in funding to the state's MinnesotaCare health insurance program.
"The governor assured all Minnesotans these rates are final," Jim Schowalter, president of the Minnesota Council of Health Plans, said in a statement Monday. "He has federal approval of the waiver and with today's announcement, is clearly committed to implementing the reinsurance program."