Premiums in Minnesota's troubled individual market won't spike as much next year as they did for 2017, according to numbers released Monday, but already high rates will get even higher if a new state program fails to win federal approval.
The state's largest health plans for individuals are seeking average rate increases ranging from 3 percent to 32 percent for next year, the Commerce Department said.
Proposed increases would be significantly reduced or transformed into discounts, state officials added, with a "reinsurance" program that is designed to provide a financial cushion for insurers that happen to attract high-cost enrollees.
Minnesota's individual market is far from being out of the woods, insurers say, but Monday's release pointed to small signs of improvement.
"It does seem like relative to previous years, the Minnesota market is seeing some signs of stabilizing," said Cynthia Cox, a researcher who follows the individual market for the California-based Kaiser Family Foundation. But she added: "There could be some pretty big premium increases in the absence of reinsurance."
The individual market primarily serves people under age 65 who are self-employed or don't get coverage from their employer. Most Minnesotans don't buy individual health insurance policies, since employer groups and government programs cover the vast majority of residents.
The market has been the focus of changes with the federal Affordable Care Act (ACA), which in 2014 started to prohibit health plans from denying coverage to people with pre-existing health problems. The federal health law also called for the launch of new health insurance exchanges like Minnesota's MNsure as an option for individuals who buy their own insurance.
Minnesota's individual market has been volatile under the ACA, with lawmakers agreeing to spend $542 million over two years on reinsurance after the market nearly collapsed last summer. At the time, the state's largest insurer pulled its most popular products from the market, and health plans sought premium increases of 50 percent or more.
Whereas the market a few years ago served about 300,000 people, currently an estimated 170,000 Minnesotans buy individual policies. Insurers are troubled by the decline, plus signals that the Trump administration will stray from ACA provisions designed to get healthy people into the market.
"I think there are still an unbelievable number of unknowns that have to be worked out … before you can say things are stable," said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for insurers.
Now, individual market consumers buying through MNsure are paying an average of $579 per month, which is 53 percent higher than the 2016 average monthly premium of $379. Average rates in the individual market, however, aren't reflective of all consumers, since actual premiums vary according to age, geography and the quality of coverage purchased.
The proposed rate increases announced Monday are subject to regulatory review. The Commerce Department is now accepting public comments through Aug. 31, and final rates will be announced by Oct. 2.
On reinsurance, Minnesota hopes to hear by the end of August whether the federal government will approve the program, said Mike Rothman, state Commerce commissioner. Rothman said in a statement: "To date, we have received positive feedback from federal officials."
The U.S. Department of Health and Human Services in July approved a reinsurance program for Alaska. Government officials at the time encouraged other states to use a waiver process under the ACA for troubled individual markets.
The numbers released Monday could be particularly noteworthy for those states, said Cox, because they show how much impact reinsurance can make in reducing premium costs.
The HMO at Eagan-based Blue Cross and Blue Shield of Minnesota, for example, is seeking average premium increases that range from 16 percent to 32 percent. But reinsurance would knock the range down considerably — with the program, Blue Cross says its subscribers would see rate changes ranging from a decline of nearly 2 percent to an increase of 11 percent.
Bloomington-based HealthPartners, which is now the biggest seller of individual policies via MNsure, proposed a rate increase of 3 to 5 percent. With reinsurance, the proposed average change at HealthPartners switches to discounts of roughly 13 to 15 percent.
"I have a little bit of a sigh of relief with those numbers compared to years past," said Matt Wandzel, 29, of St. Louis Park. While hoping for the best-case scenario of a premium discount, an increase of "3 to 5 percent is a much easier number to handle," said Wandzel, a real estate agent with Edina Realty and an existing HealthPartners customer.
Monday's data release gives consumers a sense of where premiums in Minnesota could be headed, but it doesn't provide details about how their costs could change. In the individual market, details matter a lot when it comes to figuring out a consumer's health care tab.
In Ramsey County, for example, a 30-year-old buying through MNsure can pay as little as $260 per month for a health plan, whereas a 60-year-old in Rochester can pay as much as $1,780 a month.
The release Monday did not address whether health insurers will cap their enrollment as some did for 2017, or what sort of limits will be in place when it comes to choice in doctors and hospitals. That information won't be available until final rates are released.
Whereas the release of proposed rates in past years has prompted partisan warfare, both DFL Gov. Mark Dayton and Republicans in the Legislature quickly claimed credit for the numbers, saying the chance for consumers to see relatively modest premium changes shows the positive impact of the reinsurance program. The reinsurance program was passed by the GOP-controlled House and Senate; Dayton let the bill become law without his signature.
"Minnesotans, who buy their health insurance on the individual market, are receiving the tremendous news that proposed insurance rates will remain essentially unchanged next year," Dayton said in a statement.
Speaker of the House Kurt Daudt, R-Crown, said in statement: "This puts our state on track to again be a national leader in health care."