Small-business premiums on the rise in Minnesota

The largest health insurers in the market where small businesses buy coverage are increasing premiums by an average of 8 to 14 percent next year, a slightly tighter range than carriers proposed to state regulators this summer.

The state Department of Commerce approved the final rates this week, saying the premium increases reflect higher medical use due to a somewhat less-healthy population of enrollees.

Premium increases in the small-group market regularly raise concerns that companies might no longer be able to afford offering the benefit. But health coverage remains a key way for small and large employers to compete for talent in a tight labor market.

"Small group is trending up, which is a concern because we had increases last year after several stable years," said Dan Schneeman, an insurance agent with Seven Hills Benefit Partners in St. Paul, in an e-mail. "Several carriers have suggested one reason for this is healthy small groups leaving the pool to become self-insured."

Small-group health plans provide coverage for benefits and organizations with two to 50 full-time employees. At the end of last year, about 263,000 Minnesotans were covered by the plans.

When Commerce released rate proposals for the small-group market in July, the largest carriers were seeking average increases of 8 to 17 percent.

Owatonna-based Federated Insurance announced this summer it was dropping out of the small-group market, but the lineup of carriers in the market otherwise is steady, said Mike Rothman, the state Commerce commissioner, during a news conference this week.

Bloomington-based HealthPartners, which is the largest health insurer for small businesses, will increase premiums next year an average of 12 percent or 14 percent, depending on the plan, Commerce reported on Monday.

The average increase for most at Eagan-based Blue Cross and Blue Shield of Minnesota will be 9 percent, while premiums for most at Golden Valley-based PreferredOne will increase an average of 11 percent.

At Minnetonka-based Medica, premiums for most in the small-group market will increase an average of nearly 8 percent. Gundersen Health Plan and Sanford Health Plan also sell small-group policies in Minnesota.

"As in years past, these rate increases reflect the general rise in costs for medical services and prescription drugs," Commerce said in a statement. "The rate increases for 2018 also reflect higher medical-utilization levels and claims reported by the insurers due to a somewhat less healthy enrollment population."

Schneeman said he's not seeing many small businesses dropping health plans, since the lack of benefits is a competitive disadvantage when it comes to hiring workers. Plus, the state's individual health insurance market has been unstable with large premium increases, decreased choices in insurance providers and tight limits on the network of doctors and hospitals available to subscribers.

Christopher Snowbeck • 612-673-4744