Why MNsure enrollment rolls on despite big rate hike

Choosing a health insurance plan can be one of the most important financial decisions a person makes. Choose a low premium plan and you can expose yourself to potentially higher out-of-pocket costs. Medical-related debt remains a major, though declining, component of individual household debt and a major factor in personal bankruptcies. Without a good understanding of potential medical needs and risks, people can make the wrong financial choice.

So it's no surprise that since passage of the Affordable Care Act (ACA), news stories about health insurance premiums have become almost as hot a topic as NFL draft picks or Oscar nominees.

A national survey of more than 4,800 adults following the enrollment period last year revealed that affordability, whether real or perceived, was a primary driver in why some people sign up for health insurance while others choose to go without coverage, despite the law's mandatory enrollment requirements.

So when the Minnesota Department of Commerce announced in October that premiums for individual health insurance through MNsure, the state exchange, would rise anywhere from 14 percent to 49 percent for 2016, critics and supporters alike worried that health insurance in Minnesota was becoming unaffordable for many.

Some worried that the rate hikes were undermining a primary goal of the ACA, to provide affordable health insurance to those previously uninsured. Minnesota's first-year experience with MNsure in 2014 saw the number of uninsured fall 180,500, or 40.6 percent, to about 264,500, less than 5 percent of the population.

But MNsure recently reported preliminary results in the first few weeks of the 2016 enrollment period showing that the state exchange is "on track" to match enrollment levels achieved last year, according to spokesman Shane Delaney, while continuing to maintain Minnesota as "one of only a handful of states with an uninsured rate at or below 5 percent."

What's going on?

While Minnesota's year-over-year increase in health insurance premiums through the state exchange is among the highest in the country, an increasing number of Minnesotans qualify for direct tax credits or subsidies, offsetting the increase. Currently, more than half of enrollees in private health insurance plans through MNsure are receiving financial help. Enrollment figures for 2016 show more than a 20 percent increase in eligibility for financial assistance.

In addition, even after two years of double-digit rate hikes, Minnesota's premiums remains among the lowest in the U.S., according to a survey of public exchange health premiums in major cities across 49 states and the District of Columbia by the Kaiser Foundation.

For example, a 40-year-old nonsmoking man living in Minneapolis who earns $30,000 a year will see his premium for the second-lowest-cost plan, called a Silver Plan, jump 28.4 percent over 2015. That is the eighth-highest rate hike in the country on a percentage basis. But his actual premium bill of $235 a month is 43rd lowest, according to Kaiser. Among metro areas in the Midwest, only Cleveland, Detroit and Chicago posted lower rates for the same plan. And after qualifying for tax subsidies, he'd have a premium cost of $208 per month.

Choosing a health plan is complicated. Individuals who don't have an employer-sponsored plan where the HR department can handhold participants through the sign-up process face a huge challenge matching different plan benefits and costs to individual needs.

The enrollment study cited above was done by the Commonwealth Fund, a private foundation promoting access to health care. While affordability was the No. 1 factor determining whether or not someone got insurance, access to information and help in enrolling were also important. Those who received some help, through a call center, designated "navigator" or insurance broker, were more likely to complete the enrollment process.

"It's a complicated decision with lots of choices and variations," said Sara Collins, vice president, health care coverage and access at the Commonwealth Fund and author of the study. Understanding eligibility and availability of subsidies under the ACA complicates the choices even more, she added.

Lindsey Rind, an insurance broker with the Breitenfeldt Group, said that publicity over Minnesota's rate hikes initially raised concerns among clients and prospects. But since the enrollment period began, she has seen an increase in people "wanting to know more about MNsure." Noting that call volume to her office has nearly tripled over the same period last year, to 90 queries a week, she added that callers have been both "pleasantly surprised and very relieved" when they find they are eligible for subsidies.

She said she has worked with clients who had given up in frustration trying to navigate the system themselves and either went without insurance or kept a plan that was costing them too much. "A lot of people don't know they can go to a broker for help with insurance, or they think there is a fee involved and that is not the case."

Brad Allen is a freelance journalist and former investor relations executive for companies including Imation Corp. and Cray Research. His e-mail is brad@bdallen.com.