Blue Cross retreat prompts re-evaluation by insurance competitors

The pullback by Blue Cross and Blue Shield of Minnesota from the state's individual market has prompted competing health insurers to consider if they need higher premiums for 2017.

As a result, an expected release of preliminary rate requests that was planned for Monday isn't going to happen, state officials said Thursday. It's now likely the premium proposals will be posted by Sept. 1.

Last month, Blue Cross said it would stop selling individual market plans that currently provide coverage to about 103,000 Minnesotans who buy health insurance on their own. The Eagan-based insurer said it currently projects a three-year loss in the individual market that exceeds $500 million.

"To allow other insurers time to re-evaluate the market and file revised rate proposals, Minnesota is working with the federal government to extend the date when these proposed rates will be posted," the state Commerce Department said in a prepared statement. "The expectation is that insurers' rate proposals will be posted by September 1."

The moves apply to the state's individual market, where about 5 percent of Minnesotans buy coverage. It's the portion of the health insurance market that's undergoing significant changes due to the federal Affordable Care Act, and includes the state's MNsure health insurance exchange.

Revised filings likely mean that insurers are pushing for higher premiums and/or fewer choices of doctors and hospitals.

Blue Cross competitors likely are sizing up the chance of attracting a large number of former Blue Cross subscribers, including a big number with costly health issues, said Roger Feldman, a health insurance expert at the University of Minnesota.

"They're probably scared," Feldman said. Citing figures on Blue Cross plans across the country, he added: "Just looking at the Blue Cross risk mix, looking at the services that they use, [competing insurers have] every reason to be worried."

There were signals before the Blue Cross retreat that premiums likely would be on the rise. Financial safety nets for health insurers that are funded by the health law go away next year, insurers say, and medical cost trends are picking up.

Insurers factored those pressures when they initially submitted premium proposals to the Commerce Department in May, said Eileen Smith of the Minnesota Council of Health Plans, a trade group for health insurers. But those filings "didn't reflect the thousands of people who will now switch health plans," Smith said in a statement.

"Taking these people's needs into account is a big job," she said.

Across the country, a growing number of health insurers have complained about financial losses in the individual market, where subscribers have used more health care than expected. While some carriers are holding their own in the market or growing the business, Minnetonka-based UnitedHealthcare next year will retreat from 31 of 34 state exchange markets where it currently competes.

Financial losses for insurers during the first years of the Affordable Care Act were covered, to some extent, by financial safety nets built into the law. But the Minnesota Council of Health Plans says the protections were incomplete.

Across most insurers in the state, the trade group estimates financial losses in the individual market of about $860 million in 2014-15. The financial safety nets are providing carriers with about $353 million, leaving collective losses of roughly $500 million.

Even with the delay announced Thursday, the insurers' premium requests will be subject to regulatory review to make sure they are justified and include consumer protections, Commerce said. After the review process is complete, final rates are expected to be announced by Oct. 1

Open enrollment begins Nov. 1 and ends Jan. 31, 2017. Under the federal health law, most Americans must obtain health insurance or pay a tax penalty.

While Blue Cross is pulling most of its individual market products, it will continue to sell narrow-network HMO policies for 2017, both on the MNsure exchange and the larger off-exchange portion of the individual market.

Christopher Snowbeck • 612-673-4744