Opponents of the Affordable Care Act were quick to jump on the news last week that some health insurers in Minnesota and elsewhere have requested hefty premium hikes in 2016 for consumers in the individual market — the small group of people who don’t get their coverage through employers or government programs such as Medicare.
These requested rates often are reduced during the review process. Nevertheless, consumers have good reason to be frustrated. Health insurance already is an expensive necessity, one that many families struggle to afford. But those pointing to the proposed rate hikes as evidence that the law is fatally flawed haven’t done their homework.
Long before the ACA’s passage in 2010, the small size of the individual market, which constitutes about 6 percent of the overall market in Minnesota, has made it vulnerable to eyebrow-raising rate increases. A look back at state statistics show that rates have gone up almost every year since 2000. There were years in the early 2000s when the average increase was close to 20 percent. In 2012 and 2013, average yearly increases were 2.2 percent and 3.3 percent, respectively.
Still, the requested hikes of 54 and 55 percent revealed last week from Blue Cross or affiliated plans are sobering. HealthPartners and UCare also have requested increases, averaging 23 percent and 12 percent, respectively. It’s important to note, however, that this is the first year that requested rates hikes at the beginning of the regulatory process have been made public on a high-profile, searchable new federal website — an ACA transparency improvement. Before now, consumers weren’t aware of the rate requests at the start of the regulatory process.
It’s unclear what the final numbers will be, though it’s a safe bet monthly premiums will go up for many. Fortunately, newly available financial assistance to buy insurance through the ACA will help soften the blow. The increased premium costs likely mean that more Minnesota families will qualify for aid to reduce monthly premiums. When premiums went up in Minnesota last year, so did the number of people who qualified for assistance. In 2014, 39 percent of Minnesotans were eligible. In 2015, it’s 45 percent.
Chasing ever-increasing premiums with taxpayer-funded assistance is not a sustainable strategy, however. ACA strategies (such as health provider payment reform) to lower costs while maintaining quality care need time to mature. In the meantime, the states, particularly standouts like Minnesota, need to improve upon ACA reforms.
Last week’s rate news underscores the need for Minnesota’s new health care task force. The ACA provides “innovation waivers” so that states can make dramatic changes to the ACA beginning in 2017 to better serve their citizens.
One of the first action items on the agenda: evaluating how to make Minnesota’s individual insurance market work better. A key question: How could this pool of consumers sharing risk be broadened? That’s a strategy that could help stabilize individual coverage prices, because so many people from Minnesota’s former high-risk insurance pool are likely now served by this slender market slice.
Heavy lifting lies ahead on health care reform. Those appointed to the task force will need to hit the ground running.