Health insurers have directed thousands of enrollees off the MNsure exchange by renewing certain policies only in the “off-exchange” market, a practice that threatens to take a bite out of MNsure’s revenue.
The most recent shifts were announced earlier this month, but MNsure highlighted the actions during an interview Monday by saying health insurers are renewing certain policies for about 6,500 people next year only in the non-MNsure market.
The change means enrollees would need to buy from the companies directly or through brokers — and not the exchange — if they want to maintain the plan. The shift could save insurers money, MNsure supporters say, because MNsure withholds 3.5 percent of all premiums sold through the exchange to fund its operations.
But insurers deny a financial motive. Some changes stem from competitive reasons, they say, while others recognize complaints from some consumers that the number of health plan choices can be overwhelming.
“It’s something I have my eye on,” said Alison O’Toole, the MNsure chief executive. “And it’s potentially an issue.”
About 6 percent of Minnesotans buy coverage in the individual market, and they decide whether to buy a health plan through MNsure or directly from an insurance company.
Three insurers that sold policies on the exchange in 2014 decided to move some or all of their health plan offerings to the off-exchange market for 2015. The prime example was Golden Valley-based PreferredOne, which had some of the lowest premiums in the country during 2014 but withdrew from MNsure after suffering unsustainable losses.
While the PreferredOne retreat was loudly announced, MNsure officials say they’ve been watching smaller moves by Eagan-based Blue Cross and Blue Shield of Minnesota and Bloomington-based HealthPartners.
For 2015, both insurers opted to switch a few health plans from the MNsure market to the off-exchange market. This year, Blue Cross is making a similar switch for certain policies that currently cover about 6,500 people through MNsure.
If all those enrollees renew coverage outside the exchange, it could cost MNsure between $800,000 and $1 million in revenue next year, exchange officials say.
The Blue Cross action looks like the insurer is steering people off the exchange in order to save money, said Sen. Tony Lourey, DFL-Kerrick, who was chief author of legislation to create MNsure.
“That’s a problem if people can’t take advantage of the tax credits they’re entitled to,” Lourey said, referring to federal subsidies that are only available through the exchange. “It’s 3.5 percent of premium revenue that’s either kept by the carrier, or goes to MNsure.”
Blue Cross says the 3.5 percent withhold wasn’t a factor in its changes. Several policies the company won’t offer next year on MNsure are “platinum” grade products, meaning they provide the richest benefits.
Currently, Blue Cross is the only insurer to sell those policies on the exchange, said Scott Keefer, vice president for public affairs and communications with Blue Cross. There’s been concern among insurers that many with expensive health conditions have gravitated to platinum policies, making them economically unsustainable.
“We need to have a level playing field,” Keefer said, noting that insurers are not required to sell platinum policies.
In other cases, Blue Cross simply made decisions about what lineup of products to offer on the exchange. While the company is moving some gold, silver and bronze products off MNsure, the insurer also is launching new products on the exchange for 2016, Keefer said.
About 25 percent of current Blue Cross enrollees through MNsure are in products moving to the off-exchange.
For insurance companies, a complicating factor is a state law that guarantees enrollees the right to renew their policies, said Jim Schowalter, executive director of the Minnesota Council of Health Plans, a trade group for insurers.
“Insurers want to give Minnesotans real choices, not headaches from looking at lots of plans,” Schowalter said. “As a result, [insurers] make trade-offs — adding some products, and subtracting others, based on what people chose last year.”
Lourey argued that there’s more evidence to suggest insurers want to steer people off the exchange. He pointed to a letter to some HealthPartners enrollees telling them that if they don’t qualify for federal tax credits they might consider buying directly from the insurer instead.
In a statement, HealthPartners said that when consumers qualify for a subsidy, the insurer encourages them to buy through MNsure. But in other cases, the insurer encourages direct purchases “because it’s a better experience,” the company said, adding: “In the past, the experience of buying on the exchange has been poor.”
For 2015, HealthPartners said it discontinued a plan on the exchange and replaced it with two other MNsure options that turned out to be more popular with consumers. Only about 500 people kept the old plan when it moved off MNsure, the insurer said.
But Lourey said he’s seen enough evidence to think state officials might need to change the way MNsure is funded. Rather than withhold 3.5 percent of on-exchange premiums, the state might instead withhold a lower percentage of premiums from everyone buying in the individual market — whether through MNsure, or directly from insurers.
“That would be one way to remove the incentive,” Lourey said.
About 300,000 people buy individual policies, including about 50,000 currently covered by plans marketed on MNsure. Earlier this month, the Commerce Department approved an average premium increase of about 41 percent for all policies in the market. As a result, more Minnesotans are expected to qualify for tax credits.
Individual market premiums in Minnesota have been among the lowest in the country, which means relatively few people have qualified for tax credits. That’s part of the reason MNsure enrollment has been low compared with other exchanges, although technical challenges haven’t helped.
When insurers move on-exchange products to the off-exchange market, it makes it harder for MNsure to hit enrollment targets, MNsure spokesman Joe Campbell said.
“It just makes the hill much steeper from the get-go,” he said.