Premiums on health insurance policies sold to individuals in Minnesota will increase on average between 1.9% and 5.5% next year, a range that's far below large jumps in the market seven years ago but still points to a general rise in health care costs.
The Minnesota Department of Commerce announced the rates Friday and urged consumers to shop on the state-run MNsure health insurance exchange, where federal tax credits can significantly discount out-of-pocket premium costs.
Across the country, individual market premiums are growing at a slightly faster rate this year, according to KFF, a California-based nonprofit that follows the market. The median increase across other states has been about 6%, the group says, higher than in Minnesota.
"In the rate filings, insurers were saying both the price increases from the tight labor market — wages increasing for hospitals and providers — but also the use [of medical services are] contributing," Krutika Amin, a researcher with KFF, said. "Some insurers also pointed to things like the cost of drugs coming to market."
The individual market is relatively small. Commerce says about 167,000 people, or 3% of state residents, buy these health plans.
Even so, "the individual rate filings end up being a little bit of a bellwether for what employers will also see," Amin said, referring to employer-sponsored health plans that are the primary source of coverage for people under the age of 65.
Earlier this month, the national benefits consultant Mercer reported preliminary survey results showing that U.S. employers expect the total health benefit cost per employee to rise 5.4% on average next year, even after making health plan changes to slow cost growth. Annual cost increases typically have been averaging 3-4%, Mercer said, over the past decade.
Meanwhile, a PwC Health Research Institute report forecast this summer that medical cost trends will increase from 6% this year to 7% in 2024.
The timing of contracts between insurers and health care providers means there's typically a lag between when general increases in inflation show up in health insurance costs, Amin said.
In Minnesota's individual market, the range of premium increases for the largest carriers in 2023 ranged from a decrease of 2.3% to an increase of less than 3%.
Minnesota households eligible for tax credits will save on average about $6,750 next year, spending about 5% less on private health plan premiums than they did this year, according to MNsure estimates.
About 110,000 people buy individual market coverage through MNsure; as of late August, about 60% of these consumers were obtaining tax credits. Open enrollment for the health exchange runs from Nov. 1 through Jan. 15.
"People who are subsidized will generally be shielded from these premium increases," Amin said.
Commerce announced in June that health insurers were seeking larger premium increases for next year on coverage sold directly to individuals and families in Minnesota. The final increases announced Friday are more moderate than what they initial proposed:
- Blue Cross and Blue Shield of Minnesota HMO: 3%
- HealthPartners: 5.5%
- Medica: 1.9%
- Quartz: 3.17%
- UCare: 5.45%
Every county in Minnesota will have at least two insurers offering individual market plans, the state said . Most will have competition from three or four carriers.
"Actual prices a consumer will pay for health insurance can vary depending on factors such as where they live, what plan they choose and their age," Commerce said.
Average premiums at Blue Cross, HealthPartners and UCare are increasing faster than changes at those insurers for 2023. Premiums at Medica and Quartz, meanwhile, are growing at a slower rate.
Minnesota launched the MNsure health exchange about 10 years ago under the federal Affordable Care Act. On Friday, the state published examples of tax-credit savings for consumers.
A couple in their 60s in Minneapolis with an annual income of $80,000 can enroll in a gold plan, cut their monthly premium nearly in half with tax credits, saving almost $9,000 per year, MNsure says.
After tax credits, a 30-year-old in Detroit Lakes earning $31,000 per year can find a bronze plan for less than $100 per month, according to MNsure.
"The individual market is available for Minnesotans who do not have access to employer-based coverage and are not eligible for coverage through public programs such as Medicare, Medicaid and MinnesotaCare," Commerce said. "Individual health plans are available through MNsure, an insurance broker or agent, or directly from the insurer."