Minnesota health insurers are seeking big premium increases next year for people who buy coverage on their own, with proposed jumps for thousands of people averaging anywhere from 36 percent to 67 percent.
About 270,000 people buy coverage through Minnesota’s individual market, where shoppers buy through insurers, brokers or the state’s MNsure health insurance exchange.
Insurers defend the proposed spikes as necessary given escalating medical costs among enrollees. One health plan, in fact, said the only alternative would be to drop out of the market entirely.
Politicians pounced on the numbers, with Republicans and Democrats pointing to the need for different reforms. The rates are still subject to regulatory review, with final numbers expected Sept. 30.
“These are big increases,” said Cynthia Cox, a researcher at the Kaiser Family Foundation who tracks rates nationally. “There are other states where we’re seeing similarly large increases, but this is on the high end.”
The individual market serves about 5 percent of Minnesotans, including self-employed people and those who don’t get coverage through their employer. It does not include people in the Medicare, Medicaid and MinnesotaCare health insurance programs.
Average premiums in the Twin Cities individual market remain among the lowest in the nation despite hefty rate hikes in recent years. And while the market is once again facing steep increases, employer plans and government programs in recent years have seen much more moderate rate increases on health insurance.
The individual market has been the focus of reforms under the federal health law, which prevents insurers from denying coverage to people with preexisting health problems. The change kicked in during 2014, along with the launch of government-run exchange websites where consumers at certain income levels can tap federal subsidies.
Insurers have struggled to make the business profitable ever since, with Minnetonka-based UnitedHealthcare announcing earlier this year a pullback from 30 of 33 state exchanges where it currently competes. Among other problems, United and other carriers have cited a lack of growth in the individual market.
The same issues are contributing to the increases that the biggest players in Minnesota’s individual market are proposing.
Bloomington-based HealthPartners proposed average increases of 43 percent to 51 percent for about 64,000 enrollees in Minnesota.
Minnetonka-based Medica is seeking an average rate increase of 59 percent across policies that cover about 49,000 people.
Minneapolis-based UCare, which currently covers about 16,000 people in the market, proposed an average rate increase of 66 percent.
Eagan-based Blue Cross and Blue Shield of Minnesota is seeking rate increases of anywhere from 36 percent to 67 percent, depending on the health plan.
Blue Cross shook up the market in June by announcing it would not renew policies that currently cover about 100,000 people. It’s renewing only “narrow network” HMO plans, which include greater restrictions on the doctors and hospitals that patients can visit.
“Since Blue Cross’s announcement, the department has worked hard to stabilize the individual insurance market and thoroughly review each company’s rate request,” Mike Rothman, the state Commerce Commissioner, said in a statement.
“Minnesota is not unique, as large insurers have announced they are leaving these markets across the country and many that are staying for 2017 are proposing significant rate increases,” Rothman said.
With Thursday’s release of preliminary data, a public comment period begins. Regulators are reviewing the justification for rates, so final premiums could change.
The proposed increases come after big jumps last year in Minnesota, said Cox, the Kaiser Family Foundation researcher. Consumers might be able to moderate increases by switching health plans, she said, although details aren’t yet available. What’s more, people buying through MNsure could qualify for tax credits that discount premium costs.
At the State Capitol, House Republicans blasted “historic high” premium increases, saying costs associated with the state’s MNsure website have contributed to troubles.
“Once again, families who were told they would save $500 per year will instead see their health plans get more expensive,” said House Speaker Kurt Daudt, R-Crown, in a statement.
Gov. Mark Dayton said in a statement that consumers should check MNsure to see if they can obtain a tax credit. Dayton also said he was “extremely disappointed” by Blue Cross’ pullback.
“Overall, as a result of the Affordable Care Act, we have the lowest rate of uninsurance in our state’s history,” Dayton said.
Blue Cross said its requested rate increases work out to an overall average of about 40 percent for about 12,800 people in those plans.
“Main drivers of the increases continue to be higher than expected medical costs and increased usage of covered medical services,” the insurer said in a statement.
UCare officials said they had to choose between two tough options.
“The first was to exit the market altogether,” Ghita Worcester, a senior vice president, said in a statement. “Our second option was to consider 2017 a ‘bridge’ year in which we would continue to provide coverage ... while working with industry leaders to identify and implement ‘fixes’ to help stabilize this market for the future. We chose the second option.”
Going forward, Commerce says it will evaluate if rates are justified considering benefits, expected claims cost and projected premium revenue. The department says it also will make sure carriers comply with consumer protection laws.
The benchmark premium for a 40-year-old in the Twin Cities this year is $235 per month, according to the Kaiser Family Foundation, compared with the national average of $299.
Rates vary by region. In Rochester, the benchmark plan for a 40-year-old costs $335 per month, compared with $290 per month in Duluth.
The dollars get considerably bigger for people in family plans, where some cite annual health insurance costs of $25,000 to $30,000. With the information released Thursday, consumers still don’t know exactly what will happen to their costs, since the increases are averages of rates that can vary considerably according to age and geography.