Big premium increases for next year are pushing more MNsure shoppers toward health plans with large deductibles.
It’s potentially a worrisome trend, since people who wind up getting sick and needing expensive health care could face thousands of dollars in extra out-of-pocket costs. That, in turn, could add up to more unpaid bills at hospitals and clinics.
But as MNsure approaches its first key enrollment deadline Monday, it’s not clear whether the early preference for what are known as “bronze” health plans is a lasting problem.
For some people the policies work out well — particularly if they’re in good financial and physical health. Plus, the early bronze shift might not last with deadline surges in enrollment expected this month and in January.
“It’s too early to make predictions,” said Eileen Smith, spokeswoman for the Minnesota Council of Health Plans, a trade group for health insurers. “We expect to see more people buying on MNsure, but we still don’t know how many people that will be, and what they will be buying.”
MNsure is an option for individuals and families who buy health insurance on their own, rather than having coverage from an employer or the government. Currently, about 300,000 Minnesotans buy policies in the individual insurance market, with most buying directly from insurers.
The federal health law that created the health insurance exchange also stipulated that policies would be grouped into “metal levels” — platinum, gold, silver and bronze. Platinum policies have the richest benefits, while bronze plans cover the smallest share of an enrollee’s costs.
During the first year of MNsure, premiums in the Twin Cities and other parts of the state were so low that platinum policies with very low deductibles were both affordable and popular. The popularity plunged with premiums jumps this year, and insurers next year won’t even sell platinum policies through the exchange.
Now, it’s the bronze plans that are commanding attention. They were the choice for 50 percent of the 17,678 people buying through MNsure as of Dec. 8, up from a 34 percent share one year earlier.
Numbers weren’t available for the “off-exchange” portion of the individual market, but two insurers said there were early indications of more bronze policies being sold there, as well.
The shift is clear at Crosstown Insurance in New Hope, where owner Shawnee Christenson said health insurance shoppers are responding to large premium jumps. Rates in the individual market are up an average of 41 percent next year.
Some people who opt for bronze plans have the savings to cover costs in a bad year, Christenson said, so the change won’t be a problem. But in other cases, people don’t have the money to pay large medical bills that come as a surprise.
Care providers could have trouble collecting payments from patients as a result.
“People are betting that they’re not going to need a hospitalization, and they’ll save the $70 per month in premium,” Christenson said. “It starts to become ‘you pay now or you pay later’ — if something happens.”
Such bets can prove costly, though. To better illustrate the tradeoffs, MNsure launched an online tool that lets consumers compare plans not just in terms of premiums, but also expected out-of-pocket costs.
It’s difficult to generalize about what the online tool tells consumers, because the best deal depends on a wide variety of factors, said Peter Benner, the MNsure board chair. Beyond looking at premiums and deductibles, the decision touches on income, savings, geography, appetite for risk and health status.
Looking at options in the Twin Cities, a consumer buying a gold policy might have out-of-pocket costs capped at $2,350, Benner said, compared with a limit of $6,850 on out-of-pocket costs with a bronze plan. Which is the right choice?
“If my personal financial situation says I can float that out-of-pocket hit [with the bronze plan] if it comes, that’s one thing,” Benner said. “If my personal situation says: No, I am better off doing a monthly budget in effect, then I’m probably going to buy-up to that silver or that gold plan.”
It’s too soon to say whether the preference thus far for bronze plans among MNsure shoppers is a problem, Benner said. Buying such a policy could be a rational decision, he said, for a healthy person with financial resources, particularly in a year with no medical surprises.
“The downside is: You are really exposed for that bad year,” Benner said.
There’s growing concern nationally about the impact of high-deductible health plans. If a consumer buys a bronze policy and doesn’t appreciate how much they’ll have to pay before coverage kicks in, frustration could prompt people to drop health insurance altogether, said Sabrina Corlette, senior research fellow at the Center for Health Insurance Reforms at Georgetown University.
Health insurance exchanges nationwide are paying close attention to boosting their enrollment numbers, Corlette said. But it’s also important for the exchanges to watch how many people are dropping out of coverage, and why they are leaving.
Minnesota was one of more than a dozen states to launch a health exchange in 2013, with the remainder of states covered by the federal government’s HealthCare.gov website. The exchanges depend on enrollees to cover operating costs.
“It’s a legitimate concern for MNsure and the other exchanges,” Corlette said. “It’s one thing to get people in the door, but you have to get them to want to stick around.”
The health law includes tax penalties for those who lack coverage that should help the exchanges with any retention problems. The size of the penalty varies with income, but the Kaiser Family Foundation this year estimated that the average penalty will increase 47 percent next year to $969.
Depending on age, income and geography, “the bronze plan can be cheaper than the penalty,” said Gary Claxton, a researcher with the foundation. “If they’re going to have to pay a penalty, they might as well put the money into premium.”
The numbers showing the bronze shift thus far in Minnesota don’t include the critical sign-up period of late December. Monday is the deadline for people buying policies that take effect Jan. 1, and people can purchase by Jan. 15 or Jan. 31 health plans that take effect in February or March.
Even by the end of open enrollment, it could be too soon to assess whether there’s a troublesome preference for bronze plans. The best indicators could come later in the form of bad debt totals at hospitals and clinics, and the number of people who drop insurance coverage in midyear.
Right now, the MNsure numbers likely show how consumers between ages 55 and 64 are trying to handle big premium jumps in one year, as opposed to a lasting problem, said Lynn Blewett, a professor of health policy and management at the University of Minnesota. While people of all ages are seeing big percentage jumps in premiums for 2016, they translate into bigger dollars for older enrollees because their rates were higher to begin with.
In the individual market, insurers can charge higher premiums to older people within limits. So the same health plan that costs $230 per month for a 35-year-old, Blewett said, can cost $513 per month for a 60-year-old.
“They’re looking for the lower-cost plans, which are the bronze plans,” Blewett said.
Beyond the age issue, the individual market in Minnesota continues to be a work in progress, she said.