MNsure trims enrollment, revenue outlook in adopted budget

MNsure is lowering its estimate for revenue from people buying private health insurance this year, while also trimming projections for future enrollment growth.

During a board meeting Monday in St. Paul, the state's health exchange adopted a new spending plan for the fiscal year starting this month that includes about $900,000 less in premium revenue due to a change in how MNsure tallies enrollment.

In addition, MNsure reduced from 35,000 per year to 30,000 per year its projections for enrollment growth over the next two calendar years.

Projections for MNsure revenue and enrollment have repeatedly been reduced since the exchange was launched in October 2013.

Even so, MNsure is financially sustainable, said Peter Benner, the MNsure board chairman, following Monday's meeting.

"We've been able to look at how we're spending money and make sure that expenses we incur have the revenue to pay for them," Benner said. "And we will continue to do that as we go forward."

Minnesota created MNsure as part of the federal Affordable Care Act. It serves as a place for people to enroll in private coverage and qualify for the state's public health insurance programs.

With the budget plan adopted Monday, the health exchange now expects paid enrollment of about 83,000 people at the end of 2016, down from a projection set in March of about 95,000 people. By the end of 2017, MNsure now expects enrollment of 113,000 people, down from the previous projection of 130,000 people.

The March projections assumed enrollment growth of 35,000 people in each of the next two years.

The board opted on Monday to lower projections to bring estimates in line with past results, said Tom Forsythe, a MNsure board member, following the meeting.

"We didn't deliver [35,000 people] last year, so let's not imagine we're going to deliver [35,000 people] this year," Forsythe said in an interview.

MNsure last adjusted its budget in March, at which point the exchange also lowered enrollment projections.

At that point, MNsure expected enrollees would purchase about 895,000 months of coverage during the fiscal year that starts this month, thereby generating about $9.6 million in revenue between now and June 2016.

With the budget plan adopted Monday, MNsure now expects to sell about 786,000 months of coverage during the time period, generating revenue of nearly $8.7 million.

The revision isn't driven by a change in the number of people covered through MNsure, Forsythe said. Instead, the budget now is based on the number of people paying premiums, as opposed to the higher figure of those who initially signed up for coverage.

Reduced revenue in the new budget plan is balanced by cuts such as leaving open positions unfilled and restructuring some jobs, Forsythe said.

MNsure funds a portion of its operations by withholding 3.5 percent of premiums from private insurance policies sold through the exchange. The exchange gets more funds from federal grants as well as the state-federal Medicaid program.

MNsure has fallen short of original enrollment projections for private insurance sign-ups for several reasons.

In late 2013, the MNsure website had significant technical problems and an overwhelmed call center. That prompted some to purchase directly from health insurance companies.

Minnesota had some of the lowest health insurance premiums in the country, which means fewer people qualified for federal tax credits available only through MNsure.

In 2014, most of those who bought private coverage through MNsure selected Golden Valley-based PreferredOne, but the company announced last fall that it would stop selling policies through the exchange. Forsythe said Monday: "We can't imagine having a worse disruption in the market place than having your number one carrier pulling out."

MNsure doesn't expect a repeat of that for 2016, but there's uncertainty around the forecasts, Forsythe said.

The Affordable Care Act has stiffer penalties in 2016 for people who lack coverage, which could prompt more people to buy through MNsure. Health insurers are seeking very large premium increases, which could mean more people qualify for tax credits that are available only through the exchange, Forsythe said.

But if premiums jump, some could drop coverage or not pick it up. If unemployment drops further, more employers might use health insurance to recruit and retain workers — meaning fewer people would be buying individual policies. At this point, it's not exactly clear what carriers and products will be sold though MNsure for next year.

"This is more of a guess than we'd like it to be," said Joe Campbell, a MNsure spokesman.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck