Many MNsure shoppers face the prospect of big percentage increases in premiums with the new year, but an independent analysis suggests rates in the Twin Cities are still among the lowest in the country.
Premiums for 40-year-old nonsmokers in the Twin Cities buying the cheapest “silver” policy are in a tie for the country’s fifth-lowest such rate at $181 per month, according to the Kaiser Family Foundation.
The rate is 17 percent higher than the comparable premium here last year, when the Twin Cities boasted the nation’s lowest such premiums. But it’s a lot lower than the most expensive comparable premium — $488 per month in Alaska, said Cynthia Cox, a researcher with the Kaiser Family Foundation.
Cheap premiums compared with Alaska might amount to cold comfort for shoppers.
“People don’t shop on a national basis,” said Heidi Michaels, an insurance agent with Dyste Williams in Minneapolis.
“What they’re really doing is comparing to last year,” said Michaels, who is president-elect of the Minnesota Association of Health Underwriters, a trade group for insurance agents. “Most people purchased platinum or gold plans last year, and they just weren’t able to replicate that coverage without significant increases in premiums.”
The Kaiser Family Foundation compiles data on premiums available through health exchanges such as MNsure for all 50 states plus the District of Columbia. Cox pulled numbers from the foundation’s database for the Star Tribune in order to rank the lowest-cost counties.
With the new year, “lowest-in-the-nation” bragging rights shift from the Twin Cities to Maricopa County, Ariz., where the lowest monthly premium for a 40-year-old buying the cheapest silver-grade policy is $166, according to the foundation’s analysis.
Premiums vary by age, Cox said, but patterns in geographic differences tend to hold up across age groups in most cases. Put another way, geographic differences in premiums for a 40-year-old buying a silver plan tend to correspond with regional variation in the cost for other types of coverage.
Insurance costs more in some places than others because people in some regions have more health problems. Insurers must pay doctors and hospitals more for providing services in some markets than others. Another factor, Cox said, is the amount of competition among insurers, since competitive markets tend to have lower premiums.
“Even though premiums went up in much of Minnesota, the state still has some of the lowest premiums in the country,” Cox said. “Particularly in the Twin Cities, it seems like there’s something unique in the market that premiums … continue to be so low.”
PreferredOne out of the mix
One reason MNsure rates increased for 2015 is that the lowest-cost option from last year pulled out of the market. Golden Valley-based PreferredOne isn’t selling through MNsure this year, and the company hiked premiums by an average of 63 percent for people who buy individual insurance policies in the off-exchange market.
Health exchange officials have tried to woo PreferredOne customers back by showing how MNsure options can be cheaper. A consultant’s study released in late December by MNsure argued that PreferredOne enrollees who are eligible for tax credits can save about $296 per month by switching to a policy sold through the exchange.
“We know it is in the best interest of Minnesotans to shop and compare health insurance and financial health options on MNsure,” said health exchange CEO Scott Leitz in a statement.
Michaels said many shoppers she works with are, in fact, dropping PreferredOne coverage, although she hasn’t worked with many who qualify for tax credits.
“A lot of them made the choice to stay with the gold and platinum plans, but took a lesser network” of hospitals and doctors, Michaels said. “They were willing to give up provider choice.”
People buying commercial policies through MNsure have noticed the steep increases in premium prices for 2015, said Rebecca Lozano of Portico Healthnet, a St. Paul-based group that employs health insurance navigators. But some also were frustrated to find that cheap premiums last year were accompanied by policies with pretty high deductibles, Lozano said.
“People have been more willing to say: ‘OK, I’ll pay a little bit higher premium, and have my expectations set for what I’ll be paying for the year,’ ” she said.
For years, health policy researchers have used Medicare data to show regional differences in the cost of care. Many of those studies have suggested that Minnesota has low health care costs relative to the nation.
Government-run health exchanges that were launched last year are providing another source of data on the issue.
With the federal Affordable Care Act, policies for individuals buying non-group coverage were standardized and made more comparable across state lines. Not all “silver” policies are identical in terms of coverage particulars, but they generally have similar values in terms of the share of medical costs covered by the health plan.
A Wisconsin divide
Rates during 2014 showed a sharp divide on opposite sides of the St. Croix River, with shoppers in the western Wisconsin counties of Pierce, Polk and St. Croix seeing some of the highest exchange premiums in the country. The division persists in 2015, Cox said, since the three Wisconsin counties are still in the top 5 percent of most expensive counties for 40-year-olds purchasing the benchmark plan.
Under the health law, Minnesota is divided into nine regions for selling health insurance, and eight of the regions had premiums in 2014 that were well below the national average. Southeast Minnesota was the outlier, with above-average premiums in the Rochester area.
Rochester rates higher
The differences across the state moderated somewhat in 2015, Cox said, but premiums in southeast Minnesota continued to exceed the national average. The benchmark policy for a 40-year-old in Rochester was more expensive than the comparable health plan in 72 percent of all counties during 2014, she said. This year, the benchmark plan is more expensive in Rochester than in 59 percent of all counties.
Statewide, 85 percent of Minnesotans with incomes that make them eligible for tax credits on the MNsure exchange are seeing net premium increases when selecting the lowest-cost silver plan, according to a November analysis from the McKinsey Center for U.S. Health System Reform. The maximum premium increase for shoppers selecting that policy in Minnesota is 25 percent, according to the McKinsey analysis, while those seeing decreases could see 8 percent lower premium costs.