UCare has upped its proposal for premium increases in the individual market next year, citing factors from growing medical costs to possible underpricing for some of its current policies.

The proposal was filed with regulators in mid-July, about two weeks before the state Department of Human Services announced that UCare lost out on a massive state contract for public health insurance programs.

The Minneapolis-based HMO is trying to block the state’s decision in court, with a hearing scheduled Aug. 28 in Ramsey County District Court.

The individual market business for UCare is distinct from the business in public health insurance programs.

With the July filing, UCare upped its proposed average rate increase from 12 percent to 27 percent — a bump that’s more in line with increases being sought by other individual market carriers for 2016.

“Although increases affect all members, they vary by plan option, ranging from 22.9 percent to 33.7 percent,” the HMO said in its filing.

In June, UCare was one of three Minnesota health insurers in the spotlight for requesting rate increases in excess of 10 percent for next year.

At the time, Blue Cross and Blue Shield of Minnesota commanded attention by seeking an average increase of about 54 percent for 179,000 Minnesotans in the market for individuals who buy outside of employer groups.

HealthPartners sought an average increase of 23 percent for 51,860 people. UCare’s proposal applies to about 10,000 current policyholders.

The UCare proposal is just that — regulators are scheduled to release final rates this fall, and proposed increases could be knocked down by the rate review process at the Minnesota Department of Commerce.

UCare officials said they can’t comment on the process until final rates are announced by Commerce on Oct. 1.

The requested change is noteworthy because UCare seemed like it was on track to be one of the least expensive options in the individual market, said Heidi Michaels, an insurance agent with Dyste Williams in St. Louis Park.

Being low-cost and/or high-value has proved troublesome for carriers in the individual market during the past two years, said Michaels, who is president of the Minnesota Association of Health Underwriters, a trade group for insurance agents.

In 2014, Golden Valley-based PreferredOne offered some of the lowest premiums in the country, but had to pull back in dramatic fashion for 2015 after big losses mounted.

In 2015, Blue Cross was a popular choice because it offered a combination of good premium prices and low out-of-pocket costs, Michaels said. But the insurer took on losses, and has proposed big rate increases for 2016.

“UCare was really positioned to be the low-cost carrier,” Michaels said. “They can’t be in that position going into this next open enrollment, because every carrier that has been in that position has sustained substantial losses.”

About 300,000 Minnesotans purchase coverage in the individual market, which includes the state’s MNsure health exchange. The market has been the focus of reforms under the federal Affordable Care Act, which called for the creation of health exchanges in all 50 states.

The health law blocks health insurers from denying coverage to people based on pre-existing health conditions — a feature of the market that was unpopular with consumers. Minnesota insurers, however, have questioned whether the new individual market is working, considering the proposed rate increases for 2016 as well as PreferredOne’s losses in 2014.

The Golden Valley-based insurer exited MNsure for 2015 after being the largest carrier on the exchange, and proposed big rate increases for this year in the off-exchange market.

“In a market where you’ve created a dynamic where you don’t want to be the low-cost [plan] — that’s broken,” said Mary Brainerd, the HealthPartners chief executive, during a June interview with the Star Tribune. “I’m troubled not just by what I see here, but what you see across the country.”


Twitter: @chrissnowbeck