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Minnesota individual insurance rates could go down, if feds help

ST. PAUL — Minnesota's insurers are proposing to lower or freeze premiums on many health plans — if the federal government approves a state program to subsidize some of the risk.

The proposed rate reductions come one year after many plans saw premiums jump by more than 50 percent. In response, Minnesota lawmakers passed a program called "reinsurance" that spends $542 million over two years to pay some high-cost medical bills. The goal was that health insurers, freed from having to pay those costs, would transfer the savings on to their customers in the form of lower premiums.

It seems to have worked — though the rates remain near the high levels that many Minnesotans struggled to pay last year.

Without reinsurance, carriers say they would have to increase premiums by 3 to 32 percent to account for expected costs. But with reinsurance, many plans will see slight reductions in premiums. All told, plans say reinsurance will make premiums between 18 and 25 percentage points lower.

But the reinsurance program needs approval from the federal government, and that hasn't yet occurred. The U.S. Department of Health and Human Services is currently wrapping up a public comment period on Minnesota's reinsurance plan. It could issue a decision soon or wait months more.

"The impact of reinsurance is about 20 percent on somebody's premiums," said Jim Schowalter, president of the Minnesota Council of Health Plans. "That's a big bite if we're not able to get the federal government to essentially let us do the right thing."

Rates remain high

Even though premiums will decrease if reinsurance is approved, they could still prove pricey for many Minnesotans.

A 40-year-old nonsmoking metro resident could pay anywhere from $193.88 to $515.08 per month, depending on choice of deductible, network and other options, under the rates proposed Monday. That's before any government subsidies, for which many low- and middle-income households qualify. Younger Minnesotans would pay less, while older Minnesotans and those in other parts of the state, such as southern Minnesota, would pay more.

Who's affected?

The proposals cover only the individual health insurance market, where around 4 percent of Minnesotans buy coverage. Most Minnesotans get health coverage either through an employer or a government program such as Medicare or Medical Assistance.

These rates are preliminary, and plans can revise them until 2018 rates are finalized Oct. 2. The state Department of Commerce is also taking public comment on the rates through Aug. 31 via email at healthinsurance.ratecomments@state.mn.us.

Plans remain in market

Unlike last year, when Blue Cross Blue Shield dropped out of the marketplace, leaving around 100,000 Minnesotans in search of new plans, all four of Minnesota's major insurers are still proposing to offer plans in 2018.

Minnesota no longer outpacing nation

The past two years, Minnesota's individual market saw premium increases as high as 50 percent each year, far higher than most states. This year, "Minnesota looks like it's more on target with where other states are," said Cynthia Cox, associate director at the Kaiser Family Foundation — even without reinsurance.

So far, only Minnesota and Alaska have implemented reinsurance programs.

Some states are seeing much bigger increases, including neighboring Iowa, where rates could go up by 43 percent.

Old subsidies will expire

Around 95,000 Minnesotans will likely still see a noticeable increase in their monthly bills even with reinsurance. That's because they've been benefiting this year from a temporary state subsidy that's knocked 25 percent off their premiums. That subsidy will expire in 2018. So even if the overall cost of a premium goes down, someone who was getting this subsidy will still pay more.

This expiring subsidy won't affect the many Minnesotans who earned less than 400 percent of the federal poverty line — $48,200 for an individual or $98,400 for a family of four. They qualify for different federal subsidies, which aren't scheduled to expire.

Trump administration could affect rates

President Donald Trump has been considering two actions that could drive premiums up higher compared to the proposals released Monday.

One would be to cancel some payments for insurers with lower-income customers. Cox said the loss of that money could increase rates by up to 20 percent, though Minnesotans could see a smaller effect. That's because many lower-income Minnesotans get their insurance through the state-run MinnesotaCare program. Abolishing these payments could have an impact on MinnesotaCare but might not have as big an impact on the individual market as a whole.

The second change could be to stop enforcing the Affordable Care Act's requirement that everyone purchase health insurance. Healthier people would be more likely to opt out if given the choice, leaving a sicker — and more expensive — pool of customers.

"If the Trump administration signals they're not going to enforce the individual mandate, you might see insurers going back and asking for bigger rate increases," Cox said.

Minnesota Republicans pushed measure

Gov. Mark Dayton let the reinsurance program become law without his signature in April, citing concerns about how the program was administered and how much it cost. After Monday's rates were released, the governor reiterated his concerns about costs but praised lawmakers for passing the plan.

"I applaud the Minnesota legislators, who worked together to pass this pioneering legislation, which is being shown to cause major reductions in the costs of health insurance next year for many thousands of Minnesotans," Dayton said.

The reinsurance plan was pushed in the Legislature primarily by the majority Republicans. House Speaker Kurt Daudt, R-Crown, said the proposed premiums were a triumph for Republican governance.

Not everyone was happy Monday, though. Several gubernatorial candidates on both sides said rates remained too high given the $542 million in taxpayer money invested. Legislative Democrats said reinsurance hadn't done enough to help access and promoted a plan to let Minnesotans buy coverage through the state-run MinnesotaCare program.

Leaders continue to discuss solutions that could freeze or lower insurance premiums in years to come.

"While this simply puts a pause or a Band-Aid on the hurt, it does not completely reverse it," Daudt said. "We will continue to roll up our sleeves and work on behalf of Minnesotans to try and get some more competition in the marketplace and actually bring rates down to where they're more affordable to Minnesotans."

REINSURANCE IMPACT

Here are the proposed rate changes from Minnesota's major insurers:

•Blue Plus: With reinsurance, -1.5 percent to +11.4 percent. Without reinsurance, +16.4 percent to +31.7 percent.

•Group Health/HealthPartners: With reinsurance, -14.5 percent to -13.4 percent. Without reinsurance, +3.3 percent to +4.6 percent.

•Medica: With reinsurance, -5.3 percent to +5.3 percent. Without reinsurance, +15.4 percent to +29.4 percent.

•UCare: With reinsurance, -14.5 percent. Without reinsurance, +9.4 percent.

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