Premium hikes, coverage limits frustrate insurance shoppers

Mary Enger and her husband could see their annual out-of-pocket health insurance costs jump next year to more than $33,000 — and that's if they're lucky.

The health plan they hope to purchase features the unusual restriction of an "enrollment cap," which Minnesota regulators are granting as an emergency measure so health insurers don't drop out of the individual market.

For the Engers, the cap means that if they don't hustle next month to buy the pricey health plan they'd prefer, they could be stuck with a policy that's even more expensive and doesn't include their primary clinic.

"This is crazy," said Enger, 59, who lives on a farm near the western Minnesota town of Dawson. "What isn't working is the cost and the limited options."

Frustration abounds among the 250,000 state residents who buy health insurance on their own. It's a market that's been fundamentally altered by the federal Affordable Care Act, and there's growing consensus that changes are needed.

This fall, shoppers are confronting cost increases and choice restrictions so severe that DFL Gov. Mark Dayton said Friday that he'd call a special session if lawmakers can agree by Nov. 1 on a short-term fix to ease the financial burden.

Last month, the state Commerce Department approved average premium increases of 50 percent to 67 percent in the individual market, which serves self-employed people and those who don't get coverage through an employer.

The cost hikes and limited options do not apply to people who get coverage as part of an employer-sponsored health plan. They also don't apply to the Medicare, Medicaid and MinnesotaCare government programs.

In approving the rates, the Commerce Department said that four of the five insurers in the market could cap their enrollment so they aren't overwhelmed with new enrollees and more financial losses. Regulators also approved limited choices when it comes to doctors and hospitals that are available at in-network rates.

"If you have a particular doctor and a particular clinic that you want to see, you're going to be limited" in terms of health plan options, said Heidi Mathson, past president of the Minnesota Association of Health Underwriters, a trade group for insurance agents.

The big premium jumps mean that people who qualify for tax credits under the Affordable Care Act, and purchase through the state's MNsure exchange, will receive much bigger subsidies. The upper-income threshold for tax credit eligibility in 2017 is $47,520 for an individual, and $97,200 for a family of four.

But a chunk of Minnesotans won't qualify.

"I think about these people across Minnesota — farmers, barbers, the self-employed and others — who are getting unfairly punched in the gut who do not qualify for tax credits and go without assistance," state Commerce Commissioner Mike Rothman said when he announced the rate increases on Sept. 30.

In September, Rothman fielded dozens of public comments from consumers angered by the proposed rate hikes.

Joe Thissen, 36, of Eden Prairie, was brief in his comments, writing: "This is completely unsustainable." In an interview, Thissen said he's currently paying about $15,800 in annual premiums to cover his family of seven — a big group, to be sure, but more representative than you might think, since individual market policies are priced the same for families with three or more kids.

Now, he faces the prospect of about $25,000 in premium costs for coverage that would require another $5,000 in deductible spending when the family needs care.

"It's more than most people's mortgage," Thissen said. "It's just so expensive, it's insane."

Roger Kleppe of Burnsville is a retired insurance executive who's now covered by Medicare, but has watched the cost of his wife's individual market coverage balloon.

In 2014, the monthly premiums increased to $337 per month, Kleppe said, and then grew another 14 percent to $385 per month in 2015. For 2016, when his wife's insurer sought a premium increase of 53 percent, she switched to a plan with fewer benefits at a cost increase of 39 percent — to $537 per month.

Now, she's likely to shop again, Kleppe said, since her current insurer is boosting the rate by 64 percent to about $880 per month. That's more than double what his wife was paying in 2014, and would include a $6,300 deductible.

A key problem, Kleppe said, is that people previously covered through Minnesota's high-risk pool for people with preexisting conditions have largely moved into the individual market. Under the high-risk pool structure, the costs for those patients were spread across about 1.3 million state residents, but are now concentrated in a market with just 250,000 people.

Mairi Doerr, a 62-year-old farmer in Goodhue County, used to be covered through Minnesota's high-risk pool, and says it always seemed like a pretty good deal. That's a contrast with her experience since the program closed in 2015. Premiums shot up 45 percent for this year, and will jump even more next year.

"That just feels like a runaway train," Doerr said.

The high-risk pool was necessary because health insurers could deny coverage to people with preexisting health problems. The process of getting a denial was frustrating for consumers, and then steered people into a pool with relatively few choices and above-market premiums, said Julie Larsen, a self-employed tax accountant in Golden Valley who bought coverage through the program.

Larsen said the health law improved things for 2014, and she's glad insurers can't deny coverage anymore. But the new system needs fixes, she said, particularly to spread costs more broadly.

The network limits for next year are a sharp contrast to the broad choice of doctors and hospitals in the old high-risk pool, where many consumers didn't want to change doctors.

"When you're a person who has a preexisting health condition, you have doctors that you've been seeing for years that have helped you manage those conditions — and helped you stay out of health care," Larsen said.

Out in western Minnesota, Mary Enger said she hopes lawmakers will do something for individual market consumers. But considering the enrollment caps, they need to act fast, she points out, since many shoppers will be trying to lock down coverage when open enrollment begins Nov. 1.

Enger and her husband hope to buy a plan from Minnetonka-based Medica, where annual premiums for the couple would range from $21,000 to $38,000, she said. Add in the maximum out-of-pocket costs under each plan, Enger said, and the total tab in a worst-case scenario could range from nearly $34,000 to more than $40,000.

The Blue Plus HMO from Blue Cross and Blue Shield of Minnesota is her only other option, she says, but it doesn't include health care providers important to the couple. Plus, the comparable Blue Plus plans are more expensive, Enger said.

Bloomington-based HealthPartners sold individual coverage in her county in 2016, but won't for next year.

"We work very hard as middle-class citizens and yet can't afford to be insured!" Enger wrote the Commerce Department. "Something must be done."

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck