Smaller MNsure premiums buck national trend

A new report finds that health insurance premiums available on the state's MNsure exchange in 2018 are lower than last year due in large part to a Minnesota state government program.

Researchers from the Urban Institute said the average premium across the country for a 40-year-old nonsmoker moved the other way — growing this year by nearly one-third, according to a study released this month.

While the average premium for the lowest-cost "silver" health plan is down in Minnesota, the decline doesn't apply to all consumers. Last year, shoppers weren't paying sticker prices for coverage due to a state-funded rebate program that's no longer discounting out-of-pocket costs.

"Last year, [Minnesota] premiums were significantly above the national average," said Erik Wengle, one of the Urban Institute researchers. "With the addition of reinsurance payments, that has come down to significantly below the national average."

Wengle added that continued competition was a factor, too.

The findings apply only to the individual health insurance market, which primarily serves people under age 65 who are self-employed or work for companies that don't provide health plans. About 170,000 people were buying individual coverage last year.

The individual market has undergone sweeping change as part of the federal Affordable Care Act (ACA), which launched government-run health insurance exchanges including MNsure.

Created by legislation passed in 2017, Minnesota's reinsurance program is covering a large chunk of insurance company costs for individual market enrollees with unusually large medical bills. The state Legislature is funding the program this year with $271 million.

The magnitude of the decline in Minnesota's average premium depends on whether consumers were shopping for 2017 coverage at a time when Minnetonka-based Medica was still selling health plans.

For most of the open enrollment period, Medica wasn't available to all individual market shoppers because the carrier had hit its cap on enrollment for 2017. At those times, the average premium for a 40-year-old nonsmoker buying the lowest-price "silver" health plan was $429 per month — a price that fell by 15 percent this year to $365 per month, according to the Urban Institute.

The Minnesota average premium for 2017 was lower when Medica was in the market, researchers said, so the decline in the 2018 average premium is smaller, too.

Either way, the comparable consumer across the country saw the average premium increase by 32 percent, from $342 per month to $444 per month, the Urban Institute reported.

Minnesota launched the reinsurance program after the individual health insurance market nearly collapsed in 2016 following Eagan-based Blue Cross and Blue Shield's decision to pull its most popular plans for individuals.

The state also shored up the market in 2017 with the one-time rebates. Unlike the reinsurance program, the rebate program didn't lower premium prices. So, while the sticker price for coverage is lower this year, the impact is muted because consumers weren't paying sticker prices in 2017.

Another asterisk with the Minnesota number is that premiums vary in different parts of the state. Including Medica, MNsure said the premium for the benchmark silver health plan available through MNsure for a 40-year-old nonsmoker declined by 11 percent in Hennepin County, but it increased by 7 percent in Rochester.

In the Urban Institute study, the average premium was weighted to account for population differences, Wengle said, so the overall Minnesota number was more reflective of trends in the Twin Cities, which is home to the state's largest chunk of purchasers.

The trend for an individual consumer's premium costs could be different from those reported in the study, he added, depending on whether they switched plans.

"We weren't tracking an individual plan, just the lowest cost plan available, implying that a consumer would have to switch plans in order to keep the lowest cost option," Wengle wrote in an e-mail.

Nationally, premiums for individual market coverage on the exchanges are up due in part to the federal government's decision to halt reimbursements to insurers for consumer subsidies known as "cost sharing reductions," or CSR for short. Relatively few MNsure shoppers qualify for CSR, however, so the change hasn't had much impact on prices in Minnesota, Wengle said.

In 2018, the state average lowest silver premiums for a 40-year-old nonsmoker are ranging from $287 per month (up 18.3 percent) in Rhode Island to $860 per month (up 74 percent) in Wyoming.

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