Health insurance rates drop for individuals, rise for small employers

Average premiums across Minnesota's individual market will be on the decline next year, with the benchmark rate in some parts of the state dropping by as much as 22 percent.

The reductions announced Tuesday by state officials point to a second consecutive year of flat or reduced premiums in the individual market, which for several years was plagued by premium spikes under the federal Affordable Care Act (ACA).

About 155,000 Minnesotans buy individual policies, which are an option for those who don't get health insurance through their employer. Even with premium cuts on the horizon, the market remains much smaller than it used to be and still causes pocketbook pain for those who don't receive federal tax credits.

"On average, rates are going down in the individual market because of lower utilization rates, lower costs per service, Minnesota's reinsurance program and a strong Minnesota economy," said Minnesota Commerce Commissioner Jessica Looman at a news conference at the State Capitol.

In 2018 and 2019, the state is spending $542 million on a reinsurance program that helps keep premiums low by covering some costs for people in the market with unusually expensive treatment needs. It's unclear whether state lawmakers will extend the program, but Looman called on the next governor and Legislature to take "a really hard look at how to continue to provide the state support necessary for a stable individual market."

The average premium declines in Minnesota are some of the bigger reductions reported thus far across the country, said Cynthia Cox, a researcher with the Kaiser Family Foundation. Looking at benchmark premiums across a number of major cities, Cox said individual market rates in general seem flat for 2019.

One factor is that after years of generating red ink, the market in some cases has become profitable for health insurers that have imposed big premium jumps.

"It's reaching a point that insurers can't justify a steep premium increase, or even any increase in some cases," Cox said.

The ACA markets still face uncertainty in the coming year, Cox said, noting that a tax bill signed into law by President Donald Trump last year eliminates in 2019 the health law's tax penalty for people who lack health insurance. On the other hand, the degree of uncertainty is lower than last year, she said, when congressional Republicans seemed poised to repeal the ACA altogether.

In Minnesota, the magnitude of individual market premium changes will vary by carrier, including average declines of 7.4 percent at HealthPartners, 9.98 percent at UCare, 12.4 percent at Medica, and 27.7 percent at the HMO run by Blue Cross and Blue Shield of Minnesota. Actual rate changes for individuals will vary depending on the particular health plan, the Commerce Department said, as well as a consumer's age and place of residence.

The premium declines for 2019 are generally bigger than they were for 2018, and apparently will have a wider geographic reach. In 2018, the premium for the benchmark health plan declined in counties across much of the state, but those premiums increased in southeast Minnesota, where employers have long complained about higher health costs in a regional health care market led by the Mayo Clinic.

The data release Tuesday by Commerce, however, shows that benchmark premiums will decline in every county next year. Consumers in greater Minnesota will continue to pay higher premiums than people in the Twin Cities metro, but outstate consumers will see bigger discounts in terms of dollars spent for the "benchmark" health plan.

A 40-year-old nonsmoker in Hennepin County will pay $300.01 per month next year for the benchmark health plan, a decline of 8 percent from the current rate. In St. Louis County, a 40-year-old nonsmoker buying the benchmark health plan will pay a monthly premium of $331.97, a decline of 22 percent.

For a family of four, the savings can be even more dramatic. Looman cited a monthly premium for a family of four buying the benchmark policy in Rochester dropping by $552 per month to $2,356.

Even with the reduction, however, the numbers illustrate the ongoing affordability problem for some in the market. In Looman's example, the family of four in Rochester would be paying about $28,000 over the course of the year, even with the big discount.

"Health care is still too expensive," said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for insurers. "But Minnesota is doing better than most states."

About 293,000 people were buying individual coverage in Minnesota during 2014. At that point, the monthly cost for the benchmark health plan in Hennepin County was $154 — roughly half the benchmark rate for 2019.

Open enrollment for individual market shoppers begins Nov. 1 and stretches through Jan. 13. As of July, about 100,000 individual market consumers were buying through MNsure, where about two-thirds of enrollees use federal tax credits that discount their premium costs. Individuals earning up to $48,560 per year, or a family of four earning up to $104,000 per year, could qualify for the subsidies.

Minnesota has one of the nation's lowest rates of people who lack health insurance, but the uninsured rate increased from 4.1 percent in 2016 to 4.4 percent in 2017 — a time span when the individual market saw 50 percent rate increases and a sharp drop in enrollment. The big question with Tuesday's rate announcement is whether the declines are big enough to bring back individuals who left the market, said Joshua Haberman, the owner of Alexander & Haberman, a Bloomington-based insurance agency.

"If that's not enough ... then we haven't really solved the problem — and we don't have long-term stability, because we don't have long-term funding of the reinsurance, either at the state or federal level," said Haberman.

Also on Tuesday, Commerce released 2019 rates for the small group market, where employers will see average rate increases of 3 percent to 12 percent from the market's primary carriers. About 300,000 people are covered through small group health plans, which cover businesses and organizations with 2 to 50 full-time employees.

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