Health insurers propose higher premiums for individual coverage

Minnesota's health insurers are seeking steeper premium hikes next year for people who buy coverage on their own, but many will be able to tap federal subsidies to minimize the hit to their pocketbooks.

The average increases proposed by three carriers in the market range from 9 to 13% — jumps that are significantly larger than in recent years.

Carriers say the boosts are necessary due to rising medical costs and reduced funding for a state program that for several years has helped moderate premiums in the individual market.

The rate requests, which were made public last month, now are subject to regulatory scrutiny and won't be finalized until Oct. 1 at the latest. State officials say a federal law passed earlier this year for expanded tax credits means more consumers should be able to blunt or eliminate any out-of-pocket impact.

"The message is that this is a good time for people to go on MNsure and see if they qualify for a subsidy," said Geoff Bartsh, senior vice president of individual and family business at Minnetonka-based Medica.

About 167,000 state residents buy individual coverage, a type of health insurance that's been in the spotlight since 2014 for being subject to significant changes under the federal Affordable Care Act (ACA).

Minnesota is one of just 15 states and the District of Columbia to release 2022 rate proposals in the individual market. The increases being sought in Minnesota are a bit higher than the average across all states, said Cynthia Cox, a vice president at the Kaiser Family Foundation who follows the the health insurance market for individuals.

Minnesotans under the age of 65 who are self-employed or don't receive health insurance from their employer often buy coverage in the individual market, either through an individual broker or by shopping on the MNsure exchange, which provides access to tax credits that lower the cost.

The Minnesota Department of Commerce released the proposed rate increases late last month for the six carriers that sell the coverage.

The biggest average increases were requested by UCare (13.2%), HealthPartners (11.3%) and Medica (9.3%). The requests were smaller at PreferredOne (7.1%), Quartz (4.2%) and the HMO operated by Blue Cross and Blue Shield of Minnesota (3.1%).

The changes do not reflect the impact of federal premium tax credits which were expanded for 2021 and 2022 as part of the American Rescue Plan Act (ARPA), a sweeping $1.9 trillion economic stimulus package Congress passed to mitigate the impact of business shutdowns and layoffs related to the COVID-19 pandemic.

"The actual rate change a consumer will experience in 2022 can vary from the average — with factors such as specific plan, geographic rating area, age and federal premium tax credits playing a major role," the Commerce Department said in a statement.

The ACA created a host of standardized health care benefits and provided tax credits to reduce costs for those who buy individual coverage through government-run health insurance exchanges like Minnesota's MNsure.

As of June, about 107,000 people were covered through individual plans sold on MNsure. Nearly 60% of those buying coverage on MNsure receive tax credits and the number has been growing with relief provided by the ARPA's COVID-19 relief package, said Nate Clark, the MNsure chief executive. Carriers also can sell coverage directly to individuals through the "off-exchange" market.

Proposed rate increases tend to be more closely watched by people who buy insurance off the exchange because it's not subsidized, as well as those who earn too much to qualify for tax credits on MNsure. But expanded access to tax credits with the additional federal coverage under ARPA makes it harder to say exactly who might be able to avoid premium hikes by shopping on MNsure.

With all the changes, consumers should check their options this fall using price comparisons on the MNsure exchange, said Joshua Haberman, owner of insurance agency Alexander & Haberman in Bloomington.

"I think a lot of consumers are going to be able to ride this out with minimal impact this year," Haberman said. "The big change is going to be in 2023 when the special assistance under the American Rescue Plan is scheduled to fully sunset."

After factoring the 2022 changes for their members, officials at UCare, the Minneapolis-based insurer, think the vast majority will not see an actual out-of-pocket increase.

"We want to make sure people don't get concerned because, first of all, these are preliminary, so we expect some things will change," said Ghita Worcester, a senior vice president at UCare. "But when they first see the premium, they need to make sure they go through the next step at MNsure to see what their personal adjustment or family adjustment will be as a result of the extra support systems that are out there."