Health insurers seek premium increases up to 6% in Minnesota's individual market

Three of Minnesota's biggest health plans in the market where individuals buy coverage are seeking premium increases for next year — though less than what they sought for 2022.

The Minnesota Department of Commerce on Friday released the rate proposals for the state's individual market, where about 160,000 people buy coverage.

For 2023, three large carriers in the market are seeking average increases of between 2 and 6%. A fourth large insurer has proposed lowering premiums by an average of 2%.

"I would consider those increases to be moderate," said Cynthia Cox, a researcher with the California-based Kaiser Family Foundation who follows the individual market.

The increases aren't yet final and look somewhat more palatable than the roughly 10% jumps that carriers were requesting a year ago. Even so, any premium increase could be harder for some consumers to absorb with federal subsidies for individual market coverage slated to shrink next year unless Congress intervenes.

The state's MNsure exchange, where people use federal tax credits to buy policies, estimates about 70,000 people in Minnesota next year will pay more for their coverage without the extension of current subsidies provided under the federal American Rescue Plan Act.

On Tuesday, the trade group for Minnesota's nonprofit health insurers credited a state-funded reinsurance program for helping control premium costs. "The modest increases in rates reflect a market that is stabilizing and incorporating medical cost increases," the Minnesota Council of Health Plans said in a statement.

Premium trends can vary significantly across the country, so Cox expects other states will see bigger jumps than the rates proposed in Minnesota.

Prices in health care generally grow much faster than in the rest of the economy, but the dynamic has flipped over the past year with the spike in overall inflation. In April, prices generally were up 8.3% from the previous year, compared to just 3.2% for medical care, according to a report this spring from Kaiser Family Foundation researchers.

Since payments for health services are generally negotiated on an annual basis, it's possible that inflationary pressures have been slow to show up in health insurance prices, Cox said.

"Nationally, I'm expecting premiums to increase more than in recent years," she said. "Insurers aren't as profitable as they had been in the last few years and we might start seeing inflation in the rest of the economy flow through to the health sector."

In Minnesota, consumers can file public comments on the rate proposals until July 18. Final numbers will be released on or before Oct. 1.

Minnesotans under the age of 65 who are self-employed or don't get coverage from their employer are the primary purchasers of individual health insurance policies.

The market has been in the spotlight since 2014 when the federal Affordable Care Act brought large subsidies for many buyers of the coverage, so long as they purchase through a government-run exchange like Minnesota's MNsure.

For 2023, carriers are seeking the following average rate increases: UCare 6.2%; Medica 6%; and HealthPartners 2.1%. The HMO at Blue Cross and Blue Shield of Minnesota is seeking a 2.3% decrease.

Last summer, the Commerce Department's review process for 2022 rates resulted in three of the largest carriers in the market shaving 1 or 2 percentage points off their proposed increases. For another large carrier in the market, however, the final approved rates were about 4 percentage points higher than initially proposed.

"The Commerce Department does not 'set' health insurance rates," the agency said in background materials about the 2023 proposals.

"Instead, it reviews the information submitted by the insurers to determine whether their proposed rates are justified. Rates must be justified both by the benefits that consumers receive for their premiums and by the insurance company's ability to pay expected medical claims costs based on premium revenue," the agency said.

The Commerce Department says the rate-review process ensures that carriers provide coverage of pre-existing conditions as well as no-cost preventive care. The state also checks to make sure health plans have an adequate network of health care providers.

The proposed rates are averages. Individual market rates can vary based on an individual's age, tobacco use, family size and geography. In addition, the department says the rate changes can vary based on the specific plan a consumer purchases as well as the renewal date.

Across the country, states in recent weeks have begun reporting rate proposals from carriers in the individual market. In New York, regulators say that individual market insurers for 2023 are seeking an average premium increase of 18.7%. In Washington state, the average proposed increase for next year is about 7%.

Expanded subsidies under the American Rescue Plan Act have been credited with growing enrollment in health plans sold via MNsure.

Beyond enhancing existing subsidies, the law — for the first time — provided premium tax credits for consumers with incomes above 400% of federal poverty guidelines — $54,360 for an individual or $111,000 for a family of four.

"Enrollees with incomes above 400% of poverty could face a double whammy of losing subsidies and paying for the increase in premiums," Cox said in an e-mail.

In Minnesota, more than 159,000 people were buying individual market coverage in 2021, the Commerce Department said in a report this month. The biggest carriers in the market at the time were UCare (49,649), HealthPartners (47,648), the HMO at Blue Cross and Blue Shield of Minnesota (32,759) and Medica (25,185).

PreferredOne and Quartz Health Plan, each of which covered fewer than 4,000 people in the market during 2021, are asking for average rate increases of 18 and 22.2% respectively.

As of May, 113,460 people were buying individual insurance policies via MNsure, the health exchange reported this month. At the time, about 45% of enrollees were in a health plan from UCare.