Health plans seek premium increases up to 8% on individual insurance in Minnesota

Insurers are seeking larger premium increases for next year on coverage sold directly to individuals and families in Minnesota, moves that mirror other signs of growing medical costs.

Health plans are proposing average jumps for 2024 that range from 2.8% to 8%, according to data posted late last month by the Minnesota Department of Commerce.

For individuals, federal tax credits at the MNsure health exchange should provide a financial shield if the proposed increases take effect. But analysts have been watching to see if premium trends will increase due to general inflation and rising health care labor costs.

"Rates are subject to review and approval by [regulators] and the final approved rates may vary from these proposed rates for many reasons," the Commerce Department said in background materials posted online.

"Additionally, the actual rate change a consumer will experience in 2024 can vary from the average — with factors such as specific plan, geographic rating area, age, and federal premium tax credits playing a major role."

Last month, two of the nation's largest health insurers — Minnetonka-based UnitedHealthcare and Kentucky-based Humana — reported higher costs with unexpected demand for surgeries and medical procedures. Meanwhile, a recent PwC Health Research Institute report forecast medical cost trends will increase from 6% this year to 7% in 2024.

"Usually, medical inflation lags inflation in the rest of the economy by several months or even over a year," said Cynthia Cox, a researcher with the health policy group KFF.

"Plus, we're coming out of a pandemic and there's a lot of talk about provider burnout … leading to staffing issues. When there are staffing issues, then hospitals might have to pay their staff higher wages, which leads to them asking for more money from insurance companies."

In Minnesota, the increases are being proposed in the individual market, where fewer than 5% of state residents typically buy coverage. Individual health plans are an option for people under age 65 who are self-employed or not insured by their employers.

If approved, the increases would exceed average premium changes on policies sold this year by the four largest insurers in the market, which ranged between -2.3% and 3%. The proposed increases fall short of average premium jumps in 2022, however, when increases in Minnesota's individual market ranged from 7% to 11%.

Individual market coverage was the subject of a major federal overhaul beginning in 2014 through the Affordable Care Act. The health law provides significant federal tax credits for people who buy individual health plans through a government-run health exchange like MNsure in Minnesota.

Consumers also have the option of buying directly from insurers or through agents in the "off-exchange" market.

In May, about 109,700 people were buying individual market coverage through MNsure. Some 44% of enrollees were in plans from UCare; the HMO at Blue Cross and Blue Shield of Minnesota and HealthPartners each had about 21% of market enrollment. Medica's share was roughly 13%, followed by Quartz Health Plan at 1%.

The increases are coming after several years of relative stability in premiums. Last fall, a prominent national survey found premiums for family coverage in employer-provided health plans actually held steady in 2022 — a first after more than 20 years of increases, according to California-based KFF, a nonprofit health care research group.

"Medical care prices and overall health spending typically outpace growth in the rest of the economy," KFF researchers wrote in a report published in March. "However, since 2021 prices for many consumer goods and services have increased faster than usual, with overall inflation reaching a 4-decade high in mid-2022."

The proposed rate increases by health insurer:

"These rate changes do not reflect the impact of federal premium tax credits that are available to eligible Minnesotans who purchase their coverage through MNsure," the Commerce Department said.