In Year 3, MNsure's next challenge is more customers

MNsure faces extra pressure to deliver during its third open enrollment season, since premium spikes likely will prompt more Minnesotans to seek financial relief from the health exchange's tax credits.

Open enrollment starts Sunday for more than 300,000 Minnesotans who buy individual health insurance policies, either through MNsure or the state's larger "off-exchange" market.

Technical glitches hobbled MNsure in year one, and while the system improved last year, enrollment continued to lag behind expectations.

Premiums that are set to jump an average of 41 percent next year and increased financial penalties under the federal health law for those who lack coverage are expected to drive more people to MNsure, which needs more enrollment to secure its financial future, said Roger Feldman, a health policy researcher at the University of Minnesota.

"This is a make-or-break year for MNsure," Feldman said.

Allison O'Toole, the interim chief executive at MNsure, said she disagreed with the characterization, but seconded the view that MNsure is bound to see more traffic as people seek ways to offset premium jumps.

Amid growing concern that too many are buying low-premium policies without understanding the financial risk from deductibles and coinsurance rules, MNsure plans to launch in November an online tool that better highlights the trade-offs.

"There is an added incentive to come back and shop and compare through MNsure, based on these increased prices," O'Toole said. She added: "We have a great opportunity … to help Minnesotans get a truer picture of their costs."

Minnesota launched MNsure in 2013 to implement the federal Affordable Care Act, which requires almost all Americans to have health insurance or pay a tax penalty. The exchange is an option for people who buy non-group coverage, as well as small employers, but is not a factor for people covered through large employer groups or Medicare.

In Minnesota, MNsure is the only way for people buying individual policies from private health insurance companies to obtain federal tax credits. In most states, including those that border Minnesota, individuals can buy coverage and tap subsidies through the federal government's HealthCare.gov website.

Tax credits are available for individuals with annual incomes up to $47,000, or incomes of up to $97,000 for a family of four. Incomes at those levels don't guarantee a subsidy, however, since the calculation also depends on market premiums within a region.

Only about one-sixth of Minnesota's individual market currently buys through MNsure, which means the state's exchange has one of the lowest market shares in the country among the new government-run marketplaces. One factor has been very low premiums in the state, which have meant that relatively few people qualified for tax credits.

As the number of uninsured people has dropped in Minnesota and across the country, the exchanges this fall are finding they must court consumers who are tougher to reach. That's part of the reason the federal government this month set a goal of 10 million enrollees across all exchanges for next year, which would be an increase of about 10 percent.

"Exchanges are going to have to work harder this year," said Elizabeth Carpenter, a vice president with Avalere, a health care consulting firm based in Washington D.C.

MNsure is looking for a bigger percentage jump of about two-thirds, with the exchange's budget calling for growth from the roughly 50,000 people who currently buy coverage to about 83,000 people next year.

"I think our rates set us apart from those national conversations in some ways," O'Toole said.

The individual market in 2016 will include more "narrow network" policies where consumers could find they'll pay significantly more for seeing doctors and hospitals that are outside the health plan's network. MNsure's website includes links to information from health insurers about network limits, but there won't be a tool to let folks enter names of doctors and hospitals and receive a list of health plans that cover those providers.

Federal officials, meanwhile, say they will launch search tools this year not just on networks, but also on the medications covered by different health plans. MNsure offers links to directories on insurance company websites.

The MNsure website has improved since its troubled debut, but issues remain.

MNsure, for example, is again telling website users to clear the browser history on their computers before trying to shop. Also, the exchange recommends people use Chrome or Firefox browsers, and not Internet Explorer.

"Even last November, people were enrolling with ease, and I think that will be true again this year," O'Toole said. "We're not perfect, but we have people ready to help."

MNsure is coordinating more enrollment centers staffed with health insurance agents to help people this year. Spending on health insurance navigators and the MNsure call center is down slightly, but O'Toole argued the exchange and its partners are better able to assist people through improved outreach strategies.

Cynthia Cox, a researcher with the Kaiser Family Foundation, said consumers in Minnesota should consider hypotheticals that show how they could newly benefit from tax credits this year.

A 40-year-old nonsmoker in the Twin Cities with income of about $30,000 per year in 2014, Cox said, didn't qualify for a tax credit, and paid $154 per month for the second lowest-cost "silver" grade policy in the market. That consumer in 2015 still didn't qualify for a tax credit, Cox said, and saw the monthly premium increase to $183.

In 2016, the monthly premium for the consumer buying that policy jumps 28 percent to $235, Cox said, only now a tax credit knocks the out-of-pocket premium cost back to $206 per month.

"For some people, that will still feel like a lot," she said. "But to put that in perspective, $235 per month is still well below average for what most people are paying across the country without tax credits."

Such messages, of course, don't ease the pain much for many consumers.

"When you're telling someone that their health insurance premium for their family is $1,700 per month, it doesn't help to say that it would cost $100 more per month in Wisconsin," said Heidi Michaels Mathson, an insurance agent with Dyste Williams in Minneapolis.

Erica Perl of St. Paul says she'll give MNsure a try, but she doubts her family will qualify for a tax credit. The annual health insurance premium for Perl's family of five is scheduled to jump from about $13,300 this year, to roughly $19,500 for 2016 — an increase of 46 percent.

To make matters worse, the family deductible on the policy is scheduled to increase from $10,400 to $13,100. Besides trying the exchange, Perl says she'll shop around for a cheaper policy, too, from a different insurance company.

There's one other option that Perl says she's considering — finding a job with employer-sponsored health insurance, so she and her family could get out of the individual market. Friends with coverage through employer groups, she points out, aren't facing such huge premium increases for next year.

"How is an ordinary family going to maintain a budget when you have a basic expense that's increasing by 50 percent?" Perl asked. "It's mind-boggling."

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck