Four things to know about health insurance premiums expected Thursday

Sept. 01--Minnesota's insurance companies will unveil their proposed 2017 rates Thursday -- and Minnesotans should expect some sticker shock.

The new rates for the state's individual insurance marketplace are expected to see increases of at least 25 percent and perhaps far more.

Affected will be people who buy individual insurance plans -- about 300,000 people today, of whom 70,000 buy through the state-run MNsure exchange and about 230,000 directly from insurers. People who get health insurance from providers or from government programs such as Medicare, Medical Assistance or MinnesotaCare won't be directly affected.

The rates will be unveiled mid-afternoon. Here's four things to know about the premium increases.

1. Insurance premiums are expected to go up a lot.

Last year saw insurers raise premiums between 14 and 49 percent. Experts say that will likely happen again -- and if anything, the increases will be bigger this year.

"What we're seeing in other states is premiums are going up faster in 2017 than they have in the past few years," said Cynthia Cox, associate director of Health Reform and Private Insurance at the nonprofit Kaiser Family Foundation.

Part of that reflects the health care marketplace, where the high cost of prescription drugs has made health care more expensive. Additionally, a federal subsidy designed to keep premiums down is expiring, which will raise premiums by around 5 percent all by itself.

On top of that, Blue Cross Blue Shield announced this summer that it is largely withdrawing from Minnesota's individual market. That means 100,000 Blue Cross customers will be seeking other plans -- and enough of those customers were expensive enough that Blue Cross decided it was more cost effective to leave the market than to continue to insure them. Blue Cross' rivals may raise their rates even more to cover this anticipated cost.

2. This isn't the final word.

The rates unveiled Thursday are just preliminary rates. They still need to be approved by the state Department of Commerce, which can push back against unjustified rate increases. Final rates will be announced Sept. 30, a month before open enrollment begins on Nov. 1.

Because the rates are preliminary, they'll just be averages. If a plan raises its premiums by an average of 30 percent, individual customers could see bigger or smaller increases than 30 percent. That specific data will come out at the end of September.

3. For some people, the news might be better than it sounds.

A subset of individual insurance customers could see their premiums skyrocket -- and still save money.

That's because government subsidies under the Affordable Care Act will also go up, for those people who qualify.

"When rates increase, so do tax credits, and they increase significantly," said Allison O'Toole, MNsure's CEO. O'Toole said MNsure's projections show the higher subsidies could completely cancel out the premium hikes, or even exceed them. Jim Schowalter, president and CEO of the Minnesota Council of Health Plans, agreed with the projection.

But not everyone can get subsidies. They're only available for health plans bought on MNsure, not for plans bought directly from insurers. MNsure currently only has about 25 percent of the overall individual market.

And the subsidies are on a sliding scale based on income. Only people earning less than 400 percent of the federal poverty line -- $47,520 for an individual or $97,200 for a family of four -- can qualify.

People who earn more than that or who choose to buy a non-MNsure plan won't get subsidies and will have to absorb the full brunt of the premium hikes themselves.

4. The increases come at a time of national turmoil in the health insurance industry.

Blue Cross pulling out of Minnesota's individual market isn't a Minnesota anomaly. Insurers have been leaving insurance markets around the country, including broad pullbacks from Aetna and UnitedHealth (neither participate in the Minnesota marketplace).

Even plans that have stuck around say they've lost money on their individual market plans.

"You look across states across the country and you're seeing very similar stories of significant health care needs in the individual market that drive substantial health care expense increases," Schowalter said.

With political gridlock and broad divisions in both Minnesota and Washington, D.C., neither party has been able to enact new laws to stabilize the insurance market.

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