Minnesota finds ’cause for optimism’ in individual health insurance market

Jan. 13--As consumers approach a Sunday deadline for buying coverage through MNsure, state officials say there's a glimmer of hope for less volatility in the troubled market where individuals buy health insurance.

A report released Friday by the Minnesota Department of Health details "some cause for optimism" based on partial-year information suggesting individual market insurers last year weren't losing nearly as much money compared with previous years, and might instead post a small profit.

The improvement likely stems from large premium jumps in recent years, the report says, and the state has promoted stability with a "reinsurance" program that provides a financial backstop for insurers that happen to cover people with unusually expensive medical needs.

A more stable market doesn't mean people struggling with the high cost of unsubsidized individual health plans should expect premium relief anytime soon.

"We see a more balanced financial picture for carriers continuing to serve the individual market in 2018, with premiums more in line with the health care needs of the enrollees, although some of the improvement may be related to plan design," the report said.

"At the same time, shrinking enrollment and the possibility that it is the healthier individuals who are exiting the market is cause for concern about the longer-term stability of Minnesota's individual health insurance market," the report said.

The report focuses on the individual market, which serves less than 5 percent of Minnesotans. The market has undergone sweeping change with the federal Affordable Care Act (ACA), which blocks health insurers from denying coverage to people with pre-existing health conditions.

Republicans in Congress late last year modified the ACA by eliminating in 2019 the health law's financial penalties for individuals who lack coverage. Insurers say such penalties are key to preventing people from waiting until they are sick to buy insurance.

Without citing specific changes, the state's acting Health Commissioner Daniel Pollock said in a statement about the report: "The latest federal health insurance policy changes, after a year of uncertainty around the future of the ACA, could greatly undermine and reverse the progress and stability Minnesota achieved in its individual market over the last twelve months."

A Health Department news release describes the financial improvement for health plans as a "turnaround," and says that health insurers are "looking poised for small profits in 2017 after losing money in 2014, 2015 and 2016."

In his statement, Pollock urged Minnesotans who buy individual market coverage to check whether they qualify for federal subsidies through the state's MNsure health insurance exchange, where open enrollment for individuals to buy 2018 coverage is scheduled to close at midnight Sunday.

Troubles in the individual market have prompted two health plans in Minnesota to sharply cut back plan offerings since 2014. That's been a problem across the country, with national carriers like Minnetonka-based UnitedHealthcare dropping out of the individual market exchanges in many states.

While insurers might be more confident about sticking with the business as the market stabilizes, they are also concerned about enrollment trends.

In Minnesota, enrollment has fallen from a peak of about 309,000 people in 2015 to about 166,000 enrollees by the middle of 2017. The average individual market premium increased by double digits in both 2016 and 2017.

Last year, the market suffered a number of "substantial shocks," the report noted, including a decision by Eagan-based Blue Cross and Blue Shield of Minnesota to drop products that provided coverage to about 100,000 people. Consumers also were more likely to run into limits in their choice of doctors and hospitals.

"In 2017, enrollment fell substantially, dropping considerably below pre-ACA levels," the report said. It added: "High premiums could drive away a greater number of healthy enrollees and create a risky business environment for health insurers, while leaving individuals vulnerable to one or zero options for purchasing coverage."

People who qualify for federal tax credits through MNsure are shielded from premium increases to a degree, but those at higher incomes who can't get tax credits have been hit particularly hard.

"People who have to bear the whole cost of coverage in the individual market are still going to struggle," said Stefan Gildemeister, the state health care economist. "This [improvement] is just about the existence of a market, not necessarily whether or not it's functioning terribly well or whether it's affordable."

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