MN leaders conflicted over insurance solutions

Jan. 15--Minnesotans who buy individual insurance plans were shocked last fall after insurance companies revealed skyrocketing premium rate increases for 2017.

Individual insurance buyers face 50 to 67 percent average increases to their plans. Some people have even seen their insurance costs double.

And the increases seem to leave everyone with more than a few questions.

"If it doubled this year, what the hell's it going to do next year?" said Cindi Baker of Mankato. "When does it stop? And who's going to stop it?"

Individual insurance costs have steadily increased in Minnesota over the past few years, with people in Greater Minnesota affected more than metro-area residents.

That's due in part to the way the state's insurance market is set up. Residents in rural areas are older and in need of more health care than people living in the metro, which means rural people will pay higher insurance costs on average because they're more likely to use health care.

In addition, fewer health care providers serve rural areas compared to the Twin Cities, meaning there's not enough competition to drive down medical costs for insurance companies.

So residents in areas like south-central Minnesota get stuck with fewer insurance options at higher prices.

What's more, individual insurance costs have increased in particular as more older people decided to buy individual plans rather than insurance through work.

"In the past, the individual rates were so favorable," said Dan Weir, a Mankato-based insurance agent. "That was a great place to buy insurance."

That's no longer the case, in part due to changes Minnesota made when the Affordable Care Act took effect in 2013.

The ACA made it illegal for companies to deny coverage to buyers with pre-existing medical conditions. In the past, the state had a high-risk individual insurance pool to cover those buyers through the Minnesota Comprehensive Health Association or MCHA.

MCHA closed down in 2015, however, forcing about 26,000 enrollees to switch their plans.

Those enrollees needed much more coverage than the average family, and costs soon built up. Less than 1 percent of Minnesotans, about 5,300 people, account for more than $640 million in insurance costs, according to the Minnesota Council of Health Plans.

"A small number of people need expensive care, and in the past we had shared that throughout the community, throughout the state," said Jim Schowalter, Minnesota Council of Health Plans President. "Currently, only people who are buying insurance this way are helping pay for those medical bills."

Rising costs have forced some companies to abandon the individual insurance market. PreferredOne quit offering individual insurance on the MNsure insurance exchange in 2015, and Blue Cross Blue Shield announced they were pulling out from the individual market last summer.

The remaining companies then have to shoulder even more costs, causing the state to sign off on enrollment caps for some companies. Medica, one of two companies to offer health insurance in south-central Minnesota, hit its cap a little more than a week after the 2017 open enrollment period started last November.

State officials have warned all eligible insurance companies are ready to abandon the individual insurance market in 2017 if something doesn't change.

What's the solution?

Lawmakers are trying to pass insurance reform and short-term relief for individual insurance buyers this year, but those efforts will likely be complicated by partisan gridlock between Democrat and Republican legislators.

Republicans control the House and Senate, but any legislation they pass has to get approval from DFL Gov. Mark Dayton, who has his own ideas on how the state should tackle health insurance reform.

Dayton has championed a $300 million proposal for the past three months that would offer a 25 percent rebate to the more than 100,000 residents who are projected to buy individual insurance without state or federal subsidies for 2017. His plan involves paying the money directly to insurance companies, which would then administer rebates throughout the year.

Yet Dayton's proposal would take about two months to put into effect, and critics point out some of that money would go to residents who can already afford the high insurance increases.

The GOP has championed a $450 million effort that combines parts of Dayton's plan with a reinsurance effort to set up a high-risk pool similar to MCHA. Republicans want to use about $285 million toward a 25 percent rebate for three months, then raise subsidy thresholds so more people qualify for state aid.

About $15 million would go toward setting up a system so the state can issue rebates on its own, and the remainder would go toward funding reinsurance, which acts as a sort of insurance for companies covering high-cost consumers.

"It is just spreading the really high medical bills so that everyone continues to have access to care," Schowalter said. "Reinsurance makes sure that nobody, no insurer, no community is unable to get care for the people who are there."

State officials and a few other organizations including the AARP oppose the Republican plan, however. Minnesota Management and Budget Commissioner Myron Frans said it would cost months and at least $20 million to set up the infrastructure to issue rebates, which likely means residents wouldn't receive aid until 2018.

The Senate approved the GOP plan Thursday, and the House is expected to discuss a similar plan this week.

Dayton previously has said he won't sign a relief effort if it includes reinsurance efforts or other parts of long-term reform, which lawmakers also must tackle this session.

Republicans have discussed doing away with MNsure by switching Minnesota onto the federal health exchange and allowing for-profit insurance companies to offer their products on the individual insurance market. Democrats have proposed offering MinnesotaCare as a public option on the market and doing away with geographic rating systems, so Greater Minnesota residents wouldn't have to face higher insurance rates compared to the metro area.

Both sides appear to agree on bringing back a reinsurance pool for high-risk buyers.

For all their work, state lawmakers won't make as much of an impact this year on insurance prices compared to Congress.

Republicans have vowed to repeal the ACA this year, and took steps to do so last week after both the House and Senate passed a budget measure that also allowed lawmakers to repeal parts of the ACA through a simple majority vote. It's unclear how the GOP plans to replace the ACA, which means insurance companies are left without any guidelines on how to price coverage.

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