‘Not a simple story’: Area families cope with crushing insurance costs

Jan. 15--Two years ago, Wally and Brenda Boyer had reasonable insurance.

The owners of Jake's Stadium Pizza had insurance through Brenda's job at Carlson Craft at the time, and it cost the both of them about $600 a month.

This year's a different story. Brenda no longer works at Carlson, and the Boyers will pay more than $19,200 -- more than $1,600 a month -- on a high-deductible insurance plan.

"It's crazy," Wally said.

The Boyers are among thousands of people who bought individual insurance coverage for 2017 who also don't qualify for state or federal subsidies. They don't have insurance through work but seek health insurance coverage on their own.

Yet a combination of high medical costs and fewer people to pay them has wreaked havoc on the state's individual insurance market in recent years, causing major companies to withdraw from the market and individual insurance rates to skyrocket.

About 250,000 Minnesotans who buy individual insurance saw their rates increase by 50 to 67 percent on average in 2017. Of those, about 123,000 residents won't qualify for state or federal subsidies because they make too much money.

"There's a lot of people out there who think business owners are really rich, and although we're comfortable, we don't have an extra $12,000 to throw around with another $10,000 in deductibles," Boyer said.

The Boyers may have decided to purchase coverage, but there are thousands of people like them who have until the end of the month to decide whether it's worth the extra cost to buy unsubsidized insurance.

"It's not a simple story, but at its core, it's about people's medical bills," said Jim Schowalter, president of the Minnesota Council of Health Plans. "And premiums haven't been enough to cover the medical care that people have used."

Part of the equation

South-central Minnesota, and Greater Minnesota at large, already has higher average insurance premiums compared to the Twin Cities. People living in the region tend to be older, with fewer health care provider options, than metro-area residents.

That means people like the Boyers, who are in their 60s, are already prone to seeing higher insurance bills based on their age and where they live.

Those factors play into which insurance companies offer individual insurance coverage in the area. When MNsure enrollment opened in November, only two plans were available for area residents -- coverage through Medica and through a Blue Cross HMO called Blue Plus.

Medica hit an enrollment cap designed to prevent company losses in just a few days. The company stopped selling individual insurance throughout the state by mid-November.

That left only one insurance option for many area residents and much of Greater Minnesota.

"So now we're caught between this rock and a hard spot," Cindi Baker said.

She and her husband, Peter, work part time after more than 30 years in trucking. Peter, 64, still drives a rig while Cindi, 59, does marketing in the Mankato area.

As small-business owners, the Bakers have always bought individual insurance coverage with high deductibles.

That coverage got more expensive over the past two years. In 2015, the Bakers paid about $9,000 in total for their coverage. Last year, they paid about $15,000. This year, they'll pay more than $31,000.

And that's just the cost of coverage. The Bakers, like the Boyers and thousands of others who purchased coverage for 2017, have a deductible of $6,550 for each person under their Blue Plus plan.

In other words, the Bakers could have to pay up to $45,000 before they get medical costs reimbursed by their insurance provider, Cindi said.

"It went from decent to insane to are you kidding me?" she said.

The small-business owners, farmers, independent contractors and freelancers who buy individual insurance can qualify for state and federal subsidies through MNsure, provided their income is below a certain threshold -- about 400 percent of federal poverty guidelines. Individuals who make less than $47,080, couples who make less than $63,720, and families of four who take home less than $97,000 a year are eligible for insurance subsidies.

That leaves successful families like the Bakers and the Boyers without many options. They make too much money to get subsidies but not enough to easily offset such huge insurance bills.

"This wasn't part of the equation right now," Cindi said. "This has blindsided us."

Ag frustrations

When farmers talk to Theresia Gillie, they no longer greet her by asking about the weather.

Instead, they ask the Minnesota Soybean Growers Association president about insurance costs.

"It was more important than the weather and what was going on the field, what the corn prices were," she said. "Health insurance trumped all those discussions."

Insurance has grown into a major concern for the state's agriculture industry. High property taxes and low commodity prices have tightened farm budgets across the state in recent years. Adding thousands of dollars in insurance costs to those budgets is causing an outcry throughout the industry.

"It's become a big, big issue for us," said Kevin Paap, president of the Minnesota Farm Bureau.

Kevin, 56, and his wife June, 55, operate a farm near Garden City. This year, they'll pay more than $25,000 in health insurance coverage.

That's before the $6,550 per-person deductible.

"That's just uncontrollable, but that's the only option," Kevin said.

Gillie is in a similar situation. She and her husband operate a farm near Hallock, in the northwest corner of Minnesota. They're looking at paying almost $15,000 in insurance costs this year, not counting a $6,500 deductible.

Yet Gillie is luckier than many residents. Her family got coverage through BlueConnect, a health plan partnership between Blue Cross Blue Shield and the North Dakota-based Sanford Health Network. The Gillies' local clinic became affiliated with Sanford, so people who bought BlueConnect didn't have to switch doctors.

Otherwise, people would have had to drive more than an hour to get medical care in Thief River Falls.

In the Mankato area, those who bought Blue Plus can only get treatment from Mayo Clinic Health System in Mankato, as area residents found out. The Bakers and the Paaps went to Mankato Clinic for decades; Cindi served on the clinic's patient advisory board.

"It didn't get serious until we found out we had to switch doctors," Kevin said.

Covering costs

Options are scarce for families who don't qualify for subsidies. Families such as the Boyers, the Bakers and the Paaps either have to somehow pay the costs or take a federal penalty for going without insurance coverage.

"It's been interesting the number of different people I've talked to, and have them tell me, 'I think we're just going to pay the fine,'" Gillie said.

She won't have to pay crushing insurance costs for long. She was recently elected as a Kittson County commissioner and is eligible for the county's insurance plan next month.

Still, she and about 4,000 members of the Minnesota Soybean Growers Association are looking at other options, including creating their own insurance pool.

At least a quarter of the association members would have to agree to coverage, and calculating insurance costs for thousands of people means a pool likely wouldn't go into effect until next year, if at all.

"Everybody's at a little different level; everybody has a different level in deductibles," Gillie said. "By the time we get all the information together, it may not be viable."

Other ag organizations are looking into similar arrangements, though Paap thinks such plans might work better under local ag co-ops. Either way, insurance experts say creating even a small group is a good strategy to curb costs.

"If in a family they both work the farm, in Minnesota you can have a small insurance group of two," said Dan Weir, a Mankato-based insurance agent.

Lawmakers are trying to pass emergency relief for individual insurance buyers. A Republican-controlled Senate passed a relief bill Thursday that would offer 25 percent rebates for a few months and substantially increase subsidy thresholds so middle-class families could get rebates.

Yet state officials say the GOP plan, which relies on the state to reimburse residents, would take up to $20 million to set up and delay rebate payments until next year. A similar plan by Democratic Gov. Mark Dayton would offer similar rebates through insurance company reimbursement but wouldn't go into effect for a few months.

No matter what passes, families across the state will still scramble to cover huge health insurance bills this year.

For families approaching retirement age, there's a silver lining. Residents who turn 65 can enroll in Medicare.

"I turn 65 next year, and it can't come soon enough," Wally Boyer said.

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