10/2/2017 8:34:27 AM
New reinsurance program will help stabilize rates for Minnesotans who buy their own coverage
SAINT PAUL – Minnesota Commerce Commissioner Mike Rothman today released the 2018 insurance company rates for individual and small group health plans in advance of the open enrollment period that begins on November 1.
After two years of large rate increases in the individual market, a new state reinsurance program will help stabilize rates for Minnesotans who buy their own coverage in 2018.
“While recent state actions helped to stabilize the individual market, too many Minnesotans are still paying too much for the coverage they need,” said Rothman. “The individual market survived a near-fatal crisis last year, but its recovery is still very tentative. Federal and state policymakers must address health care costs to ensure that Minnesotans have access to affordable, comprehensive health coverage.”
The individual market rates apply to health insurance plans that Minnesotans purchase for themselves and their families through MNsure, insurance agents or the insurance companies directly. The rates do not affect most Minnesotans, who are covered by employer-based insurance or public programs like Medicare, Medicaid and MinnesotaCare.
Less than four percent of Minnesotans (approximately 166,000) currently get their coverage from individual policies, while five percent (approximately 263,000) get coverage from small group policies, which are for employers with fewer than 50 full-time workers.
For insurers in the individual market, the average statewide rate changes for 2018 range from a 38 percent decrease to a less than three percent increase – compared to rate increases of 50 percent and more that occurred in 2017.
For insurers in the small group market, the average 2018 rates range from essentially no change to a 23 percent increase, with increases from 7.8 percent to 12.2 percent for the three largest small group insurers.
Earlier this year, Minnesota enacted a law creating the Minnesota Premium Security Plan, a reinsurance program designed to help stabilize premiums in the state’s individual market by providing a financial backstop against especially high-cost claims.
The Commerce Department estimates that the new program will reduce premiums for 2018 by about 20 percent on average from what they otherwise would be without reinsurance. (Note: Neither the 2017 nor 2018 rates include the temporary, one-year 25 percent premium subsidy that the Legislature enacted in 2017 for those Minnesotans who do not qualify for federal tax credits that reduce premiums.)
The new program recently received federal approval, which will allow Minnesota to use federal funds to cover a significant portion of the reinsurance costs and hold down rates for consumers. Funding is based on savings from premium tax credits that the federal government would otherwise pay to Minnesotans for higher rates without reinsurance. This federal funding is estimated to be $139 million in 2018 and $184 million in 2019.
Today’s rate announcement comes in advance of the annual open enrollment period, which begins on November 1 and continues through January 14, 2018. Insurance companies, insurance agents and MNsure will have specific plan information available for consumers soon.
Minnesotans are encouraged to make their insurance selection during open enrollment, shopping and comparing plans to find one that offers the best value for their health needs and budget. For the continuity of their own health care, consumers should carefully review a plan’s provider network to see what doctors, clinics and hospitals are included.
Consumers should contact MNsure (mnsure.org) to see if they are eligible for federal tax credits that automatically reduce monthly premiums and that are available only through MNsure. The tax credits are available to households with incomes up to 400 percent of the federal poverty level, which in 2018 is $48,240 for an individual and $98,400 for a family of four.
“Many Minnesotans and their families are leaving money on the table,” said MNsure CEO Allison O’Toole. “While premiums have stabilized this year, all Minnesotans should take a few minutes to visit mnsure.org and find out what their options are to save money. For Minnesotans that qualify for these tax credits, it can make big difference in their budget.”
Each year, the Commerce Department reviews the proposed individual and small group health plans submitted by insurers. On behalf of Minnesota consumers, the Commerce Department conducts a rigorous, thorough review of each insurer’s rate proposals.
The Commerce Department does not set health insurance rates. Instead, it reviews each company’s rate proposals to make sure they comply with state and federal laws based on the benefits that consumers receive and the company’s ability to collect adequate premium revenue to pay for consumers’ expected medical claims.
Insurers must provide coverage for a comprehensive set of essential health benefits, including free preventive care, and they are not allowed to deny coverage or charge higher premiums to consumers based on pre-existing health conditions.