The latest announcements regarding the huge rate increases for individual health insurance products coupled with the reduction of access to products throughout the state, have created a great deal of controversy regarding the future of the individual health market in Minnesota. Legislators on both sides of the aisle are hearing from their constituents regarding the 50 - 67 percent rate increases on tap for 2017. This grumbling will only increase as open enrollment begins next month. How did we get to this?
Not long ago Blue Cross announced that they were dropping 103,000 subscribers and exiting the market for their most popular products due to substantial losses. The Blues will remain in the market only with a very limited network product, Blue Plus HMO. The two major carriers expected to receive the bulk of the former Blues insureds, Medica and Health Partners, are now taking drastic measures as well creating a crisis for some 250,000 Minnesotans who must buy individual insurance.
Medica has announced that they will continue to write individual health insurance however they will cap the number of total enrollees they will accept in 2017, capping enrollments at 50,000. They also announced that they will no longer pay commissions to insurance producers and all new applicants will be required to enroll through MNsure. Renewals will be allowed through agents. They have apparently worked out this arrangement with the Department of Commerce in order to remain in the individual health insurance market.
Another major carrier, Health Partners has announced that they will limit their individual health insurance products to the seven-county metro area and four counties surrounding St. Cloud. Health Partners had previously been writing insurance in 67 counties. They were also given the authority to cap their enrollment.
The Department of Commerce granted the authority to set caps on enrollment to two other insurers, making the Blue Plus HMO the only non-capped product available. The new caps could also mean that five counties in central Minnesota could possibly lose all insurance options. State regulators claim this is unlikely to happen. Yet it seems somewhat dependent when people enroll, where they live and when a health plan meets its caps. The Department of Commerce is encouraging people to sign up as soon as possible once open enrollment starts November 1.
Yesterday the MNsure Legislative Oversight Committee heard testimony from Commerce Commissioner Mike Rothman regarding these extraordinary measures which he indicated were needed to avoid the collapse of the individual health insurance market. They also heard testimony from MNsure about the preparations for the oncoming onslaught of early enrollments. Insurance agent Dave Wiest testified on behalf of the Agents Coalition for Health Care Reform presenting the concerns of agents and brokers regarding the dire situation many of their customers will face, often now without the benefit of expert advice. The Agents Coalition represents, MAHU, MIIAB and NAIFA on issues of health insurance at the state legislature. The committee plans to have another meeting in the near future to hear from the health plans. That should be an interesting meeting.
Meanwhile, legislative leaders were quick to point to their colleagues on the other side of the aisle who have help create or failed to address this problem. Some legislators are calling for a special legislative session to address the collapse of the individual health insurance market, but candidly it would be exceedingly difficult to get an agreement on a series of fixes to be enacted prior to November 1.
What could be done? Here are a few suggestions I have heard.
- Create a reinsurance mechanism to curb health plan losses and reduce premiums.
- Reduce the MinnesotaCare provider tax by half to lower health care costs.
- Combine the individual and small group markets into a single pool.
- Dump MNsure and go to the federal exchange.
- Cap prescription drug costs by bargaining with drug companies.
- Use the $35 million in leftover MCHA funding to lower premiums.
- Allow persons to receive federal tax credits outside of MNsure.
- Expand the number of persons who qualify for MinnesotaCare by raising the income threshold from 200 percent of federal poverty to 275% or 350% or even 400%.
Perhaps the most viable option at this time is the reinsurance mechanism that would help cover health plan losses. We cannot go back to an MCHA system because of the ACA guaranty issue, but we could allow insurers to cede certain individuals to a state operated risk pool. Of course, we would have to decide how to pay for this risk pool. Initial estimates suggest over $100 million would be needed.
The MIIAB will continue to meet with legislators, regulators, insurance carriers and agent organizations as we go forward in an attempt to save the individual health insurance market in Minnesota. I'm sure you will be hearing more about this in the days and weeks ahead.