Minnesota Lawyer
There are a number of reasons why political figures might want to take a deep breath before passing judgment on the proposed rate increases for individual insurance plans sold in Minnesota. Then again, that’s never stopped them before.
Insurers have submitted 27 plans for preliminary consideration by both federal regulators and the Minnesota Department of Commerce, which imposed a mandatory review process for products with rate increases of more than 10 percent above the previous year.
Some of those plans, which were made public on Wednesday, would rise a good deal more than that 10 percent threshold. Nine products submitted by Blue Cross Blue Shield Minnesota are tabbed for increases of more than 50 percent; other insurers turned in plan frameworks with premium increases above 60 percent.
Not all of the plans up for review would eventually appear on the MNsure market. PreferredOne, which submitted three plans with increases ranging from 26 percent to 50 percent, opted to discontinue its participation in the health insurance exchange because the low monthly rates it offered had led to big enrollment figures, followed by big losses during its first year of operation.
But, as is often the case, the news was immediately viewed through the filter of MNsure, and Rep. Greg Davids, R-Preston and Republican lead on the MNsure Legislative Oversight Committee, said the rate proposals are a “disheartening sign” that administering MNsure and implementing the Affordable Care Act was coming at a cost to Minnesotans.
“Contrary to claims that insurance rates are solely a ‘business decision,’ these proposed prices are a consequence of flaws in federal policy that punish Minnesota consumers,” Davids said.
Also upset, though projecting blame in the opposite direction, was Gov. Mark Dayton, who said the large increases illustrated the wisdom of a review and approval process by the state.
“The proposed rate increases from Minnesota’s health insurers are outrageous, given that our state’s health care costs have been increasing by only 3 percent,” Dayton said.
Department of Commerce Commissioner Mike Rothman took a more measured approach than both Davids and Dayton, saying only that the release was “the first step in a rigorous and thorough review,” and that the plans posted Wednesday were “not necessarily what will be approved.” The department’s guarded statement could be a reflection on its perceived heavy-handed approach to previous approval periods; the Department had encouraged PreferredOne to reconsider its initial offering, and Republicans blamed the Dayton administration for the insurers’ subsequent departure.
Though the Department of Commerce has already been going through the plans since mid-May, the June 3 posting opens the process for public comment. It also made the plans available to legislators like Sen. Tony Lourey, DFL-Kerrick, who said the higher premiums were somewhat predictable, given the “a little bit older, and a little bit sicker” population of consumers that had joined the state’s insurance marketplace after the ACA.
“There’ve been rumblings for some time that not everything was falling in place like was thought,” Lourey said.
The true impact on MNsure is not easily discerned from Wednesday’s release, as the release did not specify how many exchange enrollees would be affected by changes to those plans, and only products with 10-plus percent increases were posted. Lourey noted that none of the plans offered by Medica, for example, had triggered the automatic review.
Still, Lourey acknowledged that Blue Cross Blue Shield had, in the wake of PreferredOne’s departure, scooped up “the lion’s share” of the individual market on MNsure. The DFL senator, who co-authored the MNsure enacting legislation and chairs of the Senate Health and Human Services Finance Committee, said he would understand why Blue Cross Blue Shield would raise rates in light of its flagging revenues.
“If you look at what’s projected for [Blue Cross and Blue Shield] for 2015, based on the first quarter, it shows a loss, and you can’t continue operating at a loss,” Lourey said. He added: “But I don’t know if plans have gone a little overboard, and tried to make up those losses from previous years. You’re not allowed to do that, either.”
University of Minnesota professor Stephen Parente said the rates could have as much to do with the future as they do with the present. Parente observed that major provisions that currently support insurance companies, such as “risk corridors,” which see the federal government subsidize consumers whose care was more expensive than projected, are due to expire at the end of 2016. After that date, when insurers are left on their own, premiums could be expected to spike dramatically.
“What’s intriguing is that [insurance companies] may be preemptively trying to sort of chunk it up, so that it’s not quite so bad,” Parente said. “They might even be going strategically, and trying to … get half of what they need to be able to get the following year. They can come in with increases of 15 [percent] and 15 [percent], instead of doing 30 [percent] all at once.”
Parente said he could understand Dayton’s frustration at the suggestion of higher premiums, as many had predicted state exchanges would be “all magic and roses.” The governor could be heartened, though only slightly, by the news that Minnesota’s percentage increases are not out-of-step nationally: Plans in Hawaii, Illinois and North Carolina, among other states submitted similarly elevated premiums for 2016.
Lourey, for his part, pointed out that MNsure consumers would be given time to change their plans during the 2015 open enrollment period this fall, and Parente said the first two years of data collected on the ACA indicates that at least some of them will.
“The nice thing about this law is, those of us doing research can actually test things,” Parente said. “As it turns out a lot of people did switch from year-to-year. It wasn’t like how you get your bank account once, and then you’re done.”
The Department of Commerce has until Oct. 1 to review and approve plans. Lourey said the legislative oversight committee has no prescribed role in the rate approval process, though he assumed the panel would meet at least once “after the dust settles a bit.”
The MNsure Board is scheduled to convene next on June 17. That meeting will be the first full proceeding under the leadership its new chair, Peter Benner, and with interim CEO Allison O’Toole, who took over for former leader Scott Leitz in late May.
