Minnesota’s state-run exchange, MNsure, has five carriers that offer health insurance plans in 2016, although two of them — Blue Plus and BCBS of Minnesota — are under the same parent company, with Blue Plus offering HMOs and BCBSMN offering PPOs.
Four of the five carriers will continue to offer plans in the exchange in 2017, but average rate increases are all at least 50 percent. MNsure had 74,060 individual market enrollees with effectuated coverage as of March 2016, and just under 64 percent of them were receiving premium subsidies. Subsidies will offset some of the rate hikes for 2017 for people who qualify for subsidies, but those who don’t will face sharply higher rates in 2017.
The majority of Minnesota’s individual market has coverage outside the exchange, as there are roughly 250,000 people in the state who have individual market coverage, and only 74,000 had coverage through the exchange in 2016. The rate increases for the individual market apply both on and off-exchange, but no subsidies are available outside the exchange. People who currently have off-exchange plans will want to compare on-exchange options during open enrollment, and double check to see if they’re eligible for subsidies to make the coverage more affordable.
Governor proposes 25% premium rebate for those not eligible for subsidies
In late October, Minnesota Governor Mark Dayton proposed a 25 percent premium rebate that would apply to people who buy individual health insurance but whose incomes make them ineligible for premium subsidies. A single individual with an income above $47,500 would be ineligible for the ACA’s premium subsidies in 2017, as would a family of four earning more than $97,200.
Dayton’s plan would use $313 million that was scheduled to be added to the Budgeted Reserve Fund. For people deemed ineligible for premium subsidies through MNsure, the state funds would be sent directly to their insurers, to lower — by 25 percent — the amount that they have to pay each month in premiums in 2017. The result would be an average net premium increase of 16 percent for those folks, instead of the 55 percent average increase that they’re otherwise facing.
Minnesota’s Legislative Leaders must approve the plan before it can be enacted, and Dayton is calling on them to do so quickly, so that people will know exactly what they’re facing in terms of net premiums once open enrollment begins on November 1.
Dayton’s proposal notes that there could be as many as 100,000 people in Minnesota who are eligible for ACA subsidies via MNsure but who have not yet taken advantage of them (HHS estimates this number to be considerably lower, at 43,000). His proposal emphasizes how important it is for everyone in the individual market to start with MNsure during open enrollment, as the ACA’s premium subsidies are the best way to keep coverage affordable. If you’re enrolling outside the exchange (as are the majority of individual market enrollees in Minnesota), you’re losing any subsidy eligibility you may have had. And the premium rebate Dayton is proposing would only be available to folks who are NOT eligible for the ACA subsidies provided through MNsure.
If Minnesota approves this premium rebate, there would need to be some sort of coordination in place between the state and the IRS, probably via the 1095-A that MNsure files for each enrollee. Sometimes, people end up with income that differs from what they projected at the start of the year, and they’re actually eligible to claim the ACA subsidy (tax credit) when they file their tax return, despite paying full price for their exchange plan all year. In instances like that, the premium rebate would have to be taken into consideration to avoid “double dipping.”
Governor also considers special session to address insurance affordability
Governor Dayton has also noted that the government needed to act quickly to stabilize the individual market in Minnesota, and indicated that he was considering calling a special session of the legislature after Election Day to address the situation. Dayton’s proposal for the premium rebate reiterates the need for lawmakers and stakeholders in Minnesota “to work seriously on a long-term solution for the challenges facing Minnesotans under the Affordable Care Act.”
But Dayton has said in very certain terms that the ACA has benefitted many Minnesota residents, and that the problems with the law could have been fixed, if not for the obstruction of Republican lawmakers who would rather see the law fail than take action to change the parts of it that needed to be fixed.
Alaska‘s individual market nearly collapsed this year, and has by far the highest premiums in the country. In an effort to stabilize the individual market, Alaska lawmakers enacted a state-based reinsurance program in 2016, keeping premium increases to a minimum for 2017 and ensuring that one carrier would remain in the market. Alaska’s efforts indicate that there are steps states can take — independently of any actions that Congress or HHS might take — to shore up an ailing individual health insurance market.
2017: Enrollment caps and 50%+ rate hikes
For 2017, Blue Cross Blue Shield of Minnesota’s PPOs will no longer be available in MNsure or outside the exchange (details below). Blue Plus, UCare, HealthPartners, and Medica are all planning to offer coverage through MNsure in 2017, but with substantial rate increases.
All of the MNsure carriers except Blue Plus will also limit their total enrollment for 2017, which means that consumers who wait until later in the open enrollment period (which runs from November 1 to January 31) will have fewer options from which to choose. Those who wish to have the maximum selection available should get going on the enrollment process as soon as possible once open enrollment begins on November 1. If you’re already enrolled in a plan for 2016, you’ll be allowed to renew it for 2017 — assuming it’s still available — regardless of the enrollment caps. But if you’re trying to switch to a new plan, you may need to act quickly in order to avoid missing out on a carrier’s plans due to the enrollment caps.
On September 30, the Minnesota Department of Commerce announced health insurance rates for 2017 for the individual and small group markets. While the rate hikes are somewhat reasonable in the small group market (ranging from a decrease of 1 percent to an increase of 17.8 percent), the individual market is “experiencing serious disruptions in 2017” and “on the verge of collapse.” The four carriers that will offer plans through MNsure will have the following average rate increases in 2017:
- Blue Plus = 55 percent
- HealthPartners = 50 percent (HealthPartners will only offer plans in 10 of the 67 counties where they offered plans in 2916)
- Medica = 57.5 percent
- UCare = 66.8 percent
The enrollment caps that HealthPartners, Medica, and UCare will be employing for 2017 were approved as part of the rate approval process, and are designed to protect carriers from further financial losses as they absorb BCBSMN’s current enrollees who will be shopping for new coverage during open enrollment.
Medica will not pay broker commissions on new enrollments in individual market plans for 2017 in Minnesota. They will continue to pay commissions when brokers help existing enrollees renew their Medica coverage, and they will continue to pay commissions in the group market, as well as in the individual market in other states where they offer plans.
In an effort to recruit more carriers to offer plans through MNsure for 2017 — particularly outside the Twin Cities metro area — state regulators sent out a request for proposals from health insurers on August 15. Regulators noted that insurers could propose waivers of regulations in order to make it feasible for them to offer coverage through MNsure, although any such waiver requests would have to be approved by regulators.
Steven Parente, a health insurance expert at the University of Minnesota, called the state’s effort to recruit insurers to MNsure a “distress call” and noted that August 15 is awfully late in the year to be putting out a request for insurer participation, given that open enrollment begins November 1.
In June, Heidi Mathson, president of the Minnesota Association of Health Underwriters, indicated that she thought average rate increases would be in the range of 20 to 30 percent. But as the summer went on, Medica opted to refile higher rates, and it became clear that a substantial number of insurers across the country were losing significant amounts of money in the individual market, and many were planning to exit the exchanges at the end of 2016.
In a news release relating to the rate announcement for 2017, the Minnesota Department of Commerce didn’t mince words. They noted that the individual market in the state was on the brink of collapse, and that they did everything in their power to save the market. While they succeeded in keeping the state’s individual market viable for 2017, with only one carrier exiting, they reiterated very clearly that substantial reforms are needed to keep the market stable in future years, and highlighted the fact that rate will be sharply higher and that carriers will limit enrollment in 2017.
Blue Cross Blue Shield dropping PPOs
For 2016, and again for 2017, there’s a trend towards fewer PPO plans — and more HMOs — in the individual market. Blue Cross Blue Shield of Minnesota is following suit, and will drop their individual market PPO plans at the end of 2016 due to significant financial losses.
The vast majority of individual enrollees in BCBSMN plans have PPO coverage. Roughly 103,000 people will have to select new plans during open enrollment, and there are just 13,000 people currently covered under Blue Plus plans, which are the carrier’s HMO options (both are currently available through MNsure).
There are currently 20,400 MNsure enrollees (a little more than one in five MNsure enrollees) with coverage under BCBSMN who will have to switch to another plan during open enrollment (the large majority of the carrier’s individual market PPO enrollment is outside the exchange). BCBSMN currently has individual PPO options available in all 87 counties in Minnesota through MNsure, while the Blue Plus coverage area — comprised of four separate HMO networks — is available in 77 of the state’s counties.
In Colorado, Anthem Blue Cross Blue Shield is also dropping their PPOs at the end of 2016. In Indiana, there will be no PPOs available in the individual market in 2017. Blue Cross Blue Shield of New Mexico dropped all of their individual market plans at the end of 2015 except one off-exchange HMO. Blue Cross Blue Shield of Texas dropped their individual market PPO plans at the end of 2015.
Nationwide, carriers are shifting away from PPOs and towards HMOs. The broad network offered by PPOs tends to be attractive to enrollees who have health problems; they’re often willing to pay higher premiums in trade for access to broad network of hospitals and specialists. But PPOs are expensive for carriers, as enrollees don’t need primary care referrals to see specialists, and it’s more challenging for carriers to hold down costs when there are more providers in the network. In an effort to stem the massive losses that carriers have been experiencing in the individual market since 2014, there are fewer and fewer PPOs being offered for sale.
Protecting Medicaid enrollees from estate liens
In every state, Medicaid is jointly funded by the state and the federal government. Longstanding federal regulations, which predate the ACA, require states to “seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services” for any Medicaid enrollee over the age of 55. This applies essentially to long-term care services, but states also have the option to go after the individual’s estate to recover costs for other care that was provided by Medicaid after age 55.
Prior to 2014, this wasn’t typically an issue, as Medicaid eligibility was generally restricted by asset tests or requirements that applicants be disabled or pregnant (although Minnesota did have much more generous Medicaid eligibility guidelines than most states prior to 2014). But as of 2014, in states that expanded Medicaid under the ACA, the only eligibility guideline is income. Applicants with income that doesn’t exceed 138 percent of the poverty level are directed to Medicaid, regardless of any assets they might have.
When applicants use the health insurance exchange — MNsure in Minnesota — they’re automatically funneled into Medical Assistance (Medicaid) if their income is under 138 percent of the poverty level. But what these enrollees didn’t know was that the state also had a program in place to put liens on estates for Medicaid-provided services for people age 55 and older.
The combination of these systems caught numerous residents off guard. They were enrolled in Medical Assistance through MNsure based on their income, but were not aware that liens were being placed on their homes so that the state could recoup the costs upon their deaths.
State Senator Tony Lourey (DFL, District 11) addressed the issue with language included in HF2749, the Omnibus supplemental budget bill, which was signed into law by Governor Dayton on June 1, 2016. The legislation limits estate recovery to just what’s required under federal Medicaid rules (ie, essentially, long-term care costs for people age 55 or older), and makes the provision retroactive to January 1, 2014.
MNsure enrollment exceeds goal, continues to climb
MNsure’s enrollment goal for the 2016 open enrollment period was 83,000 people. On February 1, they announced that they had exceeded their goal, with 85,390 private plan (QHP) enrollments by January 31, when open enrollment ended. 45 percent of the enrollees are new to the exchange for 2016.
The total for 2016 is a 42 percent increase over the total from the 2015 open enrollment period, when 60,092 people enrolled. Only Massachusetts had a higher percentage increase in year-over-year enrollment.
By March 6, enrollment in QHPs had grown to 86,856. The QHP total includes both individual and small business (SHOP) enrollments, but the vast majority – 84,970 – are enrolled in individual market plans. And 7,190 people enrolled in dental-only coverage through MNsure by March 6.
Cumulative enrollment grew again by April 17, when it had reached 90,696 people enrolled in QHPs (including 1,929 enrolled through SHOP in small business plans). And by June 12, enrollment in QHPs had grown to 95,637 (1,895 are enrolled through SHOP).
MNsure also announced that as of March 2016, their total effectuated QHP enrollment had grown to 76,505, up from 70,623 in February. But by May 31, effectuated enrollment was back down to under 71,000.
Coverage for 2016 is now only available for purchase when people have qualifying events (this applies on and off the exchange, although Native Americans can enroll year-round, and so can anyone eligible for Medicaid, CHIP, or MinnesotaCare). The next open enrollment period – for coverage effective in 2017 – will begin on November 1, 2016.
MinnesotaCare and Medical Assistance
In addition to QHP enrollments, there were 67,471 enrollments in MinnesotaCare (the state’s Basic Health Program) and 213,641 people enrolled in Medicaid (Medical Assistance) between November 1, 2015 and June 12, 2016.
MinnesotaCare is available applicants with income between 138 percent and 200 percent of the federal poverty level (those with income below 138 percent of the poverty level are eligible for Medical Assistance instead). Lawmakers in Minnesota introduced HF2491 in 2016, to allow people to purchase MinnesotaCare with income up to 275 percent of the poverty level, with premiums to be determined by the state. The legislation did not advance out of committee though.
Lawmakers also introduced SF2859, which would have allowed anyone to purchase MinnesotaCare, regardless of income. The idea was that competition from the state-run MinnesotaCare plan might result in lower premiums on private health insurance plans, and access to MinnesotaCare would provide another alternative to people who currently have no choice but to purchase a private plan. SF2859 also died in committee.
Both bills were a long shot, and would have required a 1332 waiver from the federal government in order to be implemented.
1095-A delays; all forms sent out by early April
Consumers who enroll in a health plan through the exchange receive Form 1095-A from the exchange early in the following year.
Forms 1095-A are supposed to be mailed out by the exchanges by the end of January. MNsure had to send almost 44,000 Forms 1095-A, but by March 9, nearly 18,000 people still hadn’t received theirs. The exchange sorted everything out during the second half of March, and by April 2, all of the remaining Forms 1095-A had been mailed.
However, there was still a small glitch: for people who didn’t receive a premium subsidy in 2015 (which was a about 45 percent of enrollees), no information was filled in on the form in terms of the price of the benchmark plan. For consumers who don’t ultimately qualify for a subsidy, this doesn’t matter. But for those who do qualify for a subsidy but didn’t receive it throughout the year (ie, they get the full amount as a tax credit when they file their return), the cost of the benchmark plan is an essential part of claiming the subsidy on their tax return. Consumers who needed the cost of the benchmark plan in order to file their taxes could contact MNsure at 855-366-7873 or use the benchmark plan price look-up tool on MNsure’s site.
Shifting market share
In 2015, Blue Cross Blue Shield on Minnesota was by far the dominant carrier in MNsure, with 43 percent of the enrollments, plus seven percent of the exchange’s enrollee’s in the carrier’s Blue Plus (HMO) plans. But for 2016, their rate increase was an average of 49 percent (more details below). Not surprisingly, their market share shrank as a result.
Blue Cross Blue Shield (including BCBS of MN and Blue Plus combined) still has the highest percentage of MNsure enrollees, at almost 30 percent (split between BCBS of MN at 21.3 percent, and Blue Plus at 8.2 percent). But HealthPartners and UCare both increased their market share slightly (to 25.7 percent and 23.7 percent, respectively), and Medica – which had the smallest percentage rate increase for 2016 – increased their exchange market share from 5 percent to 21.1 percent.
More enrollees receiving subsidies
Only about 55 percent of people who had 2015 coverage through MNsure received premium subsidies. But due to the sharp premium increases, that had increased to about 63 percent for the people who had purchased or renewed coverage as of June 2016
Part of the reason for the relatively small number of 2015 enrollees who had premium subsidies is that MNsure had the lowest rates in the nation in 2014 and 2015. Premium subsidies are based on keeping the cost of the second-lowest-cost silver plan (benchmark plan) at a specified percentage of enrollees’ income, so they’re less necessary if pre-subsidy premiums are low. But when benchmark premiums increase, subsidies must increase too in order to keep after-subsidy premiums in line with the affordability guidelines.
According to Kaiser Family Foundation data, the average benchmark premium in Minneapolis is 28.4 percent more expensive in 2016 than it was in 2015. Hence the significant increase in the percentage of enrollees who qualify for premium subsidies.
MNsure market share much lower than most states – but increasing
In Minnesota, just one sixth of the individual market had coverage purchased through MNsure in 2015. There are no grandmothered plans in Minnesota, but the individual market of 300,000 people likely still includes several thousand grandfathered plans. Although the vast majority of people in Minnesota’s individual market had ACA-compliant plans by 2015, most of them had purchased their coverage outside the exchange. Total enrollment in private plans through MNsure stood at just over 49,000 in mid-2015, although it’s climbed significantly for 2016, and effectuated enrollment stood at nearly 71,000 people as of late May.
In 2014, just 14 percent of the state’s individual market enrollees had purchased their coverage through the exchange. That had grown to about 17 percent in 2015. And it appears to have increased to about 24 percent in 2016.
The low on-exchange enrollment in 2014 and 2015 is likely due to the exchange’s technology problems in the first two years, as well as the fact that the state enjoyed the lowest average premiums in the nation in those years. Low premiums mean that fewer people qualify for subsidies, which means they pay the same amount regardless of whether they shop on or off-exchange. MNsure is also funded by a 3.5 percent premium assessment on policies sold through the exchange. Some state-run exchanges spread their fees across the entire market, including off-exchange plans. But MNsure’s funding means that carriers have an incentive to encourage people to enroll directly (rather than through the exchange) if they don’t qualify for premium subsidies.
MNsure partnered with 20 insurance agencies around the state in an effort to increase on-exchange enrollment during the 2016 open enrollment period. In 2015, they piloted the program with six agencies.
Since the entire individual market in Minnesota experienced steep rate hikes in 2016, the exchange worked hard to publicize the fact that premium subsidies are available through MNsure – and only through MNsure – to lower the amount that people must pay in premiums each month. The rate hikes likely mean that many of the people who had off-exchange individual coverage in Minnesota in 2015 opted to switch to a plan through MNsure instead, in order to take advantage of the premiums subsidies.
Audit questions eligibility determinations
Three different levels of financial assistance are available for health coverage in Minnesota: Medicaid (Medical Assistance), a Basic Health Program (MinnesotaCare), and subsidized private plans (QHPs). QHPs are also available without subsidies if the enrollees have incomes in excess of 400 percent of the poverty level (not all enrollees with income under 400 percent of the poverty level qualify for subsidies).
An audit conducted by Legislative Auditor James Nobles indicated that a significant number of people enrolled in MinnesotaCare and Medical Assistance in 2015 through MNsure might not have been eligible for the level of health care assistance that they were receiving. But the state Department of Human Services said that their own audit (using different methodology) found much more satisfactory results. Nevertheless, DHS Commissioner Emily Johnson Piper said in response to the Nobles audit: “We need to improve, and the need to improve is critical.”
MNsure: new and improved for 2016
In addition to the market-wide premium increases that will likely drive consumers to MNsure, the exchange is also banking on the fact that its operations are much improved over the previous two years.
Although MNsure struggled with technological issues during the first two open enrollment periods, then-interim CEO Allison O’Toole promised the exchange’s legislative oversight committee in October that round three would be much better. The technology platform has been upgraded with better security, and MNsure has hired more enrollment assisters. The website is also more user-friendly than it was in the past, and O’Toole noted that MNsure had “learned a lot of important lessons the last two years.”
O’Toole was named permanent CEO in November 2015, despite the fact that she hadn’t applied for the position; board members persuaded her to continue to lead the exchange, as they felt she was the best fit for the job.
When the legislative oversight committee met in October, the area of most concern to them was the rate increases that are coming in 2016, and that wasn’t something MNsure had control over. Rates were approved by the Minnesota Commerce Department, which would have used the same process regardless of whether the state was using its own exchange or Healthcare.gov.
Rates increased significantly in 2016 across the entire individual market in Minnesota – including plans sold thrugh MNsure, the state-run exchange. But Minnesota is a good example of how rate increases shouldn’t be conflated with overall rates. The state still has the lowest overall premiums in the upper midwest, and subsidies offset much of the rate increase for MNsure enrollees with incomes under 400 percent of the poverty level. Although Minnesota appears to have the highest average rate increase in the country for 2016, they had the lowest overall rates in the country in 2014 and 2015, which helps to put the significant rate increases in perspective.
A team of actuaries at the Minnesota Department of Commerce spent the summer scrutinizing the proposed rates that were filed for 2016, and final rates were announced on October 1,2015. For plans available through MNsure, regulators approved the following average rate changes for coverage effective January 1, 2016 (market share is as of the end of the 2015 open enrollment period):
- UCare Minnesota = 27.3 percent increase – carrier had requested a 12 percent increase (20 percent of MNsure’s market share)
- HMO Minnesota (Blue Plus) = 45 percent increase – carrier had requested a 54 percent increase (7.3 percent of MNsure’s market share)
- Group Health Plan (Health Partners) = 32.2 percent increase – carrier had requested a 22.64 percent increase (24.2 percent of MNsure’s market share)
- Blue Cross Blue Shield of Minnesota = 49 percent increase – carrier had requested a 54 percent increase (43 percent of MNsure’s market share)
- Medica = 14.2 to 15.6 percent increase – carrier had requested a rate increase below 10 percent (6 percent of MNsure’s market share)
Regulators finalized higher-than-requested rates for Medica, Health Partners and UCare. But they approved slightly lower-than-requested rates for Blue Plus and Blue Cross Blue Shield of Minnesota. Overall, for plans sold within MNsure, the weighted average rate increase for 2016 was about 38.5 percent.
In general, the carriers cited higher-than-expected claims costs over the past year, along with the coming phase-out of the ACA’s reinsurance program as justification for their 2016 rate requests. But Governor Mark Dayton called some of the higher proposed increases “outrageous,” and promised a rigorous review of the filed rate changes and justifications. Ultimately, regulators were able to limit the highest rate increases to 49 percent – as opposed to the 54 percent that had been requested by Blue Plus and BCBS of MN – but the final weighted average rate increase in the individual market in Minnesota looks like about 41 percent for 2016 – the highest in the nation.
That 41 percent weighted average rate increase is market-wide, for the entire 5.5 percent of Minnesota residents who purchase their own individual health insurance. So it includes PreferredOne, the carrier that famously withdrew from MNsure in 2014. They’re still only offering plans outside the exchange for 2016, but their rates increased sharply once again, by 39 percent (lower than the 49 percent rate increase they requested in May 2015).
Minnesota Commerce Commissioner Mike Rothman called the rate increases “unacceptably high,” and Gov. Dayton noted that he was “extremely unhappy” with the rate changes. But Rothman noted that his office “objected to all of the rates across the board,” and “squeezed out everything we could that was not actuarial justified.” In other words, the final rates, although much higher than officials and policy holders would have liked, are justified based on medical claims costs – the population enrolled in individual health plans in Minnesota is sicker than expected, and drug costs have been particularly onerous.
Given the volatility of MNsure’s rates heading into 2016, it was vitally important for enrollees to shop around during open enrollment.
SHOP exchange: just one carrier in 2016
In 2015, there were two carriers in MNsure’s SHOP exchange for small businesses: Blue Cross Blue Shield of Minnesota, and Medica. But Medica announced in 2015 that they would exit the SHOP exchange in Minnesota, North Dakota, and Wisconsin at the end of the year. That left BCBS as the only small group carrier available through MNsure in 2016, but it didn’t change much from a practical standpoint, since 83 percent of MNsure’s small groups were enrolled in plans through BCBS in 2015.
Indeed, Medica’s reason for exiting the small business exchange was based on low enrollment in the first two years. There were only a total of about 1,500 employees enrolled in plans through MNsure’s SHOP exchange in 2015 (that has grown to 1,886 in early 2016), despite the fact that the exchange had predicted 155,000 employees enrolled by 2016. Nationwide, SHOP enrollments have been much lower than anticipated (DC is an exception, mainly because Congress and staffers have to enroll through DC Health Link’s SHOP exchange).
Enrollment projections trimmed
In March 2015, when MNsure’s effectuated private plan enrollment stood at about 52,000 people, the exchange was predicting 95,000 effectuated enrollments by the end of 2016, and 130,000 by the end of 2017. But those numbers were revised downward in July 2015. MNsure is now aiming for 83,000 effectuated enrollments by the end of 2016, and 113,000 by the end of 2017. The new projections are based on the fact that enrollment to date has been lower than expected. Effectuated enrollment in MNsure private plans at the end of June 2015 stood at 49,066 people. As noted above, MNsure’s enrollment had reached nearly 87,000 people by March 2016.
As a result of the lowered enrollment projection, the exchange also expects revenue to be lower than previously forecast. With the previous enrollment trajectory, the exchange had expected to bring in $9.6 million in revenue over the coming year (through June 2016), but that’s been lowered to $8.7 million.
Despite the lowered enrollment projection, MNsure was still looking ahead to 2016, and in July 2015 the exchange awarded $4.2 million in navigator grants to fund outreach and enrollment efforts from July 1, 2015 through June 30, 2016.
Changes coming for MNsure?
In March 2015, Gov. Mark Dayton – a MNsure supporter – asked the legislature to create a Task Force on Health Care Financing that would study MNsure along with possible future alternatives. Dayton noted in his letter that he supports making MNsure “directly accountable to the governor and subject to the same legislative oversight as other state agencies” and his budget includes half a million dollars devoted to the task force. The spending bill was approved by the legislature in May, and the 29-member task force was appointed in the summer.
One of the possibilities that the task force is considering is the possibility of switching to Healthcare.gov, but it’s clear that there’s no cut-and-dried answer to the question of whether Minnesota is better served by having a state-run exchange, switching to a federally-run exchange, or teaming up with the federal government on either a supported state-based marketplace (Oregon, Nevada, New Mexico, and Hawaii have supported state-based marketplaces, and Kentucky will have one starting in 2017).
In a December 2015 meeting of the task force, the MN Department of Human Services presented a financial analysis of the alternatives available to MNsure. They determined that switching entirely to Healthcare.gov would cost the state an additional $5.1 million in one-time costs from June 2016 to June 2017. And switching to a supported state-based marketplace would cost an additional $6.6 million during that same time frame. If the state were to begin using Healthcare.gov, the soonest it could happen would be 2018, since HHS requires a year’s notice from states wishing to transition to Healthcare.gov – and Minnesota won’t be in a position to make a decision until sometime in 2016.
There were significant reservations about making that switch prior to the Supreme Court’s ruling on King v. Burwell. The Court ruled in June 2015 that subsidies are legal in every state, including those that use Healthcare.gov. Prior to the decision, a switch to Healthcare.gov could have jeopardized subsidies for tens of thousands of Minnesota residents. But now that Healthcare.gov’s subsidies are safe, some stakeholders are calling for Minnesota to scrap its state-run exchange and use Healthcare.gov instead. Because the MNsure task force was included in the 2016 budget, no hasty decisions will be made.
In January 2016, the task force submitted their recommendations to the legislature. They cover a broad range of issues, but do not recommend that MNsure transition to the federal enrollment platform. Lawmakers essentially left the exchange alone during the 2016 legislative session, and no immediate changes are likely to be made.
The magnitude of the 2016 rate increases that were announced in October resulted in MNsure opponents renewing their calls to switch to Healthcare.gov. But it’s important to keep in mind that the 41 percent weighted average rate hike in Minnesota is market-wide, and did not just apply to MNsure enrollees. In fact, the off-exchange carrier (PreferredOne) had among the highest rate hikes in the state for 2016, at 39 percent, and the exchange’s weighted average rate increase (38.5 percent) was lower than the weighted average rate increase for the whole individual market (41 percent).
IT problems for Medicaid and MinnesotaCare
Technological issues persisted well into 2015 for MNsure, despite numerous improvements. As of July 2015, there was a renewal backlog of 180,000 cases in the Medicaid and MinnesotaCare programs – significantly higher than the 55,000 case backlog that was estimated in May. The problem stemmed from tech issues at the federal data hub (since fixed) as well as MNsure, and the exchange was working to sort out eligibility issues for numerous enrolles who were in the publicly-funded health programs but might not have actually qualified for that coverage. Part of the problem is that the MNsure technology dramatically increased the time required to make changes to enrollees’ accounts, and workers have not been able to keep up.
In addition to the renewal issues, premium collection for MinnesotaCare (the state’s Basic Health Program, discussed below) has been fraught with difficulties since the program switched to MNsure as the enrollment and billing platform. In July 2015, the MinnesotaCare program decided to take their billing in-house (the way it was prior to MNsure’s launch), following a report that current billing problems at MNsure would result in a $21 million revenue shortfall over the next two years if the program continued to use MNsure for billing.
As of June 2015, about 117,000 people were enrolled in MinnesotaCare, and premiums can be as high as $50 per month, depending on the enrollee’s income. In addition to securing future premiums, MinnesotaCare was also trying to recoup back premiums, since many enrollees hadn’t received any invoices for 2015, and there were also outstanding premiums due from 2014. But administrators note that it’s difficult to force people to pay past-due premiums when the error was on the billing end, not the payment end.
As a result of the billing and other technology problems that have impacted Medicaid and MinnesotaCare, some lawmakers have called for a legislative oversight committee to address the issues. They noted that even if the exchange eventually opts to switch to Healthcare.gov’s technology platform, some of the problems plaguing Medicaid and MinnesotaCare would still need to be solved.
Given MNsure’s difficult launch, the state conducted a series of audits and reviews. The first audit reviewed how MNsure spent state and federal money. Auditors concluded that the exchange has generally adequate internal controls and found no fraud or abuse. The review was conducted by the state Office of the Legislative Auditor, and the report was published in October 2014.
Another audit, also conducted by the Office of the Legislative Auditor and released in November 2014, found that the MNsure system in some cases incorrectly determined who qualified for public health benefits. The errors occurred during the first open enrollment period, before a series of system fixes were implemented. The audit did not quantify the total financial impact of the errors. The state Human Services commissioner said a consultant working on technical fixes to MNsure concluded that the eligibility functionality was working correctly as of June 2014.
A third audit, a performance evaluation report released in February 2015, said “MNsure’s failures outweighed its achievements.” Among other criticisms, auditors said MNsure staff withheld information from the board of directors and state officials, the enrollment website was seriously flawed and launched without adequate testing, and the first-year enrollment target was unrealistically low. Auditors recommended that the governor be given authority to appoint MNsure’s chief executive officer and that the state legislature consider an advisory-only role for the MNsure board.
In October 2015, Minnesota Rep. Greg Davids, the Chairman of MNsure’s Legislative Oversight Committee, requested more details from MNsure in terms of how they’re going to make up the shortfall in their three year budget. The MNsure tax is projected to bring in $4.5 million, but spending is projected to be $8.1 million.
Multiple changes considered in 2015 legislative session
Minnesota legislators reconsidered MNsure’s governance structure during the 2015 session. One bill (SF187) would have increased the size the MNsure board of directors from 7 to 9, and required that at least one seat be held by a representative from an insurance carrier, and another by a producer (agent or broker).
Another bill (SF139) would have dissolved the board and restructured MNsure as a state agency, which would give the governor and legislature more control. These measures both received support in their introductory chambers, but did not advance to a vote during the 2015 session.
Legislators also introduced a bill (HR5) that would have allowed consumers to receive subsidies even if they shopped off-exchange. This measure would require a federal waiver in order to be implemented, and it’s unclear what value federal officials would see from approving such a request. Like the other bills, HR5 did not advance to a vote.
2015 enrollment count
At a December 2014 board meeting, MNsure released lower enrollment targets and a revised budget. MNsure reduced projected enrollment in private health plans from 100,000 to 67,000 for calendar year 2015. The drop reduced projected revenue from private health plan enrollment by $4.7 million for fiscal year 2015. And ultimately, MNsure fell short of even the reduced target for 2015.
Between Nov. 15, 2014, and April 13, 2015, enrollment in qualified health plans (QHPs) through MNsure reached 61,874. In addition, 120,129 people enrolled in Medicaid (Medical Assistance), and another 37,769 enrolled in MinnesotaCare.
But attrition is a normal part of the individual market – some enrollees don’t pay their premiums, and others choose to cancel their coverage. By the end of March, 52,169 people in Minnesota had effectuated coverage in QHPs through MNsure. Nearly 50 percent of 2015 enrollees qualified for premium subsidies, and about 15 percent qualified for cost-sharing subsidies (these numbers are significantly lower than the national average, but that’s due in large part to the fact that Minnesota has a BHP that covers residents with incomes up to 200 percent of the poverty level. The lower-than-average uptake of premium subsidies is also due to the fact that Minnesota had some of the lowest insurance premiums in the country in 2015. When the plans are less expensive, fewer people qualify for subsidies, even if their income is under 400 percent of the poverty level).
By July 2015, total private plan enrollments (not all effectuated) had grown to 67,966. 186,376 people had qualified for Medicaid between November 15 and July 14, along with 51,680 who had qualified for MinnesotaCare.
The first BHP in the nation
For more than two decades, MinnesotaCare has been a state program subsidizing health insurance for low-income residents. As of January 1, 2015, it transitioned to a Basic Health Program under the ACA, becoming the first BHP in the nation. The future of the program is uncertain however, as Republican lawmakers would rather see MinnesotaCare enrollees transitioned to subsidized MNsure QHPs, and there’s general agreement that funding for the program needs to be reassessed.
Without MinnesotaCare, the program’s enrollees would be eligible for heavily subsidized premiums and cost-sharing reductions in the exchange, but they would still be paying more in premiums and out-of-pocket expenses than they do under MinnesotaCare.
2015 rates and participating insurers
PreferredOne, which offered the lowest rates in the nation in 2014 and captured a large portion of 2014 enrollees, withdrew from MNsure for 2015. PreferredOne said remaining on the exchange was “not administratively and financially sustainable.” A Star Tribune business writer attributed PreferredOne’s departure as a market dynamics rather than a problem with MNsure.
Consumers who bought a PreferredOne plan through MNsure for 2014 could renew their policies for 2015 by working directly with the insurer. However, PreferredOne rates went up an average of 63 percent, and consumers didn’t qualify for subsidies if they shopped outside the exchange.
Five insurers offered individual and family policies on MNsure in 2015: Blue Cross Blue Shield of Minnesota, Blue Plus, Health Partners, Medica, and UCare. MNsure offered 84 plans statewide, up from 78 for 2014. Blue Plus was new to the exchange for 2015.
Minnesota officials announced 2015 premiums increased 4.5 percent on average for the four insurers that returned to MNsure from 2014. MNsure critics characterized the official announcement as misleading as it failed to take into account low-cost 2014 plans from PreferredOne.
2014 enrollment summary
Four insurers offered individual policies through the marketplace for 2014: Blue Cross Blue Shield of Minnesota, HealthPartners, Medica, PreferredOne, and UCare. Kaiser Health News reported that Minnesota offered some of the lowest premiums for silver (mid-level) plans in the U.S. Four of Minnesota’s nine regions made Kaiser’s list of the 10 least expensive places to buy health insurance.
MNsure was quite successful at enrolling residents in 2014 — despite considerable technical problems. A study commissioned by MNsure and conducted by the University of Minnesota showed that the state’s uninsured rate dropped from 8.9 percent in the fall of 2013 to just 4.9 percent over the course of the 2014 open enrollment period — the lowest rate in state history. The study’s author called the drop “unprecedented in Minnesota,” and the state now has one of the lowest uninsured rates in the nation (a Gallup poll released in February 2015 put the current rate at 7.4 percent – still among the lowest in the country).
According to a MNsure press release, 300,085 people obtained health insurance through the exchange as of August 2014: 53,770 people enrolled in private health plans, 65,749 enrolled in MinnesotaCare, and 180,566 enrolled in Medical Assistance (Medicaid). While Minnesota far exceeded its 2014 goal of 135,000 signups for overall enrollment, the mix was much different than expected. Enrollment in Medical Assistance was much higher than expected, while enrollment in private health insurance was much lower.
In April 2014, MNsure hired Deloitte Consulting to audit MNsure’s technology and improve the website to make enrolling in coverage and updating life events easier and more streamlined. Deloitte has been involved in successful state-run marketplaces for Connecticut, Kentucky, Rhode Island and Washington.
Software upgrades were installed in August 2014, and system testing continued right up until the start of open enrollment.
To reduce wait times for consumers and insurance professionals, MNsure increased its call center and support staff and launched a dedicated service line for agents and brokers.
More in-person assisters were available in Minnesota for the 2015 open enrollment period. MNsure encourages residents to utilize the exchange’s assister directory to find local navigators and brokers who can help with the enrollment process.
While these changes improved the experience for individuals shopping for private insurance, the exchange continued to be problematic in 2015 for county workers who help low-income residents. County officials told the MNsure board that the system remains “woefully inadequate” for verifying eligibility and enrolling people in Medical Assistance, MinnesotaCare, and other social services.
Some of the system issues encountered by social services staff may resolved over time with newly awarded grant money. The federal government awarded MNsure $21 million for IT fixes, and that grant triggered an additional $58.5 million from Medicaid. The money will be used to address a list of 18 priority issues. MNsure’s chief operating officer said the workload of social services staff was heavily weighted in creating the priority list.
In April 2015, the MNsure board voted to consider the possibility of partnering with an outside vendor to offer better plan comparison tools for MNsure users. There have been concerns that enrollees haven’t been able to properly compare plans, and have simply gravitated to the lowest-priced plans available in each area. Better plan comparison tools might help to solve that problem.
At an April 2016 board meeting, hCentive pitched the possibility of working as an IT vendor for MNsure. The exchange is considering that possibility (hCentive is one of several IT vendor options), but noted that they are locked into their current system for the time being, and that any changes would be down the road, possibly for 2018 or 2019.
Minnesota health insurance exchange links
State Exchange Profile: Minnesota
The Henry J. Kaiser Family Foundation overview of Minnesota’s progress toward creating a state health insurance exchange.