Rates are increasing significantly in 2016 across the entire individual market in Minnesota – including plans sold thrugh MNsure, the state-run exchange. But the state expects to still have the lowest overall premiums in the upper midwest, and subsidies will 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. For plans available through MNsure, regulators approved the 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)
Only health plans that have proposed rate increases of ten percent or more are listed on the rate review tool, and Medica did not show up on the list; presumably their initial rate filing was for an increase of less than ten percent. But ultimately regulators increased their premium for 14 to 15 percent over the 2015 rates. Regulators also finalized higher-than-requested rates for 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 is 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. Soo 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 are increasing sharply once again, by 39 percent (lower than the 49 percent rate increase they requested in May).
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’s vitally important for enrollees to shop around during open enrollment, as opposed to letting their 2015 plan auto-renew.
Only about 55 percent of MNsure’s current enrollees are receiving premium subsidies, but that number is expected to increase in 2016 due to the sharp increase in premiums in Minnesota. Part of the reason for the relatively small number of people who currently have 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 if benchmark premiums increase – as they will in 2016 – subsidies must increase too in order to keep after-subsidy premiums in line with the affordability guidelines.
Enrollment projections trimmed
In March, 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. 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 stood at 49,066 people.
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.
MNsure is looking ahead to 2016 however, and on July 7, the exchange awarded $4.2 million in navigator grants to fund outreach and enrollment efforts from July 1, 2015 through June 30, 2016. Most of those efforts will be focused on open enrollment, which will run from November 1 to January 31.
COBRA special enrollment period
MNsure is offering a special enrollment period for people who were offered COBRA but didn’t fully understand their alternatives. The special enrollment period runs from August 17, 2015 through October 15, 2015.
General open enrollment begins for all residents on November 1, for coverage effective January 1, 2016.
Changes coming for MNsure?
In March, 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 is to be appointed this summer.
One of the possibilities that the task force will consider 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 or utilizing the federally-run exchange (or teaming up with the federal government on either a partnership exchange or a supported state-based marketplace).
There were significant reservations about making that switch prior to the Supreme Court’s ruling on King v. Burwell. The Court ruled on June 25 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. Instead, the issue will be carefully considered, and the task force will make its recommendations to the legislature by January 16, 2016.
The magnitude of the 2016 rate increases that were announced in October resulted 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 does not just apply to MNsure enrollees. In fact, the off-exchange carrier (PreferredOne) has among the highest rate hikes in the state for 2016, at 39 percent, and the exchange’s weighted average rate increase (38.5 percent) is lower than the weighted average rate increase for the whole individual market (41 percent).
IT problems for Medicaid and MinnesotaCare
Technological issues persist at MNsure, despite numerous improvements over the last year and a half. As of July, 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 is working to sort out eligibility issues for numerous enrolles who are currently in the publicly-funded health programs but might not actually qualify for that coverage. Part of the problem is that the MNsure technology has dramatically increased the time required to make changes to enrollees’ accounts, and workers have not been able to keep up. improvements are being implemented, but it’s not going to be an overnight fix.
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, 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 will also try to recoup back premiums, since many enrollees haven’t received any invoices for 2015, and there are 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 agree that any major changes to MNsure’s structure should wait until the task force makes its recommendations in January, but note that even if the exchange switches to Healthcare.gov’s technology platform, some of the current 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, 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.
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.
MNsure appoints a new interim CEO
On May 4, MNsure announced that CEO Scott Leitz was resigning in order to take a job with a nonprofit in healthcare cost trend research. Leitz is being replaced by interim CEO Allison O’Toole, the exchange’s deputy director for external affairs.
Leitz took over as CEO in December 2013 in the middle of the rocky first round of open enrollment, following the resignation of MNsure’s first CEO. There is no doubt that the exchange is in better shape now than it was when he arrived, but O’Toole noted that “… we have our work cut out for us.”
2015 enrollment count
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.
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 are receiving premium subsidies, and about 15 percent are receiving 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 has some of the lowest insurance premiums in the country, meaning that fewer people qualify for subsidies, even if their income is under 400 percent of the poverty level).
By July 14, 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.
Open enrollment for 2015 has ended, as has the special enrollment period that ran from March 1 and April 30 for people who were unaware – until they filed their taxes – of Obamacare’s penalty for remaining uninsured. In order to obtain new private coverage for 2015, including outside the exchange, you’ll have to have a qualifying life event that triggers a special enrollment period. The next general open enrollment period starts on November 1, for coverage starting January 2016.
Enrollment for Medical Assistance (Medicaid) and BHP MinnesotaCare, a health insurance program for uninsured, working residents, is open year round. Native Americans can also enroll in private plans year-round through the exchange.
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 nearly 38 thousand people who enrolled in the program would have been 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 are offering individual and family policies on MNsure in 2015: Blue Cross Blue Shield of Minnesota, Blue Plus, Health Partners, Medica, and UCare. MNsure is offering 84 plans statewide, up from 78 for 2014. Blue Plus is 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
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 Aug. 21: 53,770 people enrolled in private health plans, 65,749 enrolled in MinnesotaCare, and 180,566 enrolled in Medical Assistance (Medicaid).
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 continues to be problematic 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.
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.
While low premiums are good for consumers, they raise financial concerns for the marketplace. As of 2015, MNsure’s operating costs are funded with a 3.5 percent withhold of premiums. Low premiums translate to less money collected through the withhold.
Low enrollment in private health plans compounds the financial problem. While Minnesota far exceeded its 2014 goal of 135,000 signups for overall enrollment, the mix is much different than expected. Enrollment in Medical Assistance was much higher than expected, while enrollment in private health insurance was much lower.
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 reduces projected revenue from private health plan enrollment by $4.7 million for fiscal year 2015.
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.