Minnesota marketplace highlights and updates
- Open enrollment for 2019 plans ended on January 13.
- Insurers are lowering rates significantly for 2019, but they would be even lower if the individual mandate penalty wasn’t being eliminated.
- 116,358 people enrolled for 2018, a new record for MNsure.
- Reinsurance program received federal approval, began operation in 2018.
- With reinsurance, rates decreased for 2018 and again, even more significantly, for 2019.
- Court rules that HHS must continue to fund MinnesotaCare.
- Governor blasts HHS on 1332 waiver process and potential outcome.
- MN provided premium relief for non-subsidy-eligible enrollees for 2017 only.
- Governor vetoed a proposed 2019 switch to HealthCare.gov.
- No insurers offering coverage in MNsure small business exchange in 2018 or 2019.
Minnesota health exchange overview
Minnesota’s state-run exchange, MNsure, had four carriers offering plans for 2017, and all four continued to offer coverage for 2018. Allison O’Toole, who led MNsure as CEO for three years, announced her resignation in March 2018, and the exchange named Nate Clark, the MNsure COO, as acting CEO. A few months later, the MNsure board named Clark as the permanent CEO. O’Toole left MNsure to work as director of state affairs for United States of Care, a non-profit created by Andy Slavitt, who was the acting administrator of CMS under the Obama Administration.
Throughout 2017, Minnesotans who bought their own health insurance (on or off-exchange) and weren’t eligible for ACA subsidies were provided with 25 percent premium rebates from the state as a result of S.F.1, signed into law by Governor Dayton in early 2017. The subsidies helped to offset the large premium increases that applied in Minnesota in 2017, and helped to stabilize the individual health insurance market in 2017. But the premium rebate program expired at the end of 2017.
For 2018, however, overall rates in the individual market decreased, thanks to the new reinsurance program that Minnesota created (details below). And for 2019, the rate decrease was even more pronounded, with rates dropping by an average of more than 12 percent across Minnesota’s individual market.
But the waiver that provides federal pass-through funding for reinsurance also resulted in a sharp and unexpected decrease in federal funding for MinnesotaCare, the Basic Health Program that provides coverage for people with income between 138 percent and 200 percent of the poverty level (between $16,642 and $24,120 for a single person).
In addition, the elimination of federal funding for cost-sharing reductions (CSR) in October 2018 resulted in a funding cut for MinnesotaCare, since the program is funded in large part by federal funds that would otherwise have been used to pay for premium subsidies and cost-sharing reductions in the exchange for the population that is instead eligible for MinnesotaCare. After an ensuing legal battle, a judge ordered HHS to restore funding for MinnesotaCare, although a resolution of the situation is ongoing, and the amount that HHS was ordered to pay for the first quarter of 2018 was only a little more than half of what the state had initially expected.
Open enrollment extended for 2019 coverage
In states that use HealthCare.gov, open enrollment for 2019 coverage began begin on November 1, 2018 and will end of December 15, 2018. But state-run exchanges have some flexibility with open enrollment schedules, and more than half of them (seven out of 12) have announced extended enrollment periods.
MNsure’s enrollment began on November 1, 2018, but and ended on January 13, 2019, giving Minnesota residents nearly a full additional month to sign up for 2019 coverage.
MNsure reported that as of November 14, nearly 98,000 people had enrolled in plans for 2019, including automatic renewals. That’s about 6 percent higher than the enrollment volume during the first two weeks of open enrollment the year before.
Rates are decreasing again in 2019, with reinsurance continuing to be a stabilizing factor
The Minnesota Department of Commerce has published the average approved rate changes for Minnesota’s individual market insurers, and they come as welcome news to people who buy their own insurance in the state, particularly for those who don’t get premium subsidies. All five insurers (including PreferredOne, which only offers coverage off-exchange) are decreasing their rates for 2019. That comes on the heels of an overall average rate decrease in 2018 as well.
The following average rate changes were implemented for 2019:
- Blue Plus: 27.7 percent decrease (Blue Plus originally proposed an 11.8 percent decrease, but a later filing, submitted in August, called for a 27.7 percent average decrease)
- Group Health/Health Partners (GHI): 7.4 percent decrease
- Medica: 12.4 percent decrease
- UCare: 9.98 percent decrease (UCare originally proposed a 7 percent decrease, but their revised filing called for a 9.98 percent decrease)
PreferredOne, which only offers off-exchange coverage, is reducing their rates by an average of 11 percent. They originally proposed a 3 percent average decrease in rates, but their revised filing, submitted in September, called for an 11 percent average decrease.
This is the second year in a row of declining rates in Minnesota, due in large part to the reinsurance program that the state has established. But Blue Plus had a small rate increase for 2018, so 2019 is the first year that all five insurers have decreased their average rates. And Minnesota insurance regulators note that rates in 2019 are about 20 percent lower than they would have been without the reinsurance program.
It’s also noteworthy that Blue Cross Blue Shield of Minnesota announced earlier this year that their rates in 2017 had been too high, and that they would be paying about $30 million in rebates under the medical loss ratio rules. Minnesota was one of the states where there were no MLR rebates in 2017 (based on a three-year average of claims costs and premium revenue from 2014 through 2016). But BCBSMN’s rates were high enough (and claims costs low enough) in 2017 that their three-year rolling average MLR numbers for 2015-2017 will result in a rebate.
In Alaska, where reinsurance took effect in 2017, the impact the first year was a very modest rate increase (after sharp rate increases in previous years), but then a substantial rate decrease the second year (ie, for 2018). In a similar fashion, Minnesota’s average rate decrease for 2019 is more substantial than the average rate decrease in 2018.
But most of Minnesota’s insurers are charging higher rates for 2019 than they would have if the individual mandate penalty wasn’t being eliminated, and if access to short-term plans and association health plans hadn’t been expanded by the Trump Administration (both of those are likely to appeal to healthy people, potentially tilting the ACA-compliant risk pool towards the sicker end of the spectrum). And the elimination of the individual mandate penalty is expected to result in some healthy people dropping coverage, while sicker people maintain their coverage. For example, UCare’s rate filing notes that while average rates are decreasing by about 10 percent, the rate decrease would have been nearly 15 percent if the individual mandate penalty was remaining in place.
Minnesota does have its own restrictions for short-term plans, limiting them to six months. So the harm done to the state’s ACA-compliant risk pool won’t be as significant as it will be in states that follow the new federal rules, allowing short-term plans to have initial terms of up to a year. But six-month terms are still twice as long as the term that was allowed under federal rules in 2017 and much of 2018, so it’s likely that there will be an increase in the number of people who opt for short-term coverage instead of major medical plans.
So rates are going down in Minnesota in 2019, but they would be going down even more if the federal government wasn’t implementing changes that will destabilize the individual insurance market. At ACA Signups, Charles Gaba has calculated a weighted average rate decrease of 12.4 percent for 2019 in Minnesota, but notes that the average decrease would be nearly 19 percent without those changes at the federal level.
It’s also noteworthy that Blue Cross Blue Shield of Minnesota announced earlier this year that their rates in 2017 had been too high, and that they would be paying about $30 million in rebates under the medical loss ratio rules. Minnesota was one of the states where there were no MLR rebates in 2017 (based on a three-year average of claims costs and premium revenue from 2014 through 2016). But BCBSMN’s rates were high enough (and claims costs low enough) in 2017 that their three-year rolling average MLR numbers for 2015-2017 will result in a rebate.
Open enrollment for 2018 was extended until Jan. 14, and more than 116k enrolled
Although MNsure open enrollment continued until January 14, 2018, the deadline to get a plan with a January 1 effective date was December 20, 2017. MNsure reported that as of December 20, enrollment had reached 108,540 people. This was an increase of about 12,000 people over the number who had selected coverage by the deadline the previous year to enroll in coverage that took effect January 1, 2017.
And by January 14, when open enrollment ended, 116,358 people had enrolled — the highest open enrollment total in MNsure’s history, despite the shorter enrollment period, which ended in mid-January instead of the end of January. 117,654 people enrolled for 2017, but that included 2,844 people enrolled in small business plans via MNsure’s SHOP exchange and 114,810 enrolled in individual market plans. In 2018, there are no longer any plans offered via MNsure SHOP (details below), so the total enrollment for 2018 has to be compared with the individual market enrollment from 2017, and was the highest individual market enrollment that MNsure has ever had.
In March 2018, MNsure announced at a board meeting that cumulative total enrollments for 2018 stood at 113,699. The exchange clarified that this included all non-canceled policies at that point, including both active and inactive policies, as long as they had at least one month of coverage, meaning that at least the first month’s premium had been paid in order to make the plan take effect. But cumulative total enrollments are higher than the number of effectuated enrollments at any given time, since effectuated enrollments only include plans that are currently active and paid-up. MNsure noted that the number of cumulative enrollments can fluctuate “based on enrollment activity and reconciliation with carriers.”
Open enrollment for 2018 coverage ended on December 15, 2017, in states that use HealthCare.gov. This was shorter than the previously scheduled open enrollment period, which would have been three months. But it’s the same schedule that was already slated to take effect starting in the fall of 2018; the new regulations just moved up the transition to a shorter open enrollment period.
But state-run exchanges had some flexibility in terms of making the switch to a shorter enrollment period, and state-run exchanges also have the ability to create special enrollment periods that can be added to the regular open enrollment period. In August 2017, MNsure announced that they would add a four week special enrollment period to allow people more time to sign up for 2018 coverage, starting December 16, 2017, and continuing until January 14, 2018. That essentially made open enrollment ten weeks long, instead of six.
In the months before a decision was reached on this issue, two of MNsure’s participating insurers had differing positions: UCare believed the exchange should add an additional two-week special enrollment period, while Medica did not want the exchange to have the option to extend the newly-scheduled six-week enrollment window. Notably, Medica capped their enrollment very early during the 2017 open enrollment period, and while UCare also had an enrollment cap, it was set with a target of nearly doubling their 2016 enrollment. But Medica is the only MNsure insurer that didn’t set an enrollment cap for 2018.
Medica had initially considered exiting neighboring Iowa’s exchange at the end of 2017 amid concerns about individual market instability in Iowa (although they ultimately opted to remain in the Iowa exchange, as the last insurer standing). But they did not indicate similar concerns about Minnesota.
In addition to the general extension through January 14, MNsure opted to add a few days to the deadline for enrolling in a plan with a January 1, 2018 effective date. Anyone who enrolled through MNsure by December 20 had coverage effective January 1 (normally, the deadline would be December 15). Enrollments completed between December 21 and January 14 had coverage effective February 1.
Rates for most plans decreased in 2018, thanks to reinsurance
For 2018 coverage, Minnesota had one of the latest rate filing deadlines in the nation. Individual and small group carriers had until July 17, 2017, to submit rates for review by Minnesota regulators. The rate filing data became public on July 31.
And final rates were approved on October 2 (comprehensive information about the approved rates is here), based on the Minnesota Premium Security Plan (MSPS) being implemented but cost-sharing reductions (CSR) not being funded by the federal government (the cost of CSRs was added to on-exchange Silver plans). The following average rate changes were approved:
- Blue Plus (38,400 members, on and off-exchange): 2.8 percent increase. According to the rate filing, this is based on an expectation that individual mandate will be repealed (or not enforced), but that cost-sharing reduction payments will continue to be made to insurers. [Note that Blue Plus will also be rebating approximately $30 million to consumers in the individual market in the fall of 2018, under the ACA’s Medical Loss Ratio rules, due to higher-than-expected profits in 2017.]
- Group Health (GHI): 7.5 percent decrease. Note that Group Health is part of HealthPartners, and all HealthPartners enrollees will be moved to GHI plans for 2018, but can pick other plans during open enrollment if they prefer.
- Medica: 0.4 percent decrease Medica Health Plans of Wisconsin enrollees will be moved to Medica Insurance Company for 2018, but can switch to a different plan during open enrollment instead (34,316 members as of 2017).
- UCare: 13.3 percent decrease (all UCare plans are on-exchange; coverage is not offered outside MNsure)
On September 21, MNsure had posted a notice indicating that if the reinsurance program were not approved, rates would be about 20 percent higher than they would otherwise be in 2018. Fortunately for Minnesota residents, the reinsurance program did receive federal approval, and average rates declined slightly for 2018.
But some enrollees who don’t get ACA premium subsidies still experienced a rate increase, due to the termination of the one-year, state-funded 25 percent premium rebates at the end of 2017.
PreferredOne, which exited MNsure at the end of 2014 and only offers coverage in the off-exchange market, proposed dramatically lower rates for 2018: a 38 percent average decrease if MSPS were to be approved, and a 23 percent average decrease if not. The 38 percent decrease was implemented, and no adjustments were necessary to account for CSR funding, since PreferredOne does not offer plans in the exchange, and CSRs are only available on silver exchange plans.
All insurers except Medica capped enrollment for 2018, but caps were high enough that no insurers hit them
As was the case for 2017, enrollment caps are being used in the individual market in Minnesota for 2018 by all insurers other than Medica (Medica did have an enrollment cap for 2017, which they hit very early in open enrollment; however, they resumed enrollments at the end of January 2017). Details about the insurers’ enrollment caps are in the plan binders in SERFF. For 2018, MNsure insurers implemented the following enrollment caps:
- Blue Plus: 55,000 member cap (aiming for a target of 50,000 effectuated enrollees, but effectuated enrollment is always lower than the number of people who initially enroll)
- Group Health (GHI): 73,400 member cap (aiming for a target of 70,000 effectuated enrollees)
- Medica: no enrollment cap
- UCare: 35,000 member cap (aiming for a target of 30,000 effectuated enrollees)
MNsure confirmed in May 2018 that none of their insurers had hit their enrollment caps for 2018.
Minnesota Premium Security Plan: 1332 waiver proposal approved by CMS, but with a significant funding cut for MinnesotaCare
In May 2017, Minnesota Governor Mark Dayton submitted a 1332 waiver proposal to CMS; the agency took public comment on the proposal from June 30 to July 30. The 1332 waiver was based on H.F.5, which was enacted without Dayton’s signature in April 2017 (Dayton had proposed an alternative measure that would have allowed people in Minnesota to buy into MinnesotaCare; that measure was not able to pass the state’s Republican-dominated legislature).
H.F.5 created the Minnesota Premium Security Plan (MPSP), which is a state-based reinsurance program (similar to the one that Alaska created for 2017, and that the ACA implemented on a temporary basis through 2016). The reinsurance program, which took effect in Minnesota in 2018, covers a portion of the claims that insurers face, resulting in lower total claims costs for the insurers, and thus lower premiums (indeed, average individual market premiums in Minnesota decreased from 2017 to 2018 as a result of the reinsurance program). The reinsurance kicks in once claims reach $50,000, and covers them at 80 percent up to $250,000 (this is similar to the coverage under the transitional reinsurance program that the ACA provided from 2014 through 2016).
H.F.5 was contingent upon approval of the 1332 waiver, because it relies partially on federal funding, in addition to state funding. Under the federal approval that was granted in September 2017, the federal government is giving Minnesota the money that they save on premium tax credits, and that money is combined with state funds to implement the reinsurance program (lower premiums — as a result of the reinsurance program — result in the federal government having to pay a smaller total amount of premium tax credits, since the tax credits are smaller when premiums are smaller).
It was expected that CMS would approve the state’s 1332 waiver proposal, and Governor Dayton requested that the approval process be swift so that the state could move forward with the implementation of the Minnesota Premium Security Plan in time for the 2018 plan year. Dayton indicated that his office had been told that approval would come in August 2017, but CMS didn’t approve the waiver until September 22. And the waiver approval letter noted that the federal savings for MinnesotaCare (the state’s Basic Health Program, or BHP, described below) resulting from the reinsurance program would not be eligible to be passed along to the state — in other words, CMS would keep those savings instead.
[Federal BHP funding is equal to 95 percent of the amount that the federal government would have otherwise spent on premium subsidies and cost-sharing reductions for the population that ends up being eligible for the BHP. So lower premiums — as a result of reinsurance — for qualified health plans in the exchange means that the amount the federal government would have had to spend on premium subsidies for that population is lower. That translates into a smaller amount of funding for the state’s BHP, according to the approach that HHS took for Minnesota’s waiver approval.]
And based on the letter that Dayton sent CMS a few days earlier, it appears that Minnesota could actually lose money on the deal — losing more in federal funding for MinnesotaCare than they gain in reinsurance funding. The StarTribune editorial board called out then-Secretary of HHS, Tom Price and the Trump Administration for their lack of clarity on the issue, for apparently misleading the state during the 1332 waiver drafting process, and for effectively punishing the state of Minnesota for taking an innovative approach to ensuring that as many people as possible have health insurance.
Insurers filed rates based on reinsurance being available. And by the time the waiver was approved, there was very little time to evaluate the potential impacts of the funding changes, as rates had to be finalized by October 2 in Minnesota. The finalized rates did incorporate the reinsurance program; the state has accepted the approved waiver, but Gov. Dayton sent a letter to HHS on October 3, asking them to reconsider the MinnesotaCare funding cuts. As of May 2018, the issue has not been resolved, although the MinnesotaCare trust fund still has adequate funds for 2018, and enrollees are continuing to receive benefits under the program.
Dayton blasted HHS for delayed waiver approval process and unexpected cut to MinnesotaCare funding
On September 19, Governor Dayton sent a scathing letter to HHS Secretary Tom Price, calling out CMS for their failure to approve Minnesota’s 1332 waiver in a timely fashion, and for what appeared to be last-minute cuts to MinnesotaCare, the state’s Basic Health Program (those cuts are confirmed, but not quantified, in the waiver approval letter that CMS sent Dayton on September 22).
Dayton noted in his letter that Minnesota went to great lengths to follow instructions from CMS at every turn, throughout the process of drafting H.F.5 and the 1332 waiver proposal. He explains that CMS provided Minnesota with explicit guidance in terms of how to draft the reinsurance program while maintaining full federal funding for MinnesotaCare, and highlighted the fact that the state never deviated from the instructions that were provided.
According to Dayton’s letter, CMS had indicated that approval of the 1332 waiver was likely to be finalized in August, and yet the state had not received it as of September 19, despite being up against very tight deadlines for finalizing rates and plans for 2018 coverage (rates in Minnesota had to be finalized by October 2). The approval letter from CMS ultimately came on September 22.
Even more troubling, however, was the fact that Minnesota officials had little advance warning of the fact that the reinsurance waiver approval was likely to result in a substantial cut in federal funding for MinnesotaCare. Dayton noted that he had been told that $208 million in federal funding would be provided for the reinsurance program over two years, but that Minnesota would lose $369 million in federal MinnesotaCare funding over that same two years.
In other words, Minnesota will be worse off under the 1332 waiver than they would be without it. Dayton urged HHS to rapidly approve the 1332 waiver, and to reverse the provision that would otherwise cause a substantial funding cut for MinnesotaCare. However, the approval letter that CMS sent three days later stated that federal savings based on reduced premium tax credits (due to lower overall premiums as a result of the reinsurance program) would be passed on to Minnesota to fund the reinsurance program, but that savings associated with MinnesotaCare would not (and as described above, the federal funding for MinnesotaCare is lower because premium subsidies that would otherwise be paid — if the state didn’t have a Basic Health Program — to cover those individuals in the exchange are also lower, thanks to reinsurance).
Dayton also noted that the 1332 waiver approval process had been “nightmarish” for Minnesota, and called HHS to task for the fact that they had made it so difficult, despite the Trump Administration’s public stance of encouraging states to seek innovation waivers to implement state-based health care reform.
In addition to Dayton’s letter, Republican lawmakers from Minnesota’s House and Senate also sent a letter to HHS Secretary Price and Treasury Secretary Mnuchin, asking for swift approval of the 1332 waiver according to the terms agreed upon earlier in the year. While their letter indicated that they believe Obamacare brought “turbulence and expense” for Minnesota, they explained that their 1332 waiver legislation was an effort to stabilize the state’s individual market within the constraints of the ACA’s rules. And they noted that the latest news about the potential funding cuts for Minnesota Care was distressing, stating that “preserving the individual market is jeopardized by the revelation that Minnesota may net a loss in total federal healthcare funding.”
Minnesota accepted the federal pass-through funding for the reinsurance program, but it’s unclear how they’ll address the funding cut for MinnesotaCare. After accepting the waiver approval, Governor Dayton was still working to convince HHS to allow MinnesotaCare funding to remain intact, and the situation had not been resolved as of May 2018.
Elimination of CSR funding results in additional funding cut for MinnesotaCare, but a lawsuit has partially restored that funding
MinnesotaCare is a Basic Health Program, established under the ACA (New York is the only other state that has created a BHP). States provide part of the BHP funding, but the majority of the funding comes from the federal government, and is based on 95 percent of the funding that the federal government would otherwise have spent on premium subsidies and cost-sharing reductions for the people who are eligible for MinnesotaCare (but who would have been enrolled in regular qualified health plans in the exchange if the state hadn’t established a BHP).
Nationwide, 54 percent of exchange enrollees benefit from cost-sharing subsidies. But in Minnesota, only 13 percent of exchange enrollees are receiving cost-sharing subsidies. This is because of MinnesotaCare, which covers all enrollees with income up to 200 percent of the poverty level. That’s the same group that would otherwise benefit the most from cost-sharing subsidies, so the fact that MinnesotaCare is available means that most of the people who would otherwise be enrolled in cost-sharing subsidy plans are instead enrolled in MinnesotaCare.
At first glance, this would appear to have made the uncertainty surrounding cost-sharing subsidy funding in 2017 a little less of a pressing issue in Minnesota than it was in many other states, since private insurers weren’t facing the sort of losses that insurers in other states were facing without federal funding for CSR. But when the Trump Administration eliminated federal funding for CSR in October 2017, HHS took the position that since CSR funding had been eliminated, the CSR portion of the federal funding for the BHPs in New York and Minnesota would be reduced to $0. This was not a cut-and-dried conclusion, however, as explained earlier in 2017 by Michael Kalina.
In January 2018, the Attorneys General for New York and Minnesota filed a lawsuit against the US Department of Health and Human Services, seeking to restore funding for their Basic Health Programs. A judge ruled in favor of the states in May 2018, so MinnesotaCare will continue to receive at least some CSR-based funding. But the amount awarded to the state for the first quarter of 2018 is just over half of what the state had initially expected in CSR-related funding, and a full resolution of the CSR-related funding for MinnesotaCare is still ongoing.
Lawmakers approve switching to HealthCare.gov in 2019, governor vetoed
On May 9, 2017, lawmakers in Minnesota passed SF800, an omnibus health and human services bill. Among many other things, the legislation called for switching from MNsure to the federally-run marketplace (HealthCare.gov) starting in 2019 (see Section 5). But on May 12, Governor Dayton vetoed it.
Gov. Dayton has long been supportive of MNsure, and had previously clarified that he would veto the bill (his statement of impending veto made no mention of the transition to HealthCare.gov that was included in the legislation, but focuses instead on the sharp budget cuts in the bill; his veto ensures that MNsure remains in place, however)
The Senate’s original version of SF800 did not call for scrapping MNsure, but the bill went through considerable back-and-forth between the two chambers, and the version that passed was the 4th engrossment of the bill.
As described below, a task force in Minnesota considered a switch to HealthCare.gov in 2015, but ultimately did not recommend that the state pursue that option. MNsure has improved dramatically in terms of its technology since the early days of ACA implementation, and enrollment has increased every year since 2014.
SHOP exchange: down to one carrier as of 2016, zero by 2018 (and still zero in 2019)
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.
Blue Cross Blue Shield of Minnesota continued to be the only insurer offering SHOP coverage via MNsure in 2017, but announced in July 2017 that they would no longer offer SHOP coverage in 2018, and would instead transition their SHOP enrollees to small business coverage outside the exchange. At that point, there were only 3,287 people enrolled in SHOP coverage in Minnesota — far below the 155,000 people that were originally projected to have coverage through MNsure’s SHOP program by 2016 (this much lower-than-anticipated enrollment has been the case in nearly every state’s SHOP exchange; this situation is not unique to Minnesota).
There are temporary tax credits that some small businesses can get via SHOP, and Allison O’Toole, MNsure CEO, noted that Blue Cross “has pledged to work with MNsure and federal partners to maintain the tax credits” so that they’ll be available even if plans are purchased directly from Blue Cross. It’s noteworthy that the federally-facilitated SHOP exchange on HealthCare.gov also transitioned to a system wherein small businesses enroll directly with insurers, while still being able to obtain the tax credits. Although there are a few states with robust SHOP exchanges, it has generally been a somewhat unnecessary, and very underused, system.
MNsure’s website clarifies that the state no longer has a SHOP exchange, and that small businesses need to switch to off-exchange plans as of their renewal date in 2018. Heading into 2019, the exchange was still “working with the federal government to determine how small businesses can access the tax credits that they are eligible for under the Affordable Care Act.” All MNsure SHOP plans will end by the end of 2018, as they’re all transitioning to off-exchange coverage as of their renewal date in 2018.
2017 MNsure enrollment: the largest percentage increase in the country
The majority of Minnesota’s individual market has coverage outside the exchange, but 117,654 enrolled in 2017 coverage through MNsure by February 8. The rate increases for the individual market apply both on and off-exchange, but ACA subsidies are only available in the exchange.
About 64 percent of MNsure’s enrollees are receiving premium subsidies in 2017, and the subsidies average $621/month, according to MNsure. That’s considerably higher than the $476/month average across all states that use HealthCare.gov (note that the data put out by HHS indicate that the average full-price premium in MNsure through January 31, 2017 was $566/month, with average after-subsidy premiums of $295/month; there is some discrepancy between that and the information that MNsure published a week later).
For perspective, enrollment at the end of 2016’s open enrollment period was 85,390. The extra week of enrollment helped to boost enrollment numbers, but enrollment by January 31 was still nearly 32 percent higher than it had been in 2016, which was the largest percentage enrollment growth in the country
State law provided 25% premium rebate in 2017; amendment to allow plans without essential benefits was cut from final legislation
Throughout 2016, Governor Dayton called for a state-funded premium rebate for people who buy their own insurance but aren’t eligible for the ACA’s premium subsidies (those are only available for people with income up to 400 percent of the poverty level, or $98,400 for a family of four in 2018).
Governor Dayton also noted that the government needed to act quickly to stabilize the individual market in Minnesota, and by late November 2016, his patience with lawmakers was wearing thin. In a November 23 press conference, Dayton said that House Republicans needed to “stop dilly-dallying” and decide whether to move forward with Dayton’s rebate proposal.
Dayton had also indicated that he was considering calling a special session of the legislature after election day to address the situation, and that was being negotiated for December 20. But the talks fell through when Dayton and Republican House Speaker Kurt Daudt couldn’t agree on the three bills that would have been addressed in the special session; as a result, there was no special session.
Instead, the issue was taken up by lawmakers as soon as the 2017 legislative session began. On January 5, Minnesota Senators Michelle Benson (R, 31st District) and Gary Dahms (R, 16th District) introduced S.F.1. The bill called for using $300 million in state funding to provide a 25 percent rebate to roughly 125,000 people in Minnesota.
S.F.1 passed the Minnesota Senate by a 35-31 vote on January 12. Only one DFL Senator (Melisa Franzen, from Edina) voted with Republicans in favor of the legislation. It was then sent to the House, where an amendment was added that stripped out the requirement that health plans provide various mandated benefits (see “Journal of the Day” section “Top of page 154” in this version of the bill; under the terms of the amendment, as long as a carrier offered at least one plan with all the mandated benefits, they would have been allowed to offer others without mandated benefits).
The amended bill was sent back to the Senate on January 23; differences between the bills that the two chambers passed had to be reconciled before being sent to Governor Dayton for his signature. By that point, the amendment to allow less-robust plans to be sold had garnered national attention, and public outrage helped to push lawmakers away from the provision. S.F.1 had also called for $150 million to be appropriated for fiscal year 2018 (through June 30, 2019) from the state general fund to a state-based reinsurance program to stabilize the individual market (Alaska did something similar in 2016, preventing a market collapse), but that provision was also removed in the final version (Minnesota did ultimately set up a reinsurance program, effective in 2018, which has served to stabilize the market and reduce premiums).
A Conference Committee in the Senate recommended that the House “recede from its amendments” and the Conference Committee report passed the Senate on a 47-19 vote. The House passed the bill a few hours later, 108-19. It was sent to Governor Dayton, who immediately signed it into law. Consumers were told to expect the premium rebates to show up by April 2017, but they were retroactively effective to January 2017. So a person who had been paying full price for a plan since January 2017 saw a substantial premium reduction on the April or May invoice. Going forward, for the remainder of the year, a 25 percent rebate applied each month.
DFLers did have to compromise on one issue, however; S.F.1 allows for-profit HMOs to begin operating in Minnesota’s individual market, which has long been limited to non-profit HMOs.
Dayton emphasized how important it was for all individual market enrollees to shop via MNsure. His premium rebate proposal noteed 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, but either way, it indicates that a significant number of people are leaving money on the table).
The 25 percent premium rebate program in Minnesota was only authorized for one year, so the rebates did not continue into 2018. And although almost 100,000 people received premium relief through the program in 2017, it ended up costing less than the legislature had allocated, and about $100 million was returned to the state’s budget at the end of 2017.
MNsure extended enrollment deadline to February 8, 2017 to give people time to take advantage of new state-based premium rebate
S.F.1 was signed into law on January 26, 2017, after months of political wrangling in Minnesota. Governor Mark Dayton and state lawmakers had been working since the fall of 2016 on a state-based solution to alleviate skyrocketing premiums for people in Minnesota who buy their own health insurance but aren’t eligible for the ACA’s premium subsidies (details below).
Since S.F.1 was signed into law with only a few days remaining in open enrollment (it ended January 31 that year), Governor Dayton and exchange officials were worried that there wouldn’t be enough time for people to learn about the rebate and apply for coverage before January 31. In December, Dayton had asked HHS to allow MNsure to extend its enrollment deadline to February 28 (instead of January 31) in order to allow lawmakers more time to work out the details of a state-based premium rebate while still allowing people to enroll after the legislative process is complete.
HHS denied the request for a blanket extension, but MNsure used their own authority on January 28 to grant a one-week special enrollment period (February 1 to February 8) due to exceptional circumstances.
Although the state-based 25 percent premium rebate was available on or off the exchange, the one-week extension was only valid through MNsure; health insurers did not have to accept off-exchange enrollments without a qualifying event after January 31.
People whose 2016 coverage terminated on December 31 had access to a 60-day special enrollment period that continued until March 1, so they were still able to enroll in a plan in February, even after the 8th.
Subsidies tripled for 2017
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. By February 2017, more than 117,000 people had enrolled in coverage through MNsure, and 64 percent were receiving premium subsidies. MNsure reported in early February that the average tax credit for 2017 was $621/month at that point, up from $210/month in 2016.
Subsidies keep pace with the increase in benchmark (second-lowest-cost silver) premiums, so the much higher subsidies are offsetting much of the rate hikes for 2017 for people who qualify for subsidies. But those who don’t are facing sharply higher rates in 2017.
2017 enrollment: Medica enrollment cap reached in November, enrollment re-opened on January 31
MNsure’s enrollment reached a record high during the 2017 open enrollment period. By February 8 (the end of the one-week special enrollment period), enrollment had reached 117,654 (this had grown to 127,801 by June 2017, but that did not reflect terminations that occurred during the first half of the year). For perspective, total enrollment during the 2016 open enrollment period was 85,390; for 2017, exchange enrollment in Minnesota grew by nearly 38 percent, although that includes the additional week that was tacked on at the end.
In addition to the private plan enrollments, MNsure reported that 114,511 people had enrolled in Medicaid (Medical Assistance) since November 1, and 33,369 had enrolled in MinnisotaCare. Enrollment in both those programs continues year-round.
By November 11, less than two weeks into open enrollment, Medica had hit their 50,000 member enrollment cap for 2017 (including on and off-exchange enrollments, and also accounting for expected renewals of 2016 Medica plans), and their policies were no longer available in the individual market in Minnesota, on or off-exchange. The only exception was five counties (Benton, Crow Wing, Mille Lacs, Morrison, and Stearns) where Medica agreed not to limit enrollment, as all of the other available carriers in those counties have imposed enrollment caps too. In those five counties, Medica plans continued to be available.
At that point, Medica’s market share in MNsure for 2017 stood at 34.2 percent. By December 14, Medica’s market share had dropped to 27.7 percent, as enrollments had continued to climb for the remaining carriers.
On January 31, Medica re-opened enrollment for 2017. This was because a smaller-than-expected number of 2016 Medica enrollees renewed their plans for 2017, meaning that the carrier still had some wiggle room under their 50,000 member cap; at that point, they had room for about 7,000 more enrollees. Medica plans were thus available throughout the duration of the special enrollment period that was added on at the end of open enrollment, and continue to be available for people with qualifying events.
As of January 11, MNsure reported that they had enrolled 1,934 employees — from 328 employers — in small business plans through the exchange. This represented a 65 percent increase over 2016’s small business enrollment.
2017: Enrollment caps and 50%+ rate hikes
For 2017, Blue Cross Blue Shield of Minnesota’s PPOs are no longer be available in MNsure or outside the exchange (details below). Blue Plus, UCare, HealthPartners, and Medica are all continuing to offer coverage through MNsure in 2017, but with substantial rate increases.
All of the MNsure carriers except Blue Plus are also limiting their total enrollment for 2017. Medica hit their enrollment cap very early in open enrollment, on November 11, so people who enrolled after that date had fewer options from which to choose. People who were already enrolled in Medica plans were allowed to renew them for 2017, regardless of the enrollment cap. Ultimately, there were fewer-than-expected renewals, and Medica re-opened enrollment on January 31.
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 are offering plans through MNsure had the following average rate increases in 2017:
- Blue Plus = 55 percent
- HealthPartners = 50 percent (HealthPartners is only offering plans in 10 of the 67 counties where they offered plans in 2016; their enrollment cap is 72,000 for 2017)
- Medica = 57.5 percent (enrollment cap is 50,000 for 2017)
- UCare = 66.8 percent (UCare capped enrollment at 30,000 for 2017, but only had 16,000 enrollees in 2016)
The enrollment caps that HealthPartners, Medica, and UCare are employing for 2017 were approved as part of the rate review process, and are designed to protect carriers from further financial losses as they absorb BCBSMN’s enrollees who are shopping for new coverage during open enrollment.
Medica is not paying broker commissions on new enrollments in individual market plans for 2017 in Minnesota. They will continue to pay commissions on renewals of 2016 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, 2016. 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 2016, 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 dropped PPOs at the end of 2016
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 dropped their individual market PPO plans at the end of 2016 due to significant financial losses.
The vast majority of individual enrollees in BCBSMN plans in 2016 had PPO coverage. Roughly 103,000 people had to select new plans during open enrollment, and there were just 13,000 people covered in 2016 under Blue Plus plans, which are the carrier’s HMO options (both were available through MNsure in 2016).
Most of those BCBSMN enrollees had off-exchange coverage, though. There were only about 20,400 MNsure enrollees (a little more than one in five MNsure enrollees) with coverage under BCBSMN who needed to switch to another plan during open enrollment. BCBSMN had individual PPO options available in all 87 counties in Minnesota through MNsure in 2016, while the Blue Plus coverage area — comprised of four separate HMO networks — was available in 77 of the state’s counties.
Nationwide, carriers are shifting away from PPOs and towards HMOs. In Colorado, Anthem Blue Cross Blue Shield also dropped their PPOs at the end of 2016. In Indiana, there are 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.
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 exceeded enrollment goal in 2016
MNsure’s enrollment goal for the 2016 open enrollment period was 83,000 people. On February 1, 2016, 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 was 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 were 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. But in January 2017, Minnesota did open MinnesotaCare to recipients of Deferred Action for Childhood Arrivals (DACA). The ACA does not allow undocumented immigrants to obtain coverage through the exchanges (including full-price coverage) or receive any federal subsidy. But Minnesota is using state funds to cover DACA recipients who are eligible for MinnesotaCare based on their income.
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 through 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.
2016 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.
Minnesota previously considered a switch to HealthCare.gov, but didn’t proceed
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 considered was 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, Arkansas, and Kentucky have supported state-based marketplaces).
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 had opted to switch to Healthcare.gov, the soonest it could have happened was 2018, since HHS requires a year’s notice from states wishing to transition to Healthcare.gov, and Minnesota wouldn’t have been 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 once it was clear that Healthcare.gov’s subsidies are safe, some stakeholders began 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 were made.
In January 2016, the task force submitted their recommendations to the legislature. They covered a broad range of issues, but did not recommend that MNsure transition to the federal enrollment platform. Lawmakers essentially left the exchange alone during the 2016 legislative session.
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 enrollees 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.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.