Minnesota insurers suffered heavy losses in both the private individual insurance market and in the public health programs they manage in 2016, with nonprofit insurers reporting losses of $687 million, the Minnesota Star Tribune recently reported.
The individual insurance market suffered the heaviest losses. This was due largely to the decline in individuals seeking coverage and the forced closure by the Obamacare law of our previously successful high-risk pool (MCHA), which brought a migration into the individual market of about 25,000 individuals, most of whom had significant pre-existing conditions or were very sick. The sector looking to purchase individual coverage declined by 18 percent, a result of many seeking coverage under their workplace or from public health programs.
Public health insurance programs also ended up in the red, a result of premiums that aren’t covering medical costs, particularly for those with expensive health conditions.
“The big story in Minnesota has been trying to stop our individual health insurance market from going into a death spiral,” NFIB/MN State Director Mike Hickey says. “Premiums for most people in that market are up 100 percent over the last two years and some have actually experienced a whopping 117 percent increase!”
Blue Cross extended its HMO Medicaid program throughout the state, with enrollment tripling, but reported the reimbursement rates were unsustainable for the marketplace. Healthcare plans reported a 2.7 percent loss as a percentage of revenue, with health plans losing $275.3 million in the individual market and $356.7 million on state public health programs, the Star Tribune reported.
This year two programs that help cover losses to insurance providers go away, but the legislature recently passed a reinsurance program to help cover a portion of the costs by providing for $542 million in assistance over the next two years.
“We support the legislature’s quick effort to pass a significant reinsurance plan to cushion insurers from the very high-cost claims that are threatening to destroy this market,” Hickey says. “Hopefully the new law will reduce premiums by 20 percent and stop the death spiral.”
