January 12, 2018
Individual health insurance market showed signs of financial stability but enrollment declined in 2017
Minnesota’s individual health insurance market – the place where people who do not have employer coverage or coverage through public programs get insurance – has undergone a marked turnaround, with health insurers looking poised for small profits in 2017 after losing money in 2014, 2015 and 2016.
The new Minnesota Department of Health (MDH) analysis of mid-year health plan financial filings shows that Minnesota’s individual market, where individuals buy coverage through MNsure, a broker, or directly from health insurers, has become more financially settled in 2017 with premiums generally covering claims, according to the issue brief, Evaluating the Stability of Minnesota’s Individual Market (PDF). This stability likely resulted from consecutive increases in health insurance premiums, a state-funded subsidy program and health plan enrollment capacity limits for certain carriers, rather than lower health care use.
“The latest federal health insurance policy changes, after a year of uncertainty around the future of the ACA, could greatly undermine and reverse the progress and stability Minnesota achieved in its individual market over the last twelve months,” said Acting Health Commissioner Daniel Pollock. “That makes it even more urgent for Minnesota families who could benefit from federal cost-saving tax credits to obtain 2018 coverage through MNsure prior to Jan.15.”
At the same time, declining enrollment and federal changes might further impact the long-term viability of Minnesota’s individual insurance market, according to the brief. Enrollment had fallen almost 50 percent from a peak of about 309,000 in 2015 to about 166,000 enrollees by the middle of 2017. If this decline represents healthier people leaving the insurance market, premiums could continue to rise and insurance carriers might choose to no longer offer coverage in some areas of the state, according to the issue brief.
Minnesota took steps in 2017 to shore up the market by establishing a $300 million program to buy down premiums by 25 percent for Minnesotans not receiving a federal subsidy. Minnesota also created a two-year, $542 million reinsurance program with federal support to offset insurance companies seeing certain high cost health care claims.
“The reinsurance program that began in 2018 clearly had an impact on moderating premium growth for the current year,” said Stefan Gildemeister, Minnesota State Health Economist. “Nevertheless, the fact that the individual market shrank to half its size in just two years presents a significant concern for long-term market stability.”
Eligible Minnesotans buying insurance in the individual market can still take advantage of federal premium subsidies through MNsure. Enrollment in MNsure is open through Jan. 14, even though it closed at the federal level on Dec. 15, 2017. Already, more than 111,600 Minnesotans have successfully enrolled in private health coverage for 2018 through MNsure. Over 66,000 families have saved an average of more than $7,000 per year through tax credits that are only available with MNsure.
In addition to shrinking enrollment, the report notes that the repeal of the individual mandate, and the federal government’s promotion of association health plans and short-term policies, all have the potential to further destabilize Minnesota’s individual insurance market, particularly in Greater Minnesota.