Minnesota Department of Health

News Release

July 25, 2006

Contact information

Minnesota health insurance premium growth slowed in 2005
Cost growth also slowed, according to new report

Private health insurance premiums in Minnesota grew by 4.5 percent per enrollee in 2005, according to a new report by the Health Economics Program at the Minnesota Department of Health. Premium growth in 2005 was less than half the 11.2 percent growth experienced in 2004, and the slowest since 1997. Growth in health plans’ spending on behalf of enrollees was also slower in 2005 than 2004, declining from 7.4 percent to 6.8 percent per enrollee.

“After years of double-digit growth in premiums, slower growth is good news for Minnesota consumers,” said Minnesota Commissioner of Health Dianne Mandernach. “However, we still have to keep working to make sure that all Minnesotans have access to affordable health care.” Despite slower growth in spending per enrollee, health care spending is still rising at a faster rate than per capita income, wages and inflation. 

As premiums have risen, many people have shifted to health insurance plans that require higher enrollee cost sharing. This trend continued in 2005, with enrollees’ share of costs rising to $489 per person (compared to $433 in 2004). Enrollees’ out of pocket cost as a share of total spending was just over 13 percent in 2005, up from about 10 percent in 2000.

The report also examines the changes in health care spending by type of service, finding that the slowdown in spending growth occurred across a wide range of services. From 2003 to 2005, the slowdown in spending growth was largest for physician services and prescription drugs compared to the prior 2 years. Nearly half (45 percent) of spending growth was for hospital services, which account for about one third of total spending. Despite having the slowest growth rate of all services, physician services accounted for nearly one fifth of total spending growth from 2003 to 2005.

The report is available on the Private Health Insurance Markets Publications page at http://www.health.state.mn.us/divs/hpsc/hep/publications/privatemarkets/.

-MDH-

For more information, contact:

John Stieger
MDH Communications
(651) 201-4998

Julie Sonier
Health Economics Program
(651) 201-3561

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