ST. PAUL, Minn. — Minnesota’s individual health care market is in “an emergency situation,” the state’s top industry regulator said Friday, noting that it took the approval of massive rate increases to persuade all its remaining insurance companies not to pull out for next year.
After a major insurer’s exit from the market earlier this year, the state scrambled to convince the seven remaining companies to continue offering plans to those residents who aren’t covered by an employer or through a public program, Department of Commerce Commissioner Mike Rothman said. The state agreed to rate increases that range from an average of 50 percent to as much as 67 percent while also instituting other, extraordinary last-minute measures, said Rothman, who added that changes in state law are still needed to stave off a market collapse.
“We all were faced with the prospect that there would be nothing available. Nothing,” Rothman said while announcing the finalized health care premium increases. “Everyone needs to hear the sirens and the red lights.”
It’s a dramatic reversal for the state, where just three years ago state officials touted the lowest health insurance rates in the nation as the heart of President Barack Obama’s health care law took hold. While only a small portion of Americans purchase health care through a state exchange or directly through insurers — just 5 percent in Minnesota — that market has been fundamentally reshaped by the Affordable Care Act.
Across the nation, insurers have sought double-digit premium increases while major companies like Aetna and UnitedHealth have pulled out of many state-based exchanges for 2017 after forecasting heavy financial losses. The Obama administration portrays the premium increases as a one-year market correction that can be absorbed or offset by larger financial help through tax credits. That’s an assertion echoed by officials at MNsure, Minnesota’s state-run health insurance exchange.
In Minnesota, the state’s largest insurer, Blue Cross Blue Shield of Minnesota, announced earlier this year it would exit the market for 2017, also citing heavy losses. Rothman said the remaining seven companies soon indicated it would join Blue Cross, setting off negotiations in order to ensure individual purchasers could still buy health insurance.
The large premium hikes were the price to keep the insurers around, Rothman said, as was a measure that allows most companies to cap their enrollment as a safeguard against financial losses.
“We worked day and night to save the individual market for 2017. But the result is not pretty,” Rothman said. “This is a real emergency situation.”
He’s not the only state regulator to warn of serious problems within the health law’s insurance markets.
This summer, Tennessee insurance commissioner Julie McPeak said the market in her state was “very near collapse.” Tennessee is a red state, and unlike Minnesota, it does not run its own insurance market, defaulting instead to the federal HealthCare.gov. Tennessee officials approved rate increases of 62 percent, 46 percent, and 44.3 percent for the three insurers offering coverage in its marketplace next year.