Among premium increases, insurers pulling out of the exchange and a small market share, there’s been a lot of talk about MNsure in the news lately. Of course, that’s nothing new to the state’s health exchange program. MNsure has been hotly debated since the day it entered the marketplace. In a recent Perspectives article, interim CEO of MNsure Allison O’Toole covered what’s working, but the issue is not likely to go away anytime soon. Here are five trends to keep an eye on:
- Premiums for 2016
While much has been made of recent premium increases, it’s important to remember the law of percentages. Yes, on a percentage basis, the increases are large. But they are based on current rates that are among the lowest in the country. Plans offered on MNsure for 2016 will continue to have some of the most affordable premiums in the country. According to Cynthia Cox with the Kaiser Family Foundation, premiums started out so low in Minnesota that despite two years of double digit increases, we’re still paying less than most of the country. Meanwhile, the premium increases may not be enough to offset the on-going losses many insurers are experiencing with their policies for individuals. Minnesota Council of Health Plans President Jim Schowalter told MPR “Even with these increases, (some plans are) likely to experience continued significant losses through 2016.”
- Trends in health spending
Insurance premiums aren’t the same as the cost of health care. They reflect the underlying cost of care. And on that point, experts disagree on the future. For example, the Medicare Trustees recently projected that Medicare spending would grow from 3.5 percent of GDP today to 5.5 percent by 2050. Meanwhile, the Congressional Budget Office, projected significantly larger increases in Medicare spending, growing to 7 percent of GDP by 2050. Health spending has slowed in recent years, but with an aging population, more expensive technologies and treatments and new and very costly pharmaceuticals, the pressure on health spending – and, consequently, on premiums – is significant. Some experts, including Cox, argue that because re-insurance dollars from the federal government to providers will expire at the end of 2016, insurers will face a larger bill from sicker customers. As prices rise, consumers and employers may move back to group coverage, only making the problem worse by shrinking the individual market pool.
- The rate increases won’t affect many Minnesotans
Fewer than 6 percent of Minnesota residents buy insurance on the individual market and only one-sixth of consumers on the individual market are currently buying coverage through the exchange, according to the Minneapolis StarTribune. MNsure is driving new strategies to expand this market, recently announcing an outreach to farmers and rural Minnesotans, for example. MNsure’s ability to expand its marketplace will be a key trend to watch. Meanwhile, tax credits available only to those who purchase insurance through MNsure could offset some of the rising costs and even make certain plans more affordable in 2016 than they were in 2015, according to CEO O’Toole.
- MNsure’s political future
MNsure continues to be a political football, creating uncertainty for the exchange, consumers and insurers. A particular concern for MNsure is its future funding. The exchange receives some direct funding from both the federal and state governments, but its base revenue comes from withholding a portion of the premiums sold through the exchange. With the smaller-than-projected market share and some insurers seeking to renew policies “off-exchange,” funding issues could exacerbate MNsure’s political challenges. At a minimum MNsure’s market share keeps much of the focus on the exchange’s costs while avoiding meaningful discussions of proposals to address the underlying health cost drivers.
- Time could heal most wounds
Both O’Toole and Schowalter predict higher traffic numbers this year. As people become more accustomed to buying insurance online and MNsure improves its user experience, its market share could grow.