Minnesotans who purchase individual health insurance through MNsure, the state’s exchange, recently received some good news. Premiums proposed for 2018 will increase only modestly and could actually be cut significantly if regulators in Washington, D.C., approve the reinsurance plan passed by the state legislature earlier this year.
If all goes as hoped, consumers will be able to breathe a sigh of relief. The state’s reinsurance program would help cover some costs incurred by vulnerable Minnesotans who have very high health care needs and costs. In a small pool of insured people like the state’s individual market, the high costs of just a few people results in substantial premium increases for the others.
Consumers’ respite from premium hikes for 2018 depends on the federal government allowing the state to implement the reinsurance program without losing subsidies Minnesota receives as part of the Affordable Care Act. Minnesota officials are optimistic that the waiver could come by the end of summer. According to the Minneapolis StarTribune, “The U.S. Department of Health and Human Services in July approved a reinsurance program for Alaska. Government officials at the time encouraged other states to use a waiver process under the ACA for troubled individual markets.”
The future also is complicated by uncertainty over what Congress and the Trump Administration will do with health reform.
Still, it’s likely that Minnesota purchasers of individual insurance will have more affordable options for 2018. While this is good news for the immediate future, underlying challenges remain, including these three:
First, the individual marketplace continues to shrink, from 300,000 Minnesotans just a few years ago to as few as 130,000 buyers through MNsure in 2018. Some of these Minnesotans likely have found health coverage through employers or public programs. But evidence suggests that many of those dropping out are younger, healthy people. If MNsure becomes a program through which only the highest-cost, most vulnerable Minnesotans are buying insurance, it will be an unsustainable marketplace.
Second, Minnesota’s reinsurance program is funded for only two years, and the cost is high. The state has set aside more than $500 million over the next two years for the program. Legislators used money from the state’s budget surplus and a special health access fund to finance the plan. Looking to the future, surpluses never are certain and the access fund is scheduled to expire in 2019. If the reinsurance program is successful enough to warrant continuation, new sources of funding will need to be found. That will require either tax increases or cuts to existing spending, neither of which is politically popular or easy.
Third – and perhaps most significantly – the underlying problem of rising health costs remains unsolved. While most of the focus of policymakers and the news media is on insurance premiums, it is the cost of treatments, prescription drugs and other health services and products that dictate what insurers charge. There are some promising trends, including better information to help consumers make good decisions, but more needs to be done. Until consumers, employers, health providers, insurers and policymakers make controlling health costs a top priority, insurance premiums will continue to rise.