Tag Archive: Minnesota

Honoring basic insurance principles proves challenging in state individual health insurance markets

A growing number of Minnesotans are tapping tax credits through the health law that discount premium costs on the policies. But eligibility for subsidies depends on income, and there’s growing evidence that those who don’t qualify for tax credits or have other affordability problems are fleeing the market. On Thursday, the Minnesota Council of Health Plans released numbers that show 80,000 fewer residents covered in the individual market now than a year ago, a decline of 30 percent. The current tally of 190,000 will likely drop further, insurers say.A shrinking market is a bigger problem for insurers than a drop in revenue. People with costly health problems tend to maintain even expensive coverage, knowing it’s a better deal than paying the full cost of health care. So, a shrinking market at a time of skyrocketing premiums leads insurers to conclude that healthy people are leaving the mix.

Source: Health insurers say they need insurance protection from big claims – StarTribune.com

The Patient Protection and Affordable Care Act aims to improve the spread of risk and honor the law of large numbers — bedrock principles that underpin all forms of insurance — by pooling most everyone not covered in the three main pillars of health coverage (Medicare, Medicaid, employer-sponsored coverage) into a single risk pool in each state. But even putting everyone in a given state into a single, statewide risk pool may not be enough in states with fewer residents as this account illustrates. When there are too few “covered lives” in the pool in insurance industry lingo, the risk spreading mechanism of insurance gets stressed and the pool threatened by adverse selection. That occurs when a relatively small number of people incur large claims costs as the case here in Minnesota.

Since the individual market is comprised of only a relatively small segment of the population nationwide given the dominance of the big three pillars of health coverage, honoring fundamental insurance axioms may only be possible in states with large populations such as California, New York, Texas and Pennsylvania.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

When ACA individual market reforms fail and reprise de facto high risk pool

The Minnesota Department of Commerce struck a deal with five health plans in the state’s individual market to prevent a market collapse. In June, Blue Cross Blue Shield announced that it was leaving the individual market, with 103,000 individuals left to find a new plan when open enrollment starts on November 1. It was feared that other plans would quickly follow suit. Given that BCBS had a broad network and notably higher risk profile, the remaining plans were not eager to take on new enrollees in a guaranteed issue environment. The agreement reached included caps on health plan enrollment and significant rate increases between 50-66.8 percent. Only one of the five plans, BCBS’s narrow-network HMO plan, Blue Plus, agreed to offer plans without an enrollment cap.

Source: Capping Enrollment To Save Minnesota’s Individual Market

A key element of the Patient Protection and Affordable Care Act’s reforms of the individual health insurance market is the formation of statewide risk pools comprised of those not covered by government or employer-sponsored plans. But as the Minnesota Department of Commerce notes in this news release, just five percent of Minnesota residents or 250,000 people don’t fall into these categories and make up the entire universe of the individual market.

When Affordable Care Act rules that permit health plan issuers to slice and dice state individual risk pools into county-sized rating areas where they can choose — or not — to offer a plan or plans are factored in, that universe is narrowed down. That effectively reduces the spread of risk for health plan issuers offering coverage in those rating areas if there are few issuers offering plans within them. Ultimately, the number of those in the individual market becomes too small to achieve effective spread of risk, even with the law’s individual shared responsibility mandate to have some form of health coverage in force. Especially in smaller states like Minnesota, where it appears from this Health Affairs blog post that rather than spreading risk across a larger population, the individual market is functioning more like a high risk rather than true insurance pool. That’s why Minnesota regulators accommodated health plan issuer concerns by capping enrollment — a defining characteristic of a high risk pool.

That’s a perverse development given the Affordable Care Act’s reforms of the individual market were specifically intended to restore the individual market to healthy functioning and obsolete state high risk pools that offered tightly limited coverage to those whose health status fell short of health plan issuers’ medical underwriting standards that existed prior to the reforms taking effect in 2014.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Proposed Minnesota legislation would allow Basic Health Plan on state exchange to expand rural choice

Area legislators believe they have found one possibility for cutting premiums and adding coverage to health insurance for those in rural Minnesota.They’ve introduced a bill to request a federal waiver so that MinnesotaCare, the state-run health insurance plan for low-income individuals and families, can be sold on the state exchange to those above the current income limit. Any new enrollees would pay a premium based on a statewide calculation that considers MinnesotaCare as other privately offered health insurance plans are.“In the metro area, there are a lot of insurance carriers who provide multiple products,” said Sen. Kathy Sheran, DFL-Mankato. “In the rural area, where we are more remote and there are fewer customers to be pursued, there are fewer providers of those products.”

Source: Legislators want MinnesotaCare open to all | Local | southernminn.com

This is an interesting development (h/t to Manatt’s Liz Osius) given that many state exchanges struggle to offer much in the way of choice among qualified health plans (QHPs) in their rural rating regions. This bill would allow a special state insurance plan authorized under Section 1331 of the Patient Protection and Affordable Care Act known as a Basic Health Insurance Plan (BHP) for individuals under age 65 with household incomes between 133 and 200 percent of the federal poverty level (FPL) and ineligible for Medicaid (which tops out at 138 percent of FPL in states that opt to expand Medicaid eligibility) to be offered on Minnesota’s state health benefit exchange. MinnesotaCare is the state’s BHP. The preamble to federal rules issued earlier this year governing federal funding for BHPs recognizes their utility as adjuncts to exchange QHPs and Medicaid plans:

BHP provides another option for states in providing affordable health benefits to individuals with incomes in the ranges previously described. States may find BHP a useful option for several reasons, including the ability to potentially coordinate standard health plans in BHP with their Medicaid managed care plans, or to potentially reduce the costs to individuals by lowering premiums or cost-sharing requirements.

Despite this language suggesting flexibility, it remains to be seen whether the federal government would grant a state innovation waiver under Section 1332 of the Affordable Care Act allowing MinnesotaCare to be offered on the exchange if the legislation is enacted. Section 1332 provides program flexibility on exchange requirements but does not extend to BHPs under Section 1331.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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