Nearly 80,000 fewer people bought insurance on individual market

ST. PAUL — MNsure’s record-breaking enrollment for 2017 belies a startling trend in Minnesota’s health insurance market: The number of residents buying coverage on their own is getting smaller.

Nearly 270,000 residents bought insurance on the individual market last year, either on the state exchange or directly though insurance agents of health plans. As enrollment closed this week in Minnesota, that number was down to roughly 190,000, according to the state’s main trade group for health plans.

That likely means more people chose to go uninsured for 2017, scared off by massive premium increases or the uncertainty surrounding the federal health care law in the new Trump administration. Industry experts, state officials and lawmakers fear the smaller pool is a recipe for another year of rising costs unless they step in with new policies.

“I’m concerned with the market shrinking this much that recovery becomes even more difficult,” said Sen. Michelle Benson, a top Republican on health care issues.

The shrinking of the individual market, where shoppers who aren’t covered through employers or public programs buy their insurance, follows a perilous year for Minnesota’s health care system.

The state’s largest insurer, Blue Cross Blue Shield, left the market for 2017, nearly sparking a complete exodus by the remaining plans. To keep them on board, state regulators agreed to massive premium hikes: from 50 percent to 67 percent, on average.

Federal subsidies helped offset the sticker shock, driving MNsure enrollment to a record-high of more than 117,500. Despite a novel state program that cut premiums by 25 percent for shoppers who don’t get federal help, the overall number of shoppers buying coverage on their own still dropped precipitously.

“Medical bills are too high and people are making difficult choices to forego insurance and hope they don’t get sick,” said Jim Schowalter, president of the Minnesota Council of Health Plans.

Just 5 percent of Minnesota residents buy coverage on their own, but that’s the critical market President Barack Obama’s health care law targeted to reduce the nation’s uninsured rate and eventually lower health care costs.

Chris Sloan, a managing partner at the Washington, D.C.-based Avalere Health said the shrinking pool in Minnesota is creating a self-fulfilling prophecy: As more healthy people decide the high monthly premiums aren’t worth it, it leaves behind a smaller pool of sicker residents to cover medical costs, driving up prices for the next year.

“If we don’t have other people, that cost is going to get concentrated on fewer and fewer people,” Schowalter said. “It really makes us concerned about what’s ahead.”

Any possible fixes lawmakers could make are complicated by the unclear approach President Donald Trump’s administration will take in replacing the Affordable Care Act. But with insurers about to set 2018 rates this spring, lawmakers agree they can’t afford to wait.

“We have to do the reasonable things we can to impact Minnesota’s market,” Benson said. “We can’t count on DC being the savior.”

One prominent option is a reinsurance program, which would use state money to help offset insurers’ heavy losses in hopes of avoiding another round of massive premium hikes. It’s unclear how much that might cost or where the money would come from, but Democrats and Republicans alike appear to be on board with the concept.

Democratic Gov. Mark Dayton has said he’s open to it, but he’s pitching a drastically different approach: A public health care option that would allow every Minnesota resident to buy into the state’s low-income health program, MinnesotaCare. That would further winnow the state’s individual market, but Dayton said Thursday it’s the best option to provide stable and affordable health insurance.

“We want to add more competition. We want to have a lower-priced option for people,” he said.