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Minn. health plans can't cancel but rates can rise

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Amid the uproar over insurance cancellations blamed on the federal health care overhaul, Minnesota regulators say state law prevents actual cancellations of health plans. 

Still, at least 146,000 policy holders in Minnesota have received letters saying their plan will no longer be available, but they can enroll in a new -- and typically more expensive -- plan their insurer offers.

Gloria Keogh of Burnsville, Minn., recently received notice from her insurer that her current individual policy did not comply with the Affordable Care Act.  Keogh said she's "well-versed" on the federal health care law and knew the changes were coming, but that didn't lessen the sting.

"Now I have no choice but to pay more and I cannot afford it," she said. "The increase is $166 per month."

The new plan came with benefits she said she doesn't need or want, such as mental health coverage. 

Keogh, who said she's an optimist, is in between jobs and hopes she'll find one before the new year that includes health insurance benefits.   

Some insurance carriers are sending notices like the one Keogh received about changes to their coverage.

In other states, however, insurers are sending cancellation notices, a practice prohibited in Minnesota. Under state "guaranteed renewability" consumer protection laws, insurers can't cancel a health insurance policy outright.

So in Minnesota, Keogh won't be cut off from coverage completely. She isn't forced to hunt around for a new policy as she would be in other states where insurers can outright cancel policies.

But for Keogh, the change in her policy and related rate hike might as well be a cancellation because she can't afford the increase. While the hike may be high for Keogh, her insurer may have sought an even bigger increase, according to information from the state Commerce Department.

All health plans must go through a review of their premium rates by commerce department actuaries, according to Commissioner Michael Rothman.

"We scrutinized them all for whether they were justifiable or too excessive and in many instances we reduced those requested rates," he said.

As a result of the Minnesota rate review process, many plans had to lower their proposed rate increases between 4 percent and 37 percent. 

The Affordable Care Act is ushering in sweeping changes to the health insurance market, in particular the market where individuals and families buy coverage on their own, not through an employer.  

While the state occasionally has required changes to individual coverage in the past, they've been relatively minor in comparison to the A.C.A., according to Geoff Bartsh, vice president, Public Policy and Government Relations at Medica.

Medica officials say the new changes will affect about 50,000 of their current members.

Congress required major changes in individual coverage. Plans offered on the individual market have to include minimum levels of coverage and limits on how much the policy holder has to pay in the event of an expensive illness.

Those requirements were not in many plans sold on the individual market.

For example, some plans don't cover maternity or mental health services unless the consumer pays extra for them. Those benefits are now required for everyone to purchase.

"All of those things are big changes to the coverage they have but they also make big changes to the price of that product and they drive the price of that product up," Bartsh said.

HealthPartners is sending out renewal notices related to the changes under the federal health care law to about 19,000 members. There's plenty of time to shop for other plans, said Donna Zimmerman, senior vice president, for government and community relations.

"We are helping all of our customers with those kinds of decisions and busy doing that between now and the end of the year," she said.

Other plans are also sending out notices. Blue Cross Blue Shield Minnesota said approximately 62,000 members are covered under plans that must be updated to comply with the Affordable Care Act.  

PreferredOne has 15,000 members affected. Time Insurance Company did not supply MPR with an estimate.

There is one health plan in Minnesota that won't be sending out renewal notices about changes under the health care law -- UCare. The nonprofit community-based health plan hasn't offered individual commercial products before so there's no need to update policies.

"Current UCare members - including all of our Medicare members -- are not facing decisions about switching plans," said Ghita Worcester, UCare's senior vice president for public affairs and marketing.

Rothman, the state's commerce commissioner, said regardless of what kind of renewal notice consumers receive they should play the health insurance field.

MNsure the state's new health insurance marketplace, will show what other carriers are offering and whether residents qualify for tax subsidies to help lower premium costs.