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Ouch! Officials unveil big hikes in 2016 MNsure insurance rates

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While most Minnesotans have insurance through employer health plans, average rate increases for individuals will range from 14 percent to 49 percent next year compared to 2015, the Commerce Department said Thursday.
Alex Kolyer | File for MPR News

Updated 5:08 p.m. | Posted 12:30 p.m.

Buying health coverage through MNsure will get a lot more expensive for many people next year. 

Average rate increases for individual and family coverage will range from 14 percent to 49 percent compared to 2015, the agency said Thursday. The highest average rate increase — 49 percent — will come from Blue Cross and Blue Shield of Minnesota, the state's largest insurer. 

The rate hikes by health plans are "unacceptably high," Minnesota Commerce Commissioner Mike Rothman told reporters. 

When Blue Cross pushed to raise rates by more than 50 percent in June, other insurers wanted similar hikes, he added.

  He noted that many people buying coverage through MNsure will be eligible for subsidies that will ultimately lower the actual cost from the sticker prices made public Thursday.

Still, the jumps are likely to alarm policymakers and embolden critics of MNsure, the health care exchange launched by Minnesota two years ago as part of the federal Affordable Care Act. 

While supporters have praised MNsure's role in helping many uninsured people get coverage, the exchange was also expected to help moderate the costs of health insurance. 

Gov. Mark Dayton said in a statement he was "extremely unhappy" with the insurance rate hikes for 2016.

Rothman attributed the cost problems, in part, to a greater number of sicker people applying for coverage through MNsure, as well as rising drug costs.

"We objected to all of the rates across the board," Rothman said. "We squeezed out everything we could that was not actuarial justified."

Jim Schowalter, president and CEO of the Minnesota Council of Health Plans says the insurance companies are basing their costs on expected demands in the market. 

"Premiums have to be set so it covers the expenses coming in for people getting that kind of insurance," Schowalter said. "Prices charged are set to cover the expenses in 2016."

Blue Cross confirmed the 49 percent hike for individual and family plans through MNsure, adding that, "Even with these increases, Blue Cross is likely to experience continued significant financial losses through 2016." 

Analyst Cynthia Cox with the Kaiser Family Foundation, said even after prices rise, rates in Minnesota are still below the national average. 

"And that's because these premiums started out very very low. I know Minnesotans may not believe it after having two years in a row of double digit increases in their exchange premiums but Minnesotans still pay less than many other people in the country do," Cox said.

The Commerce Department acknowledged Thursday as it released the rate hikes that changes are needed. Rothman conceded that many Minnesotans won't be able to afford coverage through MNsure given the coming hikes.

Rothman also said he wants commerce officials to examine HMO reserves and look at creating a cap on HMO profits. He also called on the Legislature to create new state-based mechanisms to hold down rates including a new reinsurance program.

Republican leaders blasted MNsure and Dayton over news of the rate increases.

"This really is a failed policy. It has been for years now," said Minnesota House Speaker Kurt Daudt, R-Crown.

Daudt said there's no reason MNsure should continue. He said scrapping it and moving Minnesota into federal health insurance exchange is an option.

A legislative task force that includes lawmakers, members of the Dayton administration, health care professionals, insurance executives and community activists is currently working on ways to improve MNsure and other health care programs. 

For now, MNsure's interim executive director Allison O'Toole said consumers concerned about a rate hike should shop on the website for the best options. O'Toole also said despite the large increases, tax credits will make some plans more affordable in 2016 than they were in 2015. 

"In light of today's news, I encourage Minnesotans to come to MNsure to shop and compare plans," O'Toole said. "For those who don't you're potentially leaving money on the table."

O'Toole said, however, that those tax credits will only be available for individuals who purchase insurance through MNsure. There are no subsidies for people who buy directly from a carrier.

Correction (Oct. 8, 2015): The original version of this story included a chart that displayed inaccurate 2016 premium levels, which  had been based on incomplete collection of rate data. The story has been updated.