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.

The aggregate cap of 153,700 represents two-thirds of the 250,000 in Minnesota’s individual market. The caps included each plan’s’ current (2016) enrollment plus a very limited number of “slots” for new enrollees. The number of new slots is just 27,100, or 24 percent of the 112,100 dropped from existing plans for 2017 (103,000 from BCBS and 9,100 from a closed HealthPartners product). Figure 1 provides an overview of the capacity limits.

Figure 1: Minnesota Individual Market Caps

 2016 EnrollmentPublished CapNew Enrollment Cap
Blue Plus13,000No CapNo Cap
PreferredOne1,8001,7000
UCare16,00030,00014,000
Medica43,00050,0007,000
HealthPartners65,90072,0006,100
Total139,700153,70027,100

Notes: Enrollment numbers are rounded. PreferredOne agreed to take no new members. HealthPartners 2016 enrollment excludes the 9,100 individuals that will be dropped for 2017.

The capacity caps guarantee an influx of enrollment to the narrow-network Blue Plus, which is offered in all but five counties (see page 14) across the state. The five remaining counties will have no plan option once the state-wide caps are met. They include a total population of 290,000 and an estimated 18,000 uninsured. Note that the caps are aggregated across the state and not allocated by geographic region or county. There is also no “hardship” exemption or explicit provision for those without a plan option, although the Commerce Commissioner has stated that no one will be without an offer of coverage.

Policy Implications of Enrollment Caps

Access to Affordable Coverage

One of the core principles of the ACA, guaranteed issue, will not apply to everyone wishing to purchase coverage. The rate increases for the remaining plans are likely to make coverage unaffordable for many.

For counties where health plans are available, many can be directed to MNsure for the tax credits that are available and others can apply for “hardship” exemptions from the individual mandate. Once the statewide caps are met it is likely that there will be five counties with no health plan option.

This issue came up recently when Pinal County, Arizona was close to no individual market health plan offers. Because of the lack of clarity in the ACA on a tax exemption for this particular circumstance, i.e. no health plan offerings, Senator John McCain introduced legislation to provide a tax exemption to individuals living in areas with one or fewer health plan offers. Minnesota’s Commerce Commissioner has stated, “Everyone who needs coverage in the individual market will be able to get coverage; no individual will be without a coverage option.” Clearly, this issue—lack of health plan offers in the individual market—was not anticipated.

In addition to the people dropped by BCBSM, the remaining uninsured will also be looking for affordable coverage. Minnesota has a very low uninsurance rate of 4.3 percent, or 234,000 people. There are an estimated 70,000 uninsured people that lack access to ESI and are eligible to purchase in the individual market. For the 18,000 uninsured in the five counties (Benton, Morrison, Crow Wing, Mille Lacs, and Stearns counties) with no Blue Plus option, accommodations will need to be made to ensure access to health plan coverage once that caps have been met.

Narrow Network Plans

Because of the small number of available “slots” for most health plans, many people will be required to purchase coverage from the narrow network Blue Plus plan. There are already concerns being raised about the networks not including major providers in certain areas (e.g. Essentia in Northeastern Minnesota) and the ability of people to access their current providers. The transition will be difficult and informing people of their choices, or lack of choice, is critical.

Monitoring Marketing and Enrollment Practices

Another concern is the marketing and enrollment practices of the health plans, especially the Blue Plus plan which is owned by BCBS and has enrollment and health status information of the 103,000 people for whom it has terminated coverage. There is incentive to get the healthiest individuals to sign up first and fill up the slots for all health plans. Then there are the details regarding oversight of marketing and enrollment and management of the caps. The financial pressures of plans are great and much can be done in both marketing and enrollment to discourage unhealthy people from enrollment.

Figure 2: Average Premium Increases By Health Plan

 2017 Average Increase
Blue Plus55%
PreferredOne63%
UCare67%
Medica58%
HealthPartners50%
Unweighted Average59%

Other Policy Options

There has been a call for a special legislative session to address the large premium increases through a rebate program and initial discussions of a state-based reinsurance system for the entire individual market. These programs could be financed through a combination of the Health Care Access Fund, the General Fund, and the remaining balance of the Minnesota’s Comprehensive Health Association (MCHA), Minnesota’s now defunct high risk pool. The stop-gap measures would assure affordable health coverage to Minnesotans by stabilizing the premiums in the individual market and not placing the financial burden of the significant rate increases on individuals, which would be likely to leave many individuals without any coverage at all.

Finally, the lack of options in the five counties with potentially no health plan options could open the door to a public option. In Minnesota, the Minnesota Care program represents the first ACA Basic Health Plan in the country and provides coverage for those with incomes from 138 through 200 percent of the Federal Poverty Level. Providing access to MinnesotaCare to those living in counties with no other plan options would allow Minnesota to comply with guaranteed issue requirements and provide an affordable plan option. If the state of Minnesota wanted to obtain federal subsidies for this population, it would require a 1332 waiver, but if the product was funded with state-only dollars with higher-income individuals paying the full premium, the state could move ahead without a waiver.

Final Thoughts

The Minnesota Department of Commerce was under incredible pressure to keep the individual market viable for 2017. The entire legislature is up for reelection this fall, creating a unique political environment. A legislative solution may be plausible during the regular legislative session which starts on January 3, 2017. By that time we should have a new President, time for a state-based solution, and perhaps a new federal game plan to help stabilize the individual market.

 

Author’s note: These are my opinions and do not represent the opinions of the University of Minnesota, SHADAC or any of our funders.