Even with low MNsure health insurance rates, some will pay more

Posted: 11/11/2013 12:01:00 AM CST

Updated: 11/11/2013 06:07:21 PM CST

For the past two months, state officials have celebrated how health insurance rates in the Twin Cities next year will be among the lowest available in the country.

But Larry Goedtel isn't joining the party.

Like other consumers, Goedtel is looking at a steep premium increase next year for coverage that comes with new requirements from the federal Affordable Care Act. His premium is set to jump by 84 percent, since the new rules say he must have a much lower deductible and purchase richer benefits such as maternity care.

It's no consolation, Goedtel said, that premiums available for 2014 will be cheaper in the Twin Cities than in Rochester, St. Croix County, Wis., and much of the nation.

'They're dictating what's good for me, and telling me I have to buy it whether I think it's good for me or not,' said Goedtel, 60, of Hugo.

Consumers like Goedtel have been in the spotlight in recent weeks as President Barack Obama has been forced to backpedal from comments he repeatedly made before and after the federal health law was passed in 2010.

Obama assured Americans that they could keep their coverage if they liked it -- a pledge contradicted in recent weeks as insurance companies have cancelled many policies.

'Even though it's a small percentage of folks who may be disadvantaged, it means a lot to them and it's scary to them,' Obama said during an interview with NBC News last week. 'And I am sorry that they are finding themselves in this situation based on assurances they got from me.'

Minnesota law guarantees that individual market consumers can renew their policies so long as an insurance company keeps operating in the state. So, technically speaking, there have been no individual market cancellations here due to the health law.

But as insurers have been sending letters about the changes required for 2014, some consumers have concluded that their health plans effectively have been cancelled. The letter from Bloomington-based HealthPartners to consumers including Goedtel stated: 'Because of the federal health care law, you have new plan options in 2014 and will not be able to stay on your current plan.'

HealthPartners used that language in about 12,000 letters covering 19,000 individual market consumers, said Adam Bauer, a spokesman for the insurance company. If they stick with policies suggested by the company, HealthPartners customers will see an average premium increase of about 23 percent.

It's a similar story at Blue Cross and Blue Shield of Minnesota, Medica and PreferredOne. As a group, the four insurance companies notified 146,000 people about changes to their health insurance policies.

On average, those consumers are facing premium increases of 20 percent to 26 percent, although individual results will vary. Some consumers could see much higher increases, while others will see premium decreases.

Under the health law, out-of-pocket costs cannot exceed $6,350 per person per year -- a mark that sets the upper limit for deductibles, as well. Benefits under the law will be richer, including mandatory coverage for maternity care, mental health services and pediatric dental benefits. Insurers won't be able to exclude people with pre-existing health problems, or provide premium discounts to people with lower health risks (except for non-smokers).

Consumers like Larry Goedtel shouldn't hesitate to shop around, said Karen Pollitz, a senior fellow at the Kaiser Family Foundation, because the new health insurance market can significantly moderate the sticker shock found in many renewal letters.

Searching rates in the Twin Cities area for consumers in Goedtel's situation, Pollitz found a monthly premium as low as $490 per month, still a 42 percent increase. For consumers who qualify for tax credits, the monthly premium could fall to $311.

Prior to the federal law, consumers in the individual market found that their premiums tended to go up and up, particularly if they made claims for health services, Pollitz said. Going forward, those customers should benefit from increased stability in premium prices, she said, so long as there's a good mix of low-risk and high-risk consumers.

That's part of the reason the health law doesn't allow health plans with $15,000 deductibles, Pollitz said. The worry is that healthy consumers might wind up flocking to high-deductible plans, Pollitz said, effectively splitting the market and leaving less-healthy consumers with escalating premium costs.

Lynn Blewett, a health policy researcher at the University of Minnesota, argued that the limit on high deductibles is good because some consumers in the past have misunderstood their financial liabilities and faced financial ruin. Others have delayed care rather than paying out-of-pocket for needed services.

The Affordable Care Act's mandates for maternity, mental health and pediatric dental coverage are part of a push for standardization and fairness in the health insurance market, Blewett argued. All policies are required to cover a minimum set of benefits, and insurance companies no longer can charge different rates to men and women.

'I think it's an equity argument -- a social responsibility argument,' Blewett said.

The move to eliminate pre-existing condition exclusions is good news to Sherri Jeffery, 53, of Clearwater.

In the past, health plans have denied Jeffery a policy for health reasons -- and used language in denial letters that made her think 'insurance companies don't like middle-aged women,' Jeffery said. As a result, she's paid above-market rates for coverage through the state's high-risk insurance pool.

Jeffery's husband currently has a high-deductible policy at HealthPartners, so he also received a letter this fall saying his policy was going away. Rather than be upset about Obama's 'keep your health plan' pledge, the couple selected a policy through the state's new health insurance exchange with a tax credit to discount the premium as well as a much lower deductible.

'It's just so much better for us to know how much it's going to cost, and not have any further outlay,' Sherri Jeffery said.

Larry Goedtel, on the other hand, would much rather continue his current policy with a $15,000 deductible, at a monthly cost of $344 for himself and his wife. HealthPartners says the closest thing to the couple's current coverage is a policy with a $6,000 deductible, and a premium of $635 per month.

During the past year, Goedtel underwent a procedure with nearly $5,000 in out-of-pocket costs. If that happened again under the new policy, he'd still be responsible for the medical bills while also paying an extra $3,500 in premiums over the year, he said.

Goedtel has looked on the website for MNsure, the state's new health insurance exchange, and doesn't like the options he's finding. He's not sure if he'll qualify for a tax credit next year.

He bristles at the suggestion offered by some supporters of the Affordable Care Act that the health law only makes illegal insurance policies that aren't worth having. And he questions the new insurance market rules that prevent health plans from providing discounts to people in good health.

'Isn't that what they want -- for people to stay healthy?' Goedtel asked. By trying to help people with pre-existing conditions, the law 'solves one problem by penalizing other people,' he said.

Obama's 'keep your health plan' pledge was clear political posturing designed to build support for a controversial law, argued Steve Parente, a health insurance expert at the University of Minnesota.

The controversy over the pledge in recent weeks could have a happy ending, Parente said, if Congress pushes forward legislation that would let people keep plans with high deductibles.

Minnesota was one of the first states where many consumers started adopting high-deductible health plans, Parente said, adding that the policies rightly give people incentives to be smart shoppers when it comes to health care.

'Sadly, these plans are being outlawed,' he said. 'I think that's wrong.'

Christopher Snowbeck can be reached at 651-228-5479. Follow him at www.twitter.com/chrissnowbeck.