Health Insurance 'Sticker Shock' Could Arrive Soon

With great fanfare earlier this month, Minnesota Department of Commerce officials announced Minnesota would continue to have among the 'lowest health insurance rates in the country.' They were referring to health insurance sold through MNsure which they said would only increase an 'average of 4.5 percent.'

That modest increase was immediately met with skepticism by Republican opponents of Gov. Mark Dayton's administration. However, the health insurance industry is also throwing cold water on the notion that Minnesotans will see rates go up just 4.5 percent. Whether buying insurance in the MNSure system or through the private market, for most Minnesotans reality will not match the rosy 4.5 percent 'average increase.'

'You've got to remember the majority of consumers who have individual health insurance policies did not buy them through MNsure,' says Alycia Reidl of the Minnesota Association of Health Underwriters. 'Most of them are outside of MNsure at this point and they haven't received their renewals yet. As they start to receive them they're going to understand they have significant increases facing them.'

Reidl made that point to the MNsure Board at their first meeting since the new MNsure rates were announced. She told them many Minnesotans now have the mistaken notion their rates will go up only 4.5 percent. Instead, Reidl says they're likely to get 'sticker shock' when they see their increases.

'The increases that are happening are putting our clients in a really difficult situation which is putting us in a difficult situation as the bearer of that news,' Reidl told the MNsure Board.

Reidl says one broker received new rates for 2015 from PreferredOne and reviewed the figures with clients. For example, there's a 45-year-old non-smoker in a 2014 plan that has a $3,600 deductible and $202 monthly rate. The closest PreferredOne plan in 2015 would have a $3,850 deductible and a $319 monthly rate, a 58 percent increase. The 2015 plan would also have a smaller provider network.

PreferredOne sold the most policies through MNsure for 2014. Those customers will have the option of staying with PreferredOne and paying the higher rates or seek insurance elsewhere in the MNsure system or through the private market. Regardless of where they go, Reidl says the increase is almost certain to be more than 4.5 percent.

It's not just individual policies going up. A survey of licensed insurance agents who handle nearly 2,500 small business groups shows there were widespread, double-digit increases in premiums between 2013 and 2014, when the 'Affordable Care Act' took effect. Small business rate information for 2015 isn't available yet.

The survey was commissioned by the National Federation of Independent Business and the Minnesota Jobs Coalition, a conservative interest group.