The health insurance market's pendulum will be swinging the other way in 2016, with individual renewals coming in at increases of 18%-55%. Those of us who have grandfathered plans (plans no longer marketed for sale), will see even larger increases. There are several reasons for these increases, and the number one factor are the claim losses. According to the Star Tribune's article on 9/28/15, "The Minnesota Council of Health Plans tabulated losses in excess of $300 million in 2014, although insurers expect to recover roughly half of that amount through financial safety nets in the health law." Ironically, that safety net of partial reimbursement from the Federal Government through the ACA (Affordable Care Act), ends in 2016. MCHA (MN Comprehensive Health Assoc) also closed its' program 12/31/14, and all of those members entered the individual market, which has made a big impact. This was a pool for those individuals with health issues who were declined by the individual market prior to ACA, and this was partly funded by all of the Minnesota health insurers. Enrollment numbers have fallen short, perhaps because many found coverage through the state's public programs, or decided premiums were still not affordable. "As more time goes on, you've got a fuller picture of the risk that you're managing," said a senior vice president with Medica. Preferred One found that out the hard way, as they had to bail from the individual market on MNsure last year, and Blue Cross has expressed similar sentiment. HealthPartners announced a 32% increase at a recent educational webinar as they too are paying out more in claims than premium revenue.
The good news is that the small group market has stabilized and renewals are in the single digits. The group market is much larger and has not been impacted by the ACA in the same way. The "community rating" was a tough pill to swallow for some a couple of years ago, but things have settled down as far as premium changes. Higher deductibles and out-of-pocket maximums continue to be a challenge in keeping costs down, but at least going forward, the individual market side of the fence will no longer be greener. Those of you who had thoughts about disbanding your group plan and letting your employees find their own individual policies can dismiss that decision now, knowing individual rates are skyrocketing. And oh, I just learned that my personal individual health policy is going up 64%; time to shop!