MN's health plan price hikes are big – but tax credits cut them in half, group says


Tax credits will likely soften the blow of price hikes for people who buy their own health insurance – but Minnesota will still see some of the highest increases in the country.

The Minnesota Department of Commerce revealed last week that people who buy individual or family health plans via MNsure or directly from insurers will see their premiums rise, on average, between 14 and 49 percent next year.

This means the approximately 6 percent of Minnesotans who buy their insurance this way could have to fork out hundreds more dollars for their coverage in 2016.

The Kaiser Family Foundation has compared the 13 states that have so far revealed their 2016 rates for health plans available under the Affordable Care Act, and found Minnesota will see the highest increase in rates, averaging 28.5 percent compared to a 4.4 percent average rise across all 13 states.

However, the impact is mitigated because of tax credits available to low-income households (who are predominantly those who buy their insurance from MNsure), which will reduce the average rise to 13.7 percent, the study found.

The Kaiser Foundation says the health plan hikes in Minnesota will see the average cost of a "silver plan" (the second-lowest cost available) for a 40-year-old non-smoker, earning $30,000 and living in Minneapolis, rise from $183 to $235 a month – costing them $624 extra each year.

However, more people will qualify for tax credits as a result of the rise, and according to Kaiser research this would bring the average price of the same health plan down to $208-a-month – a saving of $300 for the year.

MNsure said "more people than ever" in Minnesota will qualify for tax credits as a result of the rise, and that in some instances people will be paying less than they are this year.

Why are rates going up so much?

After announcing the rate hikes, Minnesota Commerce Commissioner Mike Rothman said the state would still have some of the cheapest individual health insurance rates in the country.

This may be a reason why costs are rising, with Dan McLaughlin, director of the University of St. Thomas' Center for Health and Medical Affairs, telling WCCO that last year's rates were too low.

"It doesn’t really surprise me too much, because when we first started the health insurance exchanges we had the lowest rates in the country," he told the news station.

Another reason they are rising, which Rothman raised last week, is plan providers have miscalculated the health levels among those buying plans via MNsure or directly from insurers. They have turned out to be "sicker" and "more expensive" than they anticipated.

The rate hikes led Republican House Leader Kurt Daudt to call for the abolition of MNsure, and for it to be replaced by the federal health exchange, Healthcare.gov.

But McLaughlin told WCCO that he doesn't expect this would reduce premiums for any Minnesotans, and would also mean the state has "Uncle Sam looking over your shoulder all the time."

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