Policy and Regulation News

Rising Medical Costs Created Health Plan Enrollment Shifts in MN

A growth in beneficiary medical costs created health plan enrollment shifts in Minnesota’s private and public insurance markets.

Rising medical costs attributed to health plan enrollment shifts

Source: Thinkstock

By Thomas Beaton

- The Minnesota of Council of Health Plans (MCHP) associated rising beneficiary medical costs in 2017 to irregular health plan enrollment shifts in both the private and public market.

The Council said in a press release that a three percent increase in medical costs led to variations in health plan enrollment. Payer organizations found that many beneficiaries that were previously enrolled in individual health plans switched to an employer-sponsored plan and vice-versa.

Individual health plan membership decreased by 35 percent from 2016 numbers, totaling 151,364 members by the end of 2017.

Meanwhile, private small-group insurance (50 employees or less) enrollment increased by 16 percent and large-group insurance grew by one percent. MCHP also found that Medicaid and Medicare enrollment in Minnesota grew by 7 percent and 3 percent respectively.

MCHP payers earned revenues of $27 billion and paid $24.4 billion in medical costs, which resulted in an operating gain of 0.8 percent.

Jim Schowalter, President of MCHP believes the changes in private and public payer enrollment patterns created cost-analysis challenges for payers in 2017.

"As care gets more expensive, people are doing whatever they can to find the best possible options to care for themselves and their families. For 2017, a lot of people switched between employer group and individual health insurance or the other way around," said Schowalter.

Despite a reduction in enrollment numbers, the individual health plan market generated a 16 percent gain of $157 million across all insurers. Individual health plan beneficiaries were the only group that experienced any decrease (15 percent) in their medical bill expenses because premiums unexpectedly covered the majority of member claims costs.

The individual health plan market in Minnesota has contributed to multi-million dollar losses for payers since 2013. Schowalter attributed the new positive market trends to the re-implementation of the state’s reinsurance plan.

"The fluctuation between unsustainable losses and unexpected gains shows how important Minnesota lawmakers' quick work on reinsurance was last year to help create calm for 2018," Schowalter said. "Monthly premiums remained steady this year in part because the new reinsurance program makes it easier to predict medical spending.”

The public payer market was less profitable than the individual market and led to millions in financial losses.

Medicaid, MinnesotaCare, Minnesota Senior Health Options, Minnesota Senior Care Plus and Special Needs BasicCare programs received $6.2 billion in federal payments. Payers lost a total of $79 million after accounting for operating costs and expenses.

Medicaid and MinnesotaCare for Children products drove the largest deficits in public payer profitability, according to MCHP.

“When looking exclusively at Medicaid and MinnesotaCare for children and families, expenses were more than revenue for the second year,” MCHP said.

MCHP hopes that state and federal level policy changes will create a more stable health insurance market for their beneficiaries. The continuation of uncertain insurance market policies may contribute to new health plan fluctuations, Schowalter warned.

"More public policy changes in St. Paul or Washington, DC, could easily lead Minnesotans to switch again, causing real difficulties for people,” Schowalter said. “The constant shuffle of how medical bills get paid makes it harder for all of us to plan for the future.”