Here’s what opponents of MNsure will tell you: buy a plan on the new health insurance exchange, and it will cost you more than your old plan — a lot more.
It’s a talking point that stems from a Minnesota Republican Party analysis indicating that insurance sold on MNsure will cost, on average, 22 percent more in the post-Affordable Care Act world.
Health insurance will cost more for some people starting in 2014, but not for everyone. Comparing 2013 plans to 2014 plans doesn’t tell the whole story because coverage starting in 2014 has to meet new minimum standards. So many insurers will be providing plans with more comprehensive coverage than their current policies. That makes it nearly impossible to do valid comparisons based on premium cost alone.
Republicans averaged 2013 premiums for plans sold on ehealth.com and compared that data with plans sold on MNsure, which don’t kick in until 2014.
They aim to show that the Affordable Care Act is making insurance more expensive, Republican Party Chair Keith Downey said.
For some people, it’s true that premiums are cheaper now compared to MNsure plans. For instance, a 33 year-old woman living in Nisswa, Minn., can get a plan for 2013 ehealth.com for $94 a month and a $3,500 deductible.
A $3,500 deductible plan sold on MNsure starting on Jan. 1, 2014, would cost that same woman $168 in monthly premiums.
It’s important to keep in mind that premium rates do not represent the full cost associated with insurance. Deductibles and co-pays, for instance, can also influence how much you spend on health care. For example, a 55-year-old male in Maplewood, Minn., can find a 2013 plan today for about $130 per month. But the deductible is a whopping $15,000. The cheapest 2014 plan available on MNsure for the same profile costs about $200 a month, but the deductible is only $6,300.
Julie Sonier, deputy director of the State Health Access Data Assistance Center at the University of Minnesota, said that the GOP’s cost comparison doesn’t take into account federal subsidies that will be available to many people buying on the individual market.
Sonier points to an actuarial study commissioned by the state that found that 70 percent of people buying insurance on the individual market will see either no change in their premiums or lower costs as a result of those subsidies.
Still, Sonier said a roughly 20 percent increase in premiums isn’t a big surprise.
There are a lot of reasons why premiums are, on the whole, more expensive, she said.
“One is the generosity of the coverage,” she said. For instance, the health care law requires that plans that go into effect in 2014 must cover preventive, maternity, and mental health services, among other things.
Sonier also points to a requirement that deductibles be lower. Further, the cost of insurance can only take into account where someone lives, their age and whether they smoke – which means older, sicker people will be paying less for coverage while younger, healthier people may pay more.
In addition, insurers can no longer deny coverage for people with pre-existing conditions. That means the insurance company has to assume more financial risk and possibly pay out more in claims. That major change in the insurance market will make commercial insurance available to many more people but will also make premiums more expensive, particularly for younger, healthier people.
“The prices of those plans that were being eliminated are on average cheaper than the ones that are going to be on the market right now,” University of Minnesota health finance professor Stephen Parente said. “So you will get better coverage, but you’re potentially going to be paying a lot more for it.”
Up to 25 percent of people who have coverage in Minnesota’s individual market today don’t have policies that meet those minimum requirements, according to Sonier. These people may be getting letters from their insurers saying they’ll have to pay more for their plan.
All that said, plans sold on the exchange won’t be any more or less expensive than what’s available on the open market next year.
“They should be similar if not identical,” said Karen Pollitz, a senior fellow at the Kaiser Family Foundation.
Indeed, that 33-year-old woman living in Nisswa can find the same plan on and off MNsure for the same monthly premium.
Sonier points out that the premium cost increases aren’t nearly as dramatic as they could have been. While other states are implementing new insurance rules outlined in the health care law for the first time, Minnesota has long had strict rules in place about what insurers could charge their customers based on their age and gender.
Sonier also said that prices will plateau in a year or two.
“All of these changes that we’re seeing now are largely one-time changes,” she said.
It’s true that premiums are increasing, and it’s not unfair to say that rates for plans starting in 2014 will cost about 20 percent more.
However, the GOP’s claim needs significant context.
First it doesn’t take into account the fact that many people shopping on MNsure will get federal subsidies to offset the higher cost of premiums.
It also leaves out the fact that premiums are going up because coverage will be more comprehensive and because insurers can no longer reject people with preexisting conditions, among other factors.
www.ehealthinsurance.com (Single coverage for a non-smoking male born in August, 1958, 55109 zip code)
www.MNsure.gov (Single coverage for a non-smoking male born in August, 1958, 55109 zip code)