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Chronic illnesses drive soaring health insurance costs in MN

ST. PAUL—Chronically ill Minnesotans are driving up health insurance premiums so much that state officials are rushing to deal with the problem.

Commerce Department officials on Monday, Nov. 14, told a task force studying how to contain soaring health insurance costs that 2.2 percent of people who bought individual policies last year caused 50 percent of claims. That forced up prices for healthier people.

As the task force looks at ways to reduce insurance costs, the Commerce Department advice was that any solution has to address that disparity.

At the end of a four-hour meeting, a few Minnesotans punctuated the need to lower premiums.

Some told tear-filled stories about how they need insurance to contain illnesses.

Most stories came from farmers who cannot get insurance elsewhere. One healthy couple said they will pay $61 a day for insurance next year.

Another farmer said premiums are going from $12,000 this year to $20,000 in 2017 for comparable coverage.

Paul Sobocinski of the Land Stewardship Project complained that insurance companies put "profits before people."

Heidi Morlock, a farmer just southwest of the Twin Cities, added: "We need to remember it is the people of Minnesota who are suffering, not the insurance companies."

She said her family is on MinnesotaCare, a state-subsidized insurance program for working poor families.

"We have an affordable premium, no deductible, reasonable co-pays and really good health care," Morlock said, urging the task force to recommend extending the state program to people who now must buy insurance in the private individual policy market.

A state Health Department official presented facts to drive home the point.

On the federal Medicare program, which generally serves people 65 and older, Minnesotans in good health cost $1,450 for health care a year, Stefan Gildemeister said. Those with chronic conditions cost $12,840 for medical services, he added.

To a large extent, that explains why purchasers of individual health plans for 2017 can expect to pay up to 67 percent more than this year.

While individual insurance plans were purchased by just 5 percent of the state's population, they are heavily used in rural areas by farmers and self-employed people who have no other options.

State officials said that since insurers were forced to accept so many sick people, they have been forced to increase premiums, include higher deductibles and restrict how many new policies they sell.

The biggest problem of people with chronic illnesses has fallen on the individual policy market. Half of Minnesotans get insurance through employers, and a large percentage of the rest receive health-care coverage through government programs. Those two sectors are less affected by the number of people with chronic conditions, in part because their costs are spread out among many more people.

Another factor that affects the 2017 individual market is that Blue Cross Blue Shield pulled its regular individual insurance policies, keeping just a more expensive and restrictive health maintenance organization plan on the market.

In most southern and western Minnesota counties, that HMO is the only individual policy available on the individual market after Medica reached the limit of how many new policies it would sell for next year.

Tom Major of the Health Department said the Blue Cross regular policy offered through 2016 was the most comprehensive network statewide, paying for most health-care providers in the state. But with that gone, Minnesotans are finding that remaining policies do not allow them to go to as many providers as Blue Cross did.

Commerce Commissioner Mike Rothman has said that he worked with insurance companies to keep them in the individual health insurance marketplace. For 2018, he warned, without legislative changes there may have been no individual plans available.

The task force, established by Gov. Mark Dayton, is to meet two more times and release its recommendations to fix the problem by mid-December, in time for the Legislature to consider them when it returns to session on Jan. 3.

While long-term legislation is the task force's issue, Dayton and legislative leaders also have discussed financially helping Minnesotans signing up for 2017 insurance now. There has been no decision about whether a special legislative session is possible before the 2017 regular session.

Also affecting the issue is the new Republican control of the state Legislature and Republican president-elect Donald Trump, who likely will work to dramatically change health insurance laws.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.
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