CANNON FALLS — The five panelists at a health policy summit Thursday each touched on various aspects of the Affordable Care Act and its impact on health insurance in the state, but one issue quickly took center stage.
“There’s a pretty significant premium rate differential that exists between the metropolitan market and southeastern Minnesota, and this is a tough nut to crack,” said state Sen. Matt Schmit, D-Red Wing, to an audience of more than 50 in the Cannon River Winery event center.
Individual health plan rates will jump an average of 14 to 49 percent in 2016, according to final numbers released by the Minnesota Department of Commerce last week, with some of the highest increases in southeastern Minnesota.
Schmit said he organized the summit with Cannon Falls Economic Development Authority to bring together experts to explain the premium inequality. The panel included Health and Human Services Commissioner Lucinda Jesson, Dr. Tom Witt with Mayo Clinic Health System and representatives from state offices.
The price differential is real and has been the case “for quite some time,” said Peter Brickwedde, government affairs director with the commerce department.
“With the passage of the ACA and the greater transparency for consumers … we’re now seeing it for the first time,” he said. “That is disheartening because it exists and there are real costs borne by folks here in southeastern Minnesota that aren’t borne by folks in the metro area.”
Minnesota is split into nine geographic rate areas with Goodhue County in Area 1 and neighboring Dakota County in the metro Area 8. Geographic area, tobacco use and age are the three factors that can affect premiums.
“There’s only one place in the state of Minnesota where Area 1 and Area 8 touch each other, and that happens between Goodhue and Dakota counties. Nobody else in the state of Minnesota is suffering this,” said Steve Dabelow of Cannon Falls, one of several impassioned speakers to address the panel.
“We’ve got an industrial park in Randolph, Minnesota, that’s in Dakota County, and if I own a business in Cannon Falls I’m going to pay more for the same health insurance than that business would pay five miles away,” he said.
Brickwedde said it is difficult to show what the differential is between areas because of the wide range of plans and providers not offered in all parts of the state. But each region’s benchmark — the second lowest-cost silver insurance plan — provides a good comparison, he added.
The 2016 benchmark plan in Area 1 will be $334 per month, up 18.5 percent from $282 this year. The metro area will see a lower benchmark increase while in other parts of the state it will be even higher.
Panelists did not provide a definitive reason for the differential, but hinted at a complex web of factors such as competition between care providers and insurers and market demand.
The region is unique in having the “world-class” Mayo Clinic Health System, “but the population base here is not sufficient to draw in as many other provider networks,” said Tom Major with Minnesota Department of Health’s Managed Care Services division.
The eight companies approved to sell individual insurance plans in Minnesota requested rate increases next year based on a higher-than-expected percentage of less healthy enrollees, high-cost claims for medical care and prescription drugs and the small market for individual plans.
Fewer than 6 percent of Minnesotans purchase health insurance through the individual market, primarily those without coverage through an employer and who do not qualify for public programs.
Premiums for group plans used by small businesses will increase much lower at an average of 1.29 percent in 2016.
Schmit said it was important for the panelists to hear residents’ concerns and is in talks to hold a similar discussion in Red Wing. “This is a conversation that we need to continue to have.”