Insurers Pulling Plans Is Costly Problem For MNsure

ST. PAUL, Minn. (AP) — Minnesota insurers have routed thousands of customers away from MNsure, a financial boon for the companies but one that creates enrollment and revenue headaches for an exchange already confronting concerns about long-term solvency.

After signing up customers on plans through the exchange in 2014, two insurers effectively pulled nearly 5,000 policies off MNsure for the following year. That pushed those customers into the private individual insurance market where MNsure can't collect the fees on premiums it uses as funding.

Another 6,500 policies face the same fate next year, according to data from the exchange. If none of those customers return to MNsure to pick a new plan, their insurer would escape the 3.5 percent fee the exchange collects — and MNsure could lose out on hundreds of thousands of dollars throughout the year.

It's a perfectly legal maneuver, and the two companies who have pulled plans — Blue Cross Blue Shield and Health Partners — told The Associated Press they did it not because of costs but by a desire to offer better policies that matched with demand in the individual market.

MNsure has stemmed the tide by coaxing some of those customers back to the exchange, but the wrinkle means the exchange is fighting to win back customers it should already have. And for consumers, it means the headache of switching from a plan they might be happy with if they want to preserve subsidies that only come with a policy purchased through MNsure. Some enrollees may not realize they stand to lose tax credits when the policy they got through the exchange automatically renews after being pulled off it.

Legislators may explore tweaks to solve the problem as early as next year, but a fix may not be easy.

"It's a disturbing trend," said Sen. Tony Lourey, a Democrat who helped set up MNsure. "It creates an incentive to steer away from the exchange. This is a problem."

It's an issue that's been largely limited to Minnesota.

Some state-run exchanges head off the problem by taxing all plans in the individual market — not just those sold on the exchanges created by President Barack Obama's health law. And many, including the federal government, allow exchanges to shift customers into similar policies if their current plans disappear.

The latter isn't allowed in Minnesota, where the state's strict health insurance laws require insurers to guarantee they'll continue selling a policy to consumers. The result? If a provider pulls a plan off MNsure, all those customers automatically renew in that plan — now off the exchange — unless they go back to MNsure to pick a new policy.

Blue Cross and Blue Shield of Minnesota and Health Partners together discontinued more than 4,750 enrollees' plans heading into 2015. That amounted to a one-two punch for MNsure since the largest provider in the exchange's first year, PreferredOne, left the marketplace. All told, more than 70 percent of MNsure's enrollment was primed to disappear with the New Year.

But while PreferredOne publicly announced its plans to exit the marketplace, the continued migration of some plans off the exchange has been quiet.

According to the plans recently approved by state regulators for sale on MNsure next year, Blue Cross Blue Shield will stop selling policies that currently cover nearly 6,500 residents, including all of its top-tier, low-deductible platinum plans.

Blue Cross plans to send notices out to those customers starting next week. A draft of those letters first warns of coming rate hikes and other policy changes, then informs enrollees that their plan won't be offered through MNsure. It gives customers two options: Do nothing to keep your plan, or return to MNsure to pick a new policy that qualifies for subsidies.

Spokesman Scott Keefer said they've consolidated several policies into one, more effective health plan — in some cases, routing customers to the private market because state law won't let them eliminate the older plans entirely. Keefer also pointed to the high administrative costs of working with the exchange.

"The withhold from MNsure has little, if any, material impact on our product decisions," Keefer said.

In 2014, Health Partners also sent out notices to its roughly 1,200 customers who were set to move off the exchange, but their letter did not mention the transition away from MNsure or the disappearing tax credits.

Like last year, MNsure will use direct mail and advertising to try to persuade customers to come back and pick a new plan — armed with the allure of tax credits to buy down premiums on track to rise by nearly half next year.

"I've got my eye on it. I think the whole organization does," MNsure's interim chief executive Allison O'Toole said.

The problem could continue until lawmakers step in. Lourey, O'Toole and others said a new task force studying the future of Minnesota's health care should consider a fix.

Jim Schowalter, leader at the health care trade group Minnesota Council of Health Plans, said Minnesota's "guaranteed renewability" laws have become more of a hindrance than a help now that the Affordable Care Act is in Place. Legislators should look at scrapping it, he said.

Lourey said the state should consider charging fees on all individual market health insurance policies — not just those sold on MNsure — in conjunction with lowering the rate. MNsure currently collects a 3.5 percent fee on premiums.

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