Enjoy low health care premiums while you can, Minnesota

A new policy briefing released today from Center of the American Experiment shows Minnesota healthcare premiums will remain among the lowest in the nation, largely due to the state’s reinsurance program, first implemented in 2018. Average weighted premiums from Minnesota’s five main insurers for 2024 will increase 4.32 percent, which is lower than the 5.97 percent increase nationally. The release coincides with the annual enrollment period now underway to purchase 2024 health insurance coverage on the individual market in Minnesota.

According to the briefing, premiums in Minnesota skyrocketed in the individual insurance marketplace by 119 percent between 2014 and 2017, the largest increase in the country. Rates have stabilized since the implementation of a reinsurance program which provides payments to health insurers to help offset the costs of enrollees with large medical claims. The reinsurance program in Minnesota keeps premiums even lower by incentivizing insurance plans to control costs and increases competition by encouraging more plans to remain in the marketplace.

“Minnesota is enjoying lower health insurance premiums than the rest of the country mainly because of our reinsurance program, which keeps rates down by encouraging competition” said Senior Policy Fellow Peter Nelson, author of the briefing.

Unfortunately, Gov. Walz and the 2023 legislature moved away from these efficient and effective cost controls in favor of a new MinnesotaCare public option plan that will distort the state’s health care system. The public option plan will require the kind of government subsidies and controls that frequently lead to higher premiums on private plans and lower quality care for everyone.

“As Minnesota’s individual health insurance market continues to show strength, state lawmakers should walk back the public option and, instead, build off the success of the state’s reinsurance program to address any ongoing affordability and access issues,” added Nelson.

Highlights of the policy brief include:

  • Individual market premiums are increasing by 4.32, on average, across the total market in Minnesota. This represents a rather modest increase, considering inflation is currently holding at around four percent.
  • Minnesota’s premiums are increasing more slowly than the national average and most peer states with similarly sized populations. The state’s premium increase is 1.64 percentage points, or 28 percent lower than the national average.
  • Health plan rate filings suggest medical inflation is the main factor driving rate increases.
  • One health plan also noted that their premium rate changes also accounted for “several bills” enacted during the last legislative session. These bills impose new health benefit and cost sharing mandates on health insurers.
  • Minnesota’s lower premiums and more competitive market categorically show the success of the state’s nation-leading reinsurance program.
  • To address any remaining affordability and access issues, Minnesota should build off the successful reinsurance program and abandon current moves to impose a public option to compete with private insurers.

A copy of the report can be accessed at https://www.americanexperiment.org/reports/minnesota-individual-health-insurance-outlook-for-2024