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digipo:analysis:minnesota_premium

Minnesota Premiums

Claim: Minnesota Affordable Care Act insurance premiums increased by up to 66% last year.

Status: Mostly True

Summary: Insurance companies requested premium increases of up to 66% in Minnesota for both MNSure (the ACA provider) and other providers. But these increases will be mitigated or erased by ACA subsidies for many lower class and middle class families.

Origin and Prevalence

The claim is has been a part of a Republican narrative about the Affordable Care Act since the increases were proposed in Fall 2016. But it is not purely a partisan issue: Minnesota's Democratic governor noted that the ACA was “no longer affordable”, before walking those comments back.

Issues and Analysis

The claim that Minnesota insurers have applied for hikes on this scale is true, although the 66% figure represents the high side of things, with an average increase of around 50%. There are two major caveats to keep in mind however.

First, Minnesota's increases are in part a market correction: Minnesota had had some of the lowest premiums in the nation early in ACA implementation, and that led to the low baselines off of which the increases are being computed. Even with these increases, Minnesota is still not in the top ten highest premiums by state.

Second, the increases in premiums are offset for most working class and middle class voters by Obamacare subsidies. For instance, a family of four making $90,000 a year would still qualify for some level of subsidy, and lower income families and individuals may find the ACA subsidies cover the increases entirely. Over half of Minnesota's individual market is eligible for subsidies.

Still, the hikes show some of the deficiencies of the state-level pooling on which much of the ACA is based. Minnesota's individual market is small – only about 250,000 people – and those people are sick at higher rates than the general population. This makes it hard to find insurers interested in serving that population. Two possible fixes for this are to increase penalties on individuals who do not sign up (thereby increasing the size of the market through forcing people to sign up) or to create bigger pools.

digipo/analysis/minnesota_premium.txt · Last modified: 2017/02/05 16:04 by judell