Minnesota will let health insurers increase their rates by at least 50 percent next year to protect the state’s Obamacare health insurance individual market from “collapse,” the state announced Friday.
The announcement came from Minnesota commerce commissioner Mike Rothman, who explained bluntly that the state’s individual market was barely staying afloat.
“The Commerce Department pursued every option within its power to avert a collapse this year,” said Rothman. “We succeeded in saving the market for 2017, with only Blue Cross leaving. But the rates insurers are charging will increase significantly to address their expected costs and the loss of federal reinsurance support.”
The increase in premiums for next year will range between 50 percent and a staggering 67 percent. This comes on the heels of an increase of between 14 percent and 49 percent for 2016. After those increases, Rothman warns, the annual growth rate will be completely unsustainable, showing a desperate need for reform. (RELATED: 8 of 10 Obamacare Co-ops Are Likely To Fail This Year)
“Middle-class Minnesotans in particular are being crushed by the heavy burden of these costs. There is a clear and urgent need for reform to protect Minnesota consumers who purchase their own health insurance,” Rothman said at the time.
About five percent of Minnesota residents, roughly 250,000 people, are dependent on the individual market for their health insurance. Obamacare requires all American adults who do not receive health insurance from their employer to either buy individual health insurance or pay a fine. The persistent increases in the price of individual insurance are a sign of a potential “death spiral” in the individual market, as the massive cost increases will likely encourage more people to go without insurance and pay the fine instead, thereby reducing the customer base for insurers and forcing additional rate hikes.
The federal government offers tax credits for the purchase of health insurance on the individual market, but these credits disappear at income of $47,520 for an individual and $97,200 for a family of four.
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