The reason Preferred One – provider with all of the least-expensive plans in the MNSure exchange – left the exchange last month, giving most of its subscribers a 60+% increase in rates to keep a MNSure plan, was that they were basically strong-armed into providing the unsustainable low rates to begin with:
Sometime after the insurer PreferredOne submitted its proposed rates for the first year of the MNsure exchange, state regulators asked the company to consider lowering the numbers.
Ultimately, the insurer responded with “a total rate decrease of 37 percent”, according to a July 2013 letter from an outside actuary to the company. Those final rates were the lowest in the Twin Cities – and across the country, in many cases – and helped PreferredOne to grab nearly 60 percent of the MNsure business.
Now, those subscribers face an average premium increase of 63 percent if they stay with PreferredOne — a yo-yo scenario that health policy experts say points to the challenge in setting prices under the federal health law. The big swing also suggests that the low prices were out of step with the reality of the business.
“This was the first year of a new market, so no one knew what they were bidding on,” , said Gary Claxton, a vice president with the California-based Kaiser Family Foundation. “That means it was hard to create the rates, and it was hard to review them.”
Here’s the deal: as Representative Zerwas pointed out on a morning radio show today, Preferred One is keenly aware that the MNSure board – a political board, composed (per statute) of absolutely no people from the healthcare or health insurance industries – can decide who does and doesn’t get to participate in the exchange.
Which gives them a lot of power when, for example, they tell a company like Preferred One to kick the tires on an unsustainable rate structure.