Small business health plans in Minnesota could be facing double-digit premium increases next year, with some insurers saying that enrollees are consuming more care just as medical costs are rising.
The number of those potentially affected by proposed increases is about 160,000.
Preliminary figures released this month are rekindling fears that some small businesses might drop group coverage altogether, but such moves could be tough in a tight labor market where employers use health benefits to compete for talent.
The state’s four largest health insurers for small businesses are proposing average increases that range from 8 to 17 percent, a slightly higher range than 2017 rate proposals that resulted in an overall average increase of nearly 10 percent after reviews by regulators. The state Commerce Department is scheduled to release final rates by Oct. 2.
“The mountain is harder to climb every year,” said Kevin Otto, chief financial officer at Otto Transfer, a trucking business in Delano that has maintained its employee health plan despite the cost pressures.
In Minnesota, employers with two to 50 workers are covered through the “small group” market, which this year includes more than 275,000 enrollees, according to data released this month by the federal government.
The largest health insurer in the small group market is Bloomington-based HealthPartners, with about 130,000 members. The insurer is seeking an average increase of 17 percent for most of those enrollees.
In a regulatory filing, HealthPartners said it lost money on the small group business in 2016 due in part to higher than expected medical claims. In 2018, the insurer projects increased use of medical services, plus higher payment rates to health care providers and for prescription drugs.
“We expect to see continuing small losses in 2017,” the company said in the filing. “The requested rate increase is projected to result in revenue that is adequate to cover claims and expenses in 2018.”
Golden Valley-based PreferredOne is seeking an average rate increase of nearly 12 percent for about 30,000 enrollees. In its filing, PreferredOne said: “The biggest driver of the rate change is the increasing illness level of policyholders.”
Eagan-based Blue Cross and Blue Shield of Minnesota, which is the second-largest carrier in the market, is seeking an average increase of 9 percent for most of the 89,000 enrollees it currently covers in the small group market. Blue Cross also cited medical cost and utilization trends, adding that reinstatement of a federal tax on health insurers next year also justifies the rate increase.
Not all carriers, however, stressed the same factors in their filings. Minnetonka-based Medica, for example, did not…