Minnesota health insurers are seeking larger premium increases for 2025, including double-digit hikes proposed for many individual and small employer markets.
The proposals, which the Minnesota Department of Commerce posted online last month, are the latest sign that health care costs are rising as the country emerges from the COVID-19 public health emergency.
Eagan-based Blue Cross and Blue Shield of Minnesota, the state’s largest nonprofit health insurer, is seeking double-digit average rate increases in both markets, according to Commerce Department data.
“The primary drivers of the proposed rates are health care costs and utilization trends, including increasing costs of prescription drugs that treat chronic conditions,” Blue Cross said in a statement.
The initial rates, proposed and filed in June, are subject to review by the state departments of Health and Commerce. Final numbers will be known by the end of September.
The proposals apply to a relatively small group of Minnesotans: about 163,000 people in the individual market and about 209,000 small employer health insurance plans. They do not include rates for Medicare, Medicaid and large employer health insurance plans.
The annual data released by the Commerce Department is one of the few public reports on premium trends in Minnesota. It is closely followed for trends in the individual market, where the federal government is orchestrating a sweeping coverage overhaul in 2014 under the federal Affordable Care Act.
“It’s probably too early to say too much at this point, but it appears that the increases are due to [medical cost] “The trend is up,” said Julia Dreier, deputy commissioner for insurance at the Commerce Department. “And the trend is obviously up, which is not terribly surprising given inflation and other factors that are happening in the market.”
In Minnesota, most people who buy individual insurance do so through the government-run MNsure health insurance exchange. The rates offered don’t reflect the significant savings many MNsure buyers receive from federal tax credits.
Across the country, many states have yet to release individual market rate proposals for 2025, said Jared Ortaliza, a California-based researcher at KFF.
“However, in states that have public information, we see premiums for people who buy their own insurance often increase by 5 to 15 percent, not including the federal subsidies that most people receive,” Ortaliza said by email. “Minnesota’s premium increases are slightly lower than what we’re seeing in other states so far.”
Health care inflation is the main driver, he said. Some insurers said hospitals and health care providers have negotiated higher reimbursement rates. In addition, a small handful of insurers cited the impact of high-priced GLP-1 drugs used to treat diabetes and help people lose weight. Health plans saw “increased utilization in 2023 that they expect to continue into 2025,” Ortaliza said.
In Minnesota, the three largest individual insurers are seeking average increases ranging from nearly 8% to nearly 13%. In the past two years, however, the average increases proposed by these insurers have not exceeded 8%.
In the market where small employers buy insurance, the three largest insurers are offering increases ranging from nearly 4% to nearly 16%. Although comparable proposed rates for previous years are not available, these small group insurers have typically seen rate increases of 2% to 7% in recent years.
Small employer groups typically employ fewer than 50 workers.
Blue Cross requested an average rate increase of 15.78% for small business customers who buy through its health insurance division and 10.47% for those who buy the company’s HMO coverage. Last year, Blue Cross saw its operating income fall about 40% to $103.7 million, continuing a string of profitable years for the health insurer.
“Our filings also reflect our continued offering of small group and individual plans in every county in Minnesota,” the insurer said.
HealthPartners and UnitedHealthcare also asked for average double-digit increases in the small group market.
In the individual market, Blue Cross’ HMO division saw the largest increase, up 12.75%. Other average rate increases included: UCare, up 8.8%; HealthPartners, up 7.69%; Medica, up 1.95%; and Quartz Health Plan, up 9.35%.
Minneapolis-based UCare, the state’s largest seller of individual market coverage, said increased use of medical services and higher reimbursement rates were among the factors behind the proposed increase.
Other factors include state requirements for “lower co-payments for chronic disease drugs/supplies and out-of-network coverage for rare diseases.” [and] “Biomarker testing coverage,” the HMO said in a statement. There are also “new requirements for pharmacy manufacturers’ co-pay assistance programs (“coupons”) that shift more costs to insurance companies.”
