1 week Ago By Dené K. Dryden
ROCHESTER — As Rochester-area residents shop for private health insurance plans during this open enrollment period, they might see higher premiums compared to their counterparts in the Twin Cities. For example, a 40-year-old who buys the second lowest-cost silver plan on MNsure, the state's health insurance marketplace, could expect to pay, on average, $538.48 per month in 2025 if they live in Olmsted County.
If they live in Hennepin County, though, that monthly bill is about $315.13, per data from the Minnesota Department of Commerce. ADVERTISEMENT According to 2024 data from MNsure, insured people in Rating Area 1 — a 10-county area surrounding Rochester — have the highest monthly premiums, on average, for individual insurance plans in Minnesota.
(The data does not reflect employer-sponsored plans, Medicare, Medical Assistance or MinnesotaCare.) Why the discrepancy? Health insurers can set different prices for their plans in different geographic areas. However, per a MNsure spokesperson, "(price) differences can only reflect differences in the costs of delivering health care .
.. not differences in the health of the population by geographic area.
" The Rochester area does have the highest relative health care prices in Minnesota, per a 2023 analysis from MN Community Measurement. Competition among health systems, among other things, factors into the cost of care in a region. "You get in a more metropolitan area — the Twin Cities, for example — there's a lot more competition from different hospital systems" compared to the Rochester area, said Mitch Anderson, an independent health insurance advisor at Prime Time Health Advisors in Rochester, a MNsure broker enrollment center.
"There's also more competition from insurance companies," Anderson said. "We have three insurance companies that offer individual plans in southern Minnesota, compared to ..
. five or more that are available in the Twin Cities." Health insurers can use only four other factors, per federal law, to set premium prices: age, tobacco use, whether the plan covers a spouse or dependents and the Affordable Care Act plan category it falls in.
ADVERTISEMENT This is how that all plays out in numbers: In 2024, the average gross premium in the Rochester area is $1,123.30. In comparison, the average in Rating Area 7, which encompasses the Twin Cities metro and the greater St.
Cloud area, is $709.59, the lowest in the state. Rating Area 3, south-central Minnesota, has the second most expensive average gross premiums at $1,014.
07. Those figures come with an important caveat: the advanced premium tax credit. This tax credit reduces the upfront cost of one's health insurance premium.
Income eligibility used to be capped at 400% of the Federal Poverty Guidelines, but the Inflation Reduction Act of 2021 removed that cap. The size of the credit depends on one's gross income, household size and the cost of the benchmark plan available to them. That benchmark plan is defined as the second-lowest cost silver-tier plan.
"In general, somebody's going to pay roughly 10% of their modified, adjusted gross income on health care premiums," Anderson said. "What Obamacare determined was that's roughly what a household can afford to pay on individual health insurance premiums." For someone making $60,000 per year, Anderson said, that 10% is $6,000.
Divided over 12 months, that is $500 per month. If the benchmark health insurance plan on MNsure for that person costs $800, that person would get a $300-per-month tax credit to bring their premium cost down. While southeast Minnesota has the state's highest average gross premiums, it also has the largest average tax credits to offset the cost of health insurance.
Per the MNsure data, eligible Rating Area 1 residents qualified for a tax credit of $788.87 per month, on average. After tax credits, Rochester-area residents' average premiums are $334.
43, still higher than other regions' averages, but by a lesser degree. (After tax credits, the average premium for the Twin Cities-St. Cloud region is $302.
04.) ADVERTISEMENT Across Minnesota, health insurance marketplace enrollees received more than $332 million in premium tax credits in 2024, according to data compiled by the Kaiser Family Foundation. Despite the price differences between different corners of the state, Anderson said Minnesota has some of the lowest health premiums in the nation.
Part of that, he said, is due to the state's reinsurance program. "(The insurance companies) don't know who's going to have a million-dollar expense," Anderson said. "That's hard, from an actuarial value, to price a plan.
" What Minnesota's reinsurance program, established in 2017, does is, after covered medical expenses for a patient exceed a certain amount, the state covers a portion of those costs. Current state statute has the reinsurance program kick in at $50,000. The insurer covers that $50,000, but the rest of cost (up to $250,000) is split between Minnesota and the insurer 80% and 20%, respectively.
"They found this gap where if the state helped fill in that gap, the insurance company could stabilize their plans," Anderson said..
