Bait and Switch

Minneapolis Star Tribune reporter (recently of the Pioneer Press) Christopher Snowbeck is performing a great public service in his reporting the on the ongoing MNsure debacle.

About this time last year, we were all suspicious of the apparent low rates being offered on Minnesota’s Obamacare exchange.  Sure, everyone loves a bargain, but the re-election campaign-ready “nation’s lowest rates” claim always looked too good to be true.

Sure enough, low-price supplier Preferred One grabbed a majority of the first-year MNsure market share.  It turns out that they were low-price, not low cost.  They have dropped out of the MNsure exchange and raised rates by 63 percent to any customers who are still interested in sticking around.

Snowbeck reports that Preferred One’s low rates were the result, in part, of pressure from state insurance regulators.  In my opinion, the situation reads less like a consumer advocate asking bidders to “sharpen their pencils” than a political deal getting done.

Was there some quid pro quo involved?  Democrat Governor Mark Dayton has previously denied putting any pressure on the insurance company.  Quoting last week’s Pioneer Press,

Dayton said he never talked to PreferredOne, and neither his commerce commissioner nor MNsure dictated rates.

As they say in the business, “that statement is longer operative.”  Dayton and his appointees need to come clean about who said what to whom and when.

In the end, consumers did not benefit from these artificially low prices.  Yes, premiums paid by some consumers looked to be a real bargain for a few months.  But now they are faced with ruinous rate hikes they did not plan for and may not be able to afford.

Bait and switch may work in politics, but in economics, not so well.