Last year's return to profitability for Minnesota's nonprofit health insurers included smaller losses from the state's biggest contract in the Medicaid and MinnesotaCare health insurance programs.
The business generates more than $3 billion in annual revenue for HMOs, which for decades have served as managed-care organizations in the state's health care programs for lower-income residents.
The financial improvement in 2017 for insurers comes amid hints that for-profit HMOs such as Minnetonka-based UnitedHealthcare might for the first time compete for the Minnesota public program business over the next year or so.
The latest numbers suggest big losses in 2016 were "a one-year blip in a decadelong or longer record of strong profitability for the Minnesota HMOs contracting with the state," said Allan Baumgarten, an independent health care analyst in St. Louis Park.
But Jim Schowalter, chief executive of the Minnesota Council of Health Plans, said the 2017 improvement looks bigger than it actually was because some insurers accounted for some of last year's losses in advance, and recorded them in their 2016 results.
As opposed to a one-year blip, Schowalter said: "I think 2016 was a learning year — a low point that both the [health plans and state] are learning from and trying to get to a sustainable place, so that enrollees can count on the same care and the same providers every year."
In April, the Minnesota Council of Health Plans reported that the state's seven nonprofit health insurers collectively posted in 2017 net income of $307.9 million on $27.6 billion in revenue, for a profit margin of about 1.1 percent. The trade group noted the results marked a turnaround from the two previous years, when the seven carriers collectively lost money on operations.
A big part of the improvement came in the market where individuals buy health insurance, which has generated considerable losses for insurers since major Affordable Care Act changes kicked in during 2014. But there also was financial improvement for carriers from the state contract for managing care in MinnesotaCare and the largest chunk of Medicaid, which is called the Prepaid Medical Assistance Program (PMAP).