The business of managing care for lower-income Minnesotans has become less profitable for health plans, with one insurer arguing that low payment rates from the state this year have overcorrected the big profits of 2015.
Through the first three quarters of 2016, the HMO divisions at Minnetonka-based Medica and Eagan-based Blue Cross and Blue Shield of Minnesota posted a combined loss of about $195 million, according to a Star Tribune analysis of regulatory filings released this month.
Medica and Blue Cross were the big winners in terms of enrollment when the state dramatically downsized Minneapolis-based UCare's position for 2016 as a managed care organization in the largest chunk of state public programs.
Last year, health insurers in Minnesota and other states saw lots of operating income from the Medicaid business, where enrollment has grown under the federal Affordable Care Act.
"The market greatly overcorrected, which is creating the situation where we have the losses that we do," said Geoff Bartsh, the vice president and general manager for state public programs at Medica. "The payments to the plans from the state are nowhere near adequate to cover the costs of the program."
The state-federal Medicaid program provides health insurance for a variety of groups, but primarily serves people with incomes at or below the poverty line. MinnesotaCare covers a slightly higher income group often described as the "working poor."
For decades, Minnesota has hired HMOs to manage care for most enrollees in the programs. HMO profits on the business have generated controversy over the years, with some arguing the health plans make too much money.
The state Department of Human Services (DHS) administers the health insurance programs, and said the 2016 rates were set through competitive bids. Minnesota was one of 32 states and the District of Columbia that opted to expand eligibility for Medicaid as part of the federal health law.