Minnesota extends law blocking HMO sales to for-profits

State lawmakers have extended to 2023 a moratorium that blocks the state's nonprofit HMOs from being sold to for-profit companies.

The measure was first adopted two years ago as a temporary measure to block conversion transactions. Lawmakers were concerned that in a merger or acquisition, nonprofit assets could wrongly be shifted to investor-owned carriers.

Initially scheduled to run two years, the moratorium was a compromise struck after Republican and DFL lawmakers couldn't agree on how to write a new law that would govern such transactions. The four-year extension was included in a massive health care spending bill passed last month during the legislative special session.

"We're relieved that the moratorium was extended, but the job is not done," said Kenza Hadj-Moussa of DFL-allied TakeAction Minnesota in a statement. "The threat of a legal health care heist is still there, it's just delayed."

The trade group for nonprofit health insurers in Minnesota said it supported the extension.

"The law signals the importance of keeping Minnesota's health care resources in nonprofit stewardship," said Patsy Riley, interim president of the Minnesota Council of Health Plans, in a statement.

For decades, Minnesota law stipulated that only nonprofit groups could obtain HMO licenses. That changed in 2017 as Republicans pushed for opening the market to boost competition. While state law previously blocked for-profit companies from holding HMO licenses, those carriers were free to seek licenses as insurance companies.

When the moratorium was first passed in 2017, nonprofit carriers said they had no interest in becoming for-profit companies. Analysts, however, said the nonprofit health plans could be acquisition targets for outside insurers looking to expand in Minnesota.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck