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Minnesota: Bad News: Largest insurance co. pulling out of MNsure

Hat Tip To: 
Lindsey P., Brian W., others

Ouch. While most states are seeing their list of insurance providers increasing this year, in a few cases some are dropping out...and in the case of Minnesota, it's the one with 59% of current enrollees:

The insurer with the lowest rates and most customers on Minnesota's health care exchange is pulling out.

Golden Valley-based PreferredOne this morning confirmed its exit from MNsure. It comes as a major blow to the exchange — the next open enrollment period starts Nov. 15 and runs through Feb. 15.

MNsure officials said the online insurance exchange would reach out soon to PreferredOne customers who bought coverage through MNsure last year with information on next steps.

They said consumers still have at least four, well-known, Minnesota-based carriers "who are committed to providing important health coverage" to everyone, including people who qualify for tax credits and public programs.

...According to a company statement, MNsure policies make up only a small percentage of PreferredOne's entire enrollment but take up a significant amount of resources to support.

PreferredOne had 59 percent of the individual market for MNsure enrollees as of Aug. 6.

Minnesotans currently enrolled in Preferred One are covered through their existing plan for the rest of 2014.

Well, yeah, this pretty much sucks. 59% of the total means roughly 32,000 people. The silver lining is that there's still at least 4 other MN-based insurers to choose from, but from a PR perspective, this has gotta hurt.

The reason for this development is apparently mainly related, ironically, to Minnesota's embrace of another ACA provision:

In 2015, well more than half of MNsure exchange subsidies won't go to insurers on the exchange, but to a public program serving households that fall between the cut-off for Medicaid and 200% of the poverty level.

To date, this MinnesotaCare program for households above 138% of the poverty level has signed up 72,000 people vs. just 55,000 for the subsidized exchange.

The state was the first to embrace the Affordable Care Act's little-known basic health program option, allowing for subsidies to be used in this way. New York state's 2015 budget authorized the creation of a basic health program, so it may be the second to take the plunge.

IBD writer Jed Graham suggests that this has resulted in a lower-than-average "young adult" enrollment rate, which may be the cause of PreferredOne dropping out, citing the 24% 18-34 figure in the state. However, this isn't that much lower than the national average of 28% in that age range, so I'm not sure this holds water. Then again, he notes that the payment rate among that demographic might be lower still relative to the other age brackets, so who knows?

One other interesting tidbit: According to Graham...

2 odd facts about MNsure: Only 4 in 10 sign-ups get subsidies & more people signed up for platinum (27%) than bronze (26%).

— Jed Graham (@Jed_Graham) September 17, 2014

I don't know what percent of PreferredOne enrollees specifically are currently receiving subsidies, but assuming that 40% is true for that company, it suggests that the financial impact on the enrollees of this move may not be as bad as it sounds (ie, only around 12,900 would have to move to another carrier to keep their tax credits instead of all 32,000).