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Health plan enrollment increases 308,895 in Minnesota

Staff writer ▼ | April 1, 2015
Enrollment in Minnesota's seven nonprofit health plans increased 308,895 or 6.8 percent, between 2013 and 2014, according to reports by Minnesota's health insurers.
Minnesota health
Healthcare   According to reports by health insurers:
MCHP member health plans paid $21.3 billion.
With enrollment at more than 4.8 million, enrollment gains were seen in many segments but most notably within individual private coverage and public programs.

Data released by the Minnesota Council of Health Plans (MCHP) provide the first industry-wide look at the impact of the Affordable Care Act (ACA) on Minnesota's health market. ACA reforms help individuals pay for private market premiums, eliminate asset limits for Medicaid enrollment and make changes to standardize product options and add federal taxes.

Enrollment in new individual market products showed consumers seeking a variety of options, with fewer than 1 in 4 selecting Bronze coverage. About 1 in 5 individual market members remained in grandfathered products, meaning their coverage started prior to the ACA start date. In total, most of these policies were sold directly to consumers, with MNsure, the state's health insurance exchange, enrolling fewer than 14 percent of individual members.

While aggregate year-over-year industry-wide financial performance remains steady, significant variation took place across companies, business lines and products.

For example, more members from the state's high risk pool selected new coverage in the individual market than predicted. With high risk pool members' health care costs at three to four times higher than average, the accelerated move is one reason why individual market premium revenue did not cover expenses.

Overall in 2014 MCHP member health plans paid $21.3 billion—$58.3 million every day—for medical care on behalf of their members for doctor visits, prescription drugs, hospital stays and other covered medical services. While per person spending on care increased just 0.8 percent, reflecting the impact of increased enrollment, overall spending for care was up more than $1.5 billion or 7.7 percent over 2013.

The overall industry-wide operating margin was 0.97 percent ($229.4 million) on $23.7 billion of premium revenue. Investment income was $136.2 million. The 2014 contributions to reserves was 1.4 percent ($330.9 million) of total revenue. Per enrollee, the amount of money in reserves decreased in 2014.

Revenue from state public programs serving 760,298 Minnesotans was $5.1 billion in 2014. The year ended with an operating margin of 3.6 percent ($185.2 million.) The average operating margin over the past 10 years on public programs is 1.8 percent of revenue.

While overall administrative spending remains consistent as a percent of premium revenue (9.2 percent), the components of that spending have changed. The industry increased its spending on programs and services that improve the health of Minnesotans by 14.4 percent. In addition, premium taxes paid by smaller employers and individual policyholders increased 19.8 percent to $387.9 million in 2014.

The increase was driven by $172.7 million in new fees and taxes designed to pay for premium subsidies, expanded public programs coverage and other changes called for as the ACA is implemented nationwide. Taxes and assessments account for about 11 to 12 percent of the premium paid by policyholders.