Minn. Healthcare Payers Reported $687M in Financial Losses
New data found that local Minnesota payers lost millions throughout the previous year, with relationship between premium and care costs cited as the cause.
Source: Thinkstock
By - Local healthcare payers in Minnesota reported financial losses of $687 million due to the rising gaps in premiums and healthcare spending.
The Minnesota Council of Health Plans gathered statewide data from insurance companies and HMOs, and found that revenues from premiums increased four percent from last year up to $25.9 billion. However, healthcare expenses rose by six percent up to a total of $26.6 billion.
State public programs accounted for half of the losses while individual markets also saw dips in profitability.
On average, Minnesota payers paid $763 per second for care, which in turn required these payers to withdraw $560 million from state-mandated medical reserves.
"While information throughout last year pointed to some financial problems, $687 million is a much bigger number than I expected," said Jim Schowalter, MCHP President. “Yet our medical bills got paid.”
Over a three-year period, Minnesota payers have not experienced positive revenue-to-premium expenses. In 2016, individual market expenses reported a difference of $275.5 million more than premiums paid. Federal help reduce this amount by roughly $50 million, bringing the final difference to $222.7 million.
Also contributing to the losses were low purchasing numbers for individual insurance. About four percent of Minnesotans bought policies directly, while the number of people who bought health insurance on their own dropped by 18 percent.
Public health insurance costs in Minnesota also exceeded expected revenues. Payers ended 2016 with payments from the state for care of families and children $356.7 million short of expenses. Other state-supported insurance such as elderly and disabled care added another $17.4 million to that shortfall.
The Minnesota Department of Health announced a savings of $450 million in a new competitive bidding contrac, but failed to cover the costs of state health insurance through payments. Savings did not translate to other sectors of the public.
"The state wanted to save money and it did," said Schowalter. "The aim for the future should be working together so that taxpayers, businesses owners, individuals—whomever is paying the bill—saves money, too. Those savings require finding ways to reduce the actual expense of care we need.”
Following the release of the numbers the council concluded that the fewer choices for coverage, lower access to care, and rising premium prices needed to be addressed in2017.
“While decisions coming from St. Paul and Washington, D.C., may still affect 2018 health insurance for some Minnesotans, employer-sponsored insurance for more than 3.2 million people is expected to be less effected,” the Council said.
Governor Dayton and legislators took action by agreeing that the state should pay 25 percent of premiums for people who buy insurance on their own and ensure the public can get care closer to where they live.
“Employer insurance was the first to benefit from payment changes that reward wellbeing over the number of tests or procedures done,” MCHP said. “They have also experienced the success of partnerships with high-value networks of hospitals and clinics, as well as insurers’ support of start-ups that offer new ways to get people the care they need.”
