ST. PAUL, Minnesota — The insurance company that grabbed the most customers on Minnesota's health care exchange by offering the lowest rates told state officials Tuesday that it's pulling out of MNsure, a major blow to the exchange as the next open enrollment period approaches.
The decision by Golden Valley-based PreferredOne may mean higher rates and again puts the troubled exchange front-and-center in Minnesota's governor and House elections.
MNsure officials said the company's exit won't affect health coverage through the state-run exchange. The state will send out notices early next month to the nearly 30,000 people who enrolled in PreferredOne through MNsure to outline next steps — customers can transition to another MNsure health plan or renew with PreferredOne, in which case they'll no longer be eligible for government subsidies.
PreferredOne had 59 percent of the private-plan market for MNsure enrollees as of early August. Blue Cross and Blue Shield of Minnesota had 23 percent, HealthPartners 12, Medica 5 percent and UCare 1.
MNsure CEO Scott Leitz said he's had no word any of the four remaining companies are mulling an exit. Open enrollment begins Nov. 15.
Despite a launch last year marred by technical problems and long call center waits, Democratic Gov. Mark Dayton's administration has called MNsure a success because it helped reduce the ranks of uninsured Minnesotans by nearly 41 percent to a record low while offering some of the lowest premium rates in the country. More than 327,000 Minnesotans have enrolled through MNsure since it went live Oct. 1, including nearly 55,000 in private plans. Most enrollees are in the publicly run Medicaid and MinnesotaCare programs for lower-income people.
In a statement, Dayton cast the company's exit as a result of its own low rates.
PreferredOne didn't return calls from The Associated Press.
Company spokesman Steve Peterson told KSTP-TV, which first reported the decision, that staying on MNsure wasn't financially or administratively sustainable. The membership they gained through MNsure was small, but was taking "a significant amount of our resources" to administer, Peterson said.
Republicans called it the latest sign of systemic problems in MNsure, an issue they plan to use to bolster their election-year pitch to take back control of the House and the defeat Dayton. Rep. Joe Hoppe, R-Chaska, said Tuesday's news makes it clear Democrats have mismanaged the state's health care overhaul.
"If you tell your average Minnesotan that we spent $160 million to develop a website and it doesn't work, I think it makes a pretty strong argument for new management, not only in the state House, but in the governor's office as well," Hoppe said.
But Leitz and MNsure board chair Brian Beutner said it was proof the exchange is working as a competitive marketplace. Both officials acknowledged the exchange's rocky rollout, but Beutner suggested PreferredOne's low rates led to its exit.
"They offered the lowest rates and the broadest networks offered last year. I can understand how that might impact them," Beutner said.
It's unclear whether PreferredOne's exit will affect premium rates for 2015, which were already expected to increase because health care costs have been rising. The state's Department of Commerce is expected to release an early snapshot of rates in early October, with full details to follow when open enrollment begins. The department is still reviewing rates from the four remaining providers.
Rep. Joe Atkins, an Inver Grove Heights DFLer and the lead House sponsor of the legislation that created MNsure, said he expects premiums to stay low compared with the rest of the country. He laughed off the Republican criticism as election-season politics.
Atkins said he wasn't surprised by the announcement because he expected some losses and some additions to the online marketplace for 2015. He pointed out that despite its large market share on MNsure, PreferredOne is one of the smaller carriers in the Minnesota health insurance market.
The Dayton administration opted to set up the state-run exchange rather than have Minnesota participate under the federal exchange created by the Obama administration's Affordable Care Act.
Dayton's GOP opponent, Jeff Johnson, blasted the governor and MNsure officials for PreferredOne's withdrawal. If elected, Johnson said he'd sweep out the MNsure board and replace its top management.
Johnson said Dayton himself used PreferredOne's "artificially low" rates to tout MNsure as having the lowest rates in the country.
"It was all a house of cards," Johnson said. "Now 60 percent of policyholders are going to have to go through this whole nightmare again."
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