Minnesota’s Biggest Obamacare Insurer Leaves Exchange

PreferredOne
was the least expensive insurer in the Minnesota’s state-run
Obamacare exchange last year. It was also the most successful at
signing up customers, capturing 59 percent of the state’s market
for private plans,
according to CBS Minnesota. 

And now it’s leaving the exchange, and the 30,000 people who had
enrolled in its coverage. 

As Jed Graham from Investor’s Business Daily
explains, this was due to an unusual feature of Obamacare in
Minnesota—the existence of a “basic health program” option for
lower-income households. 

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.

Given PreferredOne’s dominant position on Minnesota’s exchange,
it stands to reason that the insurer sees no great opportunity to
be had.

The state’s embrace of the basic health program has not only
narrowed the potential exchange pool to households above 200% of
the poverty level, but it seems it may have skewed the demographics
somewhat older.

A statement from the company indicated that support costs for
the exchange plan were too high. “Continuing on MNsure [the state
exchange] was not sustainable,” the statement said. 

The basic health plans were supposed
to mitigate “churn” in the health insurance market, where income
changes throughout the year often mean that low-income individuals
end up switching back and forth between various forms of insurance
as their incomes move up and down across eligibility borders. But
they may end up turning off insurers from participating by limiting
the number of people who end up looking to buy private
insurance.