- PreferredOne Health Insurance, Minnesota's dominant exchange insurer, has notified the state exchange MNsure and the Minnesota Department of Commerce that it will be pulling out of the exchange market for 2015. PreferredOne has the lowest rates and the most customers on the 2014 exchange—59% of the individual market enrollees, followed by Blue Cross Blue Shield with a mere 23%.
- According to a PreferredOne spokesperson, the withdrawal is "purely a business decision." Ongoing participation in the state exchange was "not administratively and financially sustainable going forward," said the spokesperson.
- The insurer also indicated that systemic security issues in the exchange created untenable challenges. According to PreferredOne, MNSure was unable to accurately verify consumer identities, although insurers were still required to enroll them in plans. As a result, the insurer says it has wound up providing coverage to individuals who don't live in the state in some cases.
As of April 13, PreferredOne had 59% of the 47,902 enrollees in MNSure. The lesson here is that high enrollment doesn't necessarily translate to program solvency, notes healthcare analyst Dan Diamond. Small insurers often struggle with the "administrative and financial complexity" of managing large customer bases on ACA exchanges, according to Diamond.
Reminder that strong enrollment ≠ strong finances. MT @5hauser: BREAKING: PreferredOne will pull out of MNSure health insurance exchange.— Dan Diamond (@ddiamond) September 16, 2014
According to a company statement, the PreferredOne MNSure individual product membership "is only a small percentage of the entire PreferredOne enrollment but is taking a significant amount of our resources to support administratively. We feel continuing on MNsure was not sustainable and believe this is an important step to best serve all PreferredOne members."
What remains to be seen is how the PreferredOne withdrawal will impact state premium rates in 2015. According to University of Minnesota political expert Larry Jacobs, rates could go up by 10% to 15% in 2015.