PreferredOne – a carrier with a 59 percent share of Minnesota individual public exchange plan enrollment – has decided to pull out of the state’s exchange in 2015.
Managers of MNsure, a state-based Patient Protection and Affordable Care Act (PPACA) exchange, said they believe customers will be able to choose qualified health plans (QHPs) from at least four other carriers for 2015. State law gives consumers who already have PreferredOne QHP coverage the right to renew their coverage next year, but PreferredOne can increase the premiums.
Scott Leitz, the chief executive officer of MNsure, and Marcus Merz, the CEO of PreferredOne, put out a joint statement saying “both organizations understand that MNsure is still an evolving partnership.”
PreferredOne said in a separate statement that its 31,000 exchange QHP enrollees account for just a small share of the company’s total enrollment but use up a significant share of its administrative resources. “We feel continuing on MNsure was not sustainable,” the company said.
PreferredOne kept prices low this year partly by setting deductibles for coverage with a “metal level” relatively high. For a 49-year-old single nonsmoker in Minneapolis, for example, silver-level coverage now costs about $205 per month for a QHP with a $3,500 annual deductible.
Minnesota Gov. Mark Dayton told local news organizations that PreferredOne had tried to buy market share by setting rates at very low levels, and that keeping its rates in place in 2015 would distort MNsure’s rate structure.
Before the 2014 open enrollment began, some actuaries had suggested that the temporary PPACA risk corridors program – one of the “three R’s” PPACA risk-management programs – might reward carriers that charge very low rates.
Program rules call for the U.S. Department of Health and Human Services (HHS) to use cash from health insurers with good 2014 underwriting results to help QHP issuers with weak underwriting results. PPACA drafters said they created the program to protect health insurers from the unexpected shifts in risk that might occur because of the new PPACA rules.
In the past year, HHS has emphasized that it wants to run the risk corridors program in a “budget neutral” manner, using only money from health insurers. Republicans in the House have called the program a bailout for health insurers. Rating analysts at Moody’s Investors Service have suggested that a combination of political uncertainty and uncertainty about health insurers’ 2014 performance makes predicting how much money QHP issuers will get out of the risk corridors program difficult.