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Minnesota has $10 billion on the line in letting health insurance go for-profit

UnitedHealth, based in Minnetonka, is rearing to sell policies to Minnesotans, but legislators warn the dangers of a for-profit insurance market.

UnitedHealth, based in Minnetonka, is rearing to sell policies to Minnesotans, but legislators warn the dangers of a for-profit insurance market. Bruce Bisping, Star Tribune

Since 1973, nonprofits have run Minnesota’s health insurance market. Even UnitedHealth, based in Minnetonka, couldn’t sell policies in its own state. All of that changed in 2017, when lawmakers lifted a ban on for-profit insurers. It’s expected to take effect in July.

Minnesota Attorney General Keith Ellison and a group of legislators are trying to stop it. They want to reverse the repeal before it can take effect, contending there are about 10 billion reasons the average Minnesotan should want that, too.

At the time the repeal was passed, Minnesota’s fleet of nonprofit health plans had $10 billion in assets and reserves – all built on the tax breaks, premiums, and public contracts that came with nonprofit status. In return, that money was supposed to be spent in the public interest – like lowering premiums, or on smoking cessation campaigns, or promoting healthy diet and exercise.

Now that some of those nonprofits may convert to for-profits – or simply be subsumed by them – they could use that money for… whatever they want, really.

“There’s nothing in the statute preventing them from doing it,” says Rep. Tina Schultz (D-Duluth). And they have plenty of evidence it will go bad. Medica has already told the Minnesota Department of Human Services it plans to transfer over $100 million out of state – including some $90 million that would go straight to its Wisconsin subsidiary.

Schultz says this will be allowed due to a single sentence snuck into a larger bill about insurance premiums. (Legislators, she says, were in a rush to pass a discount on premiums and stabilize the market.)

At the time, Republicans argued it would be a great thing for Minnesotans. What better to lower premiums than a little old-fashioned capitalistic competition? But Schultz, who has a Ph.D. in economics and health services research, is skeptical.

“As an economist, I’m not opposed to having for-profit companies operating in the market,” she says. But she is opposed to doing it without guidelines in place, as are 19 states that have already enacted some regulations.

The kicker is that all of this rides on a 1,000-page, many-headed hydra of a health and human services bill, which is supposed to be debated on the House floor today.

It’s hard to predict whether repealing the repeal will survive the effort, especially after failing last year. Then there's the Republican-controlled Senate, where consumer-friendly legislation rarely gets a welcome reception. Michelle Benson (R-Ham Lake), chairwoman of the Health and Human Services Finance and Policy Committee, is not supportive. 

Schultz says they “might” be able to get this accomplished – if they offer something to Republicans in return. Then again, that's how we got here in the first place.