Minnesota's Nonprofit Health Plan Industry's Annual Report Shows Health Care Cost Increases Continued, Enrollment Shifted in 2009

ST.PAUL, Minn., April 19 /PRNewswire-USNewswire/ -- Data released today by the Minnesota Council of Health Plans shows five consistent trends for Minnesota's health plans and health care in Minnesota. The analysis is based on data from Minnesota's eight nonprofit health plan companies and shows:

• enrollment continues to grow in health savings accounts (HSAs) products
• enrollment continues to grow in government-supported health care programs
• enrollment continues to decrease in small employer group coverage
• health care costs continue to rise
• industry wide, operating gains continue to be below 1 percent of premium revenue

Payments by Minnesota's health plans on behalf of their members for doctor visits, prescription drugs, hospital stays and other medical services increased $1.2 billion in 2009, totaling just under $17 billion. While pharmacy spending had decreased or was fairly flat the last three years, it increased this year more than 5 percent. Other spending trends in health plan spending mirror recent national reports and include:

• 6.7 percent increase in physician services
• 14.3 percent increase in other professional services
• 7.8 percent increase in inpatient hospital services
• 8 percent  increase in outpatient services
• 16.6 percent increase in emergency services
• 5.4 percent increase in pharmacy and medical supplies
• 19.2 percent increase in chemical dependency and mental health services

Overall enrollment remains stable, enrollment shifts among products

While enrollment in Minnesota's health plans remained fairly steady at 4.3 million individuals, the make up of that enrollment shifted in 2009. Enrollment in state public programs and plans that qualify for HSAs increased, while fewer individuals were enrolled in small group coverage.  

• Government programs enrollment, including Medical Assistance, General Assistance Medical Care and MinnesotaCare, increased 14 percent in 2009 to 462,013.
• Companies with 50 or fewer employees dropped small group coverage for 42,486 people in 2009. According to a recent Minnesota Department of Health University of Minnesota report, nearly one in five Minnesotans without health care coverage work for employers that qualify for small group plans.  
• Enrollment grew 32 percent in products that connect a savings account with health care coverage. HSA products feature lower monthly premiums and higher deductibles than some other products.  One in six enrollees (721,328) in Minnesota's nonprofit health plans had HSA-type qualifying coverage in 2009.

"As nonprofits, Minnesota's health plans work to keep premiums as low as possible. Yet premiums also need to reflect the actual costs of care, and those costs continue to increase. My hope is that the larger discussion on reform now moves beyond health insurance and begins to address the larger concerns that impact the entire health care system," said Julie Brunner, executive director of the council. "Any additional taxes or other changes that add costs to the system means there will be fewer people who can afford private coverage."

Investment turnaround helps replenish previous losses in reserves

Health plans earned $74.8 million in interest on investments and posted an operating margin of less than 1 percent on $18.6 billion in premium revenue in 2009. The industry added 1.2 percent of revenue ($220.4 million) to reserves, which had dropped $151 million the previous year. Minnesota law requires health plans to have reserves to ensure that health plans can pay members' medical bills, and invest in technology and other improvements even if there are unexpected catastrophic claims, natural disasters or economic downturns.  Minnesota's health plan industry currently holds enough money in reserves to meet just more than two months of day-to-day expenses for the 4.3 million enrollees.

"After four years of operating in the red or close to it, Minnesota's health plan industry saw a modest gain. These resources are essential to weather the many changes and requirements that are coming from Washington as we begin to implement health care reform," Brunner concluded.

State statute requires Minnesota's health plans to submit reports on their financial status. The reports are independently audited to comply with generally accepted accounting principles, standards of the Financial Accounting Standards Board, and definitions and standards promulgated by the National Association of Insurance Commissioners and the State of Minnesota.

Established in 1985, the Minnesota Council of Health Plans is a trade association of seven licensed nonprofit health plans.

SOURCE Minnesota Council of Health Plans