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Minnesota health insurance marketplace: history and news of the state’s exchange

COVID-related special enrollment period ended July 16, 2021, but applicants who have received unemployment compensation in 2021 can still enroll

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Key takeaways

Minnesota health exchange overview

Minnesota’s state-run exchange, MNsure, has five participating insurers for 2021, up from four in 2020. The exchange enrolled more than 122,000 people in individual market coverage during the open enrollment period for 2021 coverage. And 12,700 additional people enrolled during the COVID-related special enrollment period that continued through July 16, 2021

Throughout 2017, Minnesotans who bought their own health insurance (on or off-exchange) and weren’t eligible for ACA subsidies were provided with 25% premium rebates from the state as a result of S.F.1, signed into law by Governor Dayton in early 2017. The subsidies helped to offset the large premium increases that applied in Minnesota in 2017, and helped to stabilize the individual health insurance market in 2017. But the premium rebate program expired at the end of 2017.

Thanks in large part to the new reinsurance program that Minnesota created (details below), premiums decreased in Minnesota’s individual market in 2018, 2019, and again in 2020, although rates increased modestly for 2021. In May 2019, Minnesota leaders reached an agreement on a budget that included an extension of the reinsurance program through 2020 and 2021. The program had already been granted federal approval through the end of 2022; Minnesota Governor Tim Walz had hoped to implement a premium subsidy program and a new tax credit in Minnesota starting in 2020. But a compromise in the budget ended up with the state opting to continue the existing reinsurance program for two more years instead.

When is open enrollment for 2022 coverage in Minnesota?

Open enrollment for 2022 coverage starts on November 1 in Minnesota, and MNsure has announced that it will continue until January 15, 2022.

Last year, for 2021 coverage, MNsure allowed people to enroll until December 22, 2020, so the open enrollment period for 2022 coverage will be three weeks longer than the window that was available for 2021 coverage. Minnesota is following suit with most of the rest of the country, where open enrollment has also been extended through January 15. That’s despite the fact that a MNsure committee indicated in July that it would be technologically challenging for the exchange to extend open enrollment into January and thus allow both January and February effective dates.

Which insurers offer coverage in the Minnesota marketplace?

As of 2021, there are six insurers that offer exchange plans in Minnesota. Quartz is new for 2021.

The following insurers offer plans in the Minnesota exchange as of 2021, with plan availability varying from one location to another:

  • Blue Plus
  • Group Health
  • Medica
  • UCare
  • Quartz
  • PreferredOne

PreferredOne offers only off-exchange coverage, while the other five all make their plans available through MNsure. Four of the five offer plans both on-exchange and off-exchange, while UCare only offers plans on-exchange (ie, through MNsure).

COVID-related special enrollment period ended July 16, 2021; enrollment still possible for applicants with qualifying events as well as people who have received unemployment compensation in 2021

Due to the ongoing COVID pandemic, MNsure offered a special enrollment period in 2021. The special enrollment period gave people another opportunity to sign up for 2021 coverage. It began in February and continued through July 16, 2021. A few days before it ended, MNsure reported that nearly 12,700 people had signed up during the special enrollment period.

Although the COVID-related special enrollment period has ended, MNsure is still allowing people who received unemployment compensation in 2021 to enroll or switch to a $0 premium plan. Applicants can use MNsure to begin the process, and will then be given a 60-day window to enroll in coverage. The exchange has clarified that this provision is in effect through the end of 2021.

MNsure’s COVID-related special enrollment period allowed anyone who wasn’t already enrolled in a MNsure plan to do so. Uninsured Minnesota residents could take advantage of this, as could people who were enrolled off-exchange and preferred a plan through the exchange (with financial assistance if they’re eligible, including the newly enhanced premium subsidies created by the American Rescue Plan).

It’s noteworthy that MNsure did not allow people who already had a plan through MNsure to use this special enrollment period to switch to a different plan in order to optimize the ARP’s additional premium tax credits; they would need to have a qualifying event in order to do so. But the exchange is allowing people who are receiving unemployment compensation to switch to a $0 premium silver plan, even now that the COVID-related window has ended.

Open enrollment for 2021 health plans was extended through December 22, 2020; Insurers implemented modest rate increases for 2021, after three years of overall rate decreases

MNsure enabled window shopping for 2021 health plans as of October 12, 2020. This gave residents a few weeks to browse the available plans before open enrollment started on November 1, 2020. And MNsure announced that open enrollment would continue through December 22, 2020, which was a week longer than the open enrollment period that applied in states that use the federally-run exchange; the flexibility to extend open enrollment is often cited as one of the benefits of having a fully state-run exchange. (MNsure had a similar extension in December 2019, for 2020 health plans).

For 2021, Quartz joined the Minnesota marketplace. Quartz already offered plans in Illinois and Wisconsin, and expanded into Minnesota for 2021. And two of the existing insurers — HealthPartners and UCare — expanded their coverage areas for 2021 (BluePlus and Medica already offered coverage statewide, and continue to do so in 2021).

The following average rate changes were approved for MNsure’s insurers:

  • Blue Plus: 4.21 percent increase (down from an initially proposed 7.12 percent increase)
  • Group Health/Health Partners (GHI): 0.67 percent increase (down from an initially proposed 4.15 percent increase)
  • Medica: 2.42 percent increase (down from an initially proposed 7.06 percent increase)
  • UCare: 1.6 percent increase (up from an initially proposed 1.39 percent decrease)
  • Quartz: New for 2021, so no applicable rate change

PreferredOne Insurance Company, which offers plans outside the exchange, increased premiums by 1.05 percent (down from an initially proposed average increase of 5.09 percent).

Rate changes in previous years

2015: Average increase of 4.5 percent. MNsure critics characterized the official announcement as misleading as it failed to take into account low-cost 2014 plans from PreferredOne. Consumers who bought a PreferredOne plan through MNsure for 2014 could only renew their policies for 2015 by working directly with the insurer, since PreferredOne stopped offering plans in the exchange at the end of 2014. However, PreferredOne rates went up an average of 63 percent, and consumers didn’t qualify for subsidies if they shopped outside the exchange.2016: Average increase of 41.4 percent for the individual market, and about 38.5 for plans sold in MNsure (ie, not counting PreferredOne). Rates increased significantly in 2016 across the entire individual market in Minnesota — including plans sold through MNsure, the state-run exchange.

Approved rates for 2016 were announced on October 1, 2015, ranging from about 15 percent for Medica to 49 percent for Blue Cross Blue Shield of Minnesota. In general, the carriers cited higher-than-expected claims costs over the past year, along with the impending phase-out of the ACA’s reinsurance program as justification for their 2016 rate requests. But Governor Mark Dayton called some of the higher proposed increases “outrageous,” and promised a rigorous review of the filed rate changes and justifications.  Ultimately, regulators were able to limit the highest rate increases to 49 percent — as opposed to the 54 percent that had been requested by Blue Plus and BCBS of MN — but the final weighted average rate increase in the individual market in Minnesota still ended up being the highest in the nation. But Minnesota still had the lowest overall premiums in the upper midwest (although Minnesota had the highest average rate increase in the country for 2016, they had the lowest overall rates in the country in 2014 and 2015).

Minnesota Commerce Commissioner Mike Rothman called the rate increases “unacceptably high,” and Gov. Dayton noted that he was “extremely unhappy” with the rate changes. But Rothman noted that his office “objected to all of the rates across the board,” and “squeezed out everything we could that was not actuarial justified.”  In other words, the final rates, although much higher than officials and policyholders would have liked, were justified based on medical claims costs — the population enrolled in individual health plans in Minnesota was sicker than expected, and drug costs had been particularly onerous.

Only about 55 percent of people who had 2015 coverage through MNsure received premium subsidies. But due to the sharp premium increases, that had increased to about 63 percent for the people who had purchased or renewed coverage as of June 2016.

2017: When the Minnesota Department of Commerce announced health insurance rates for 2017 for the individual and small group markets, the rate hikes were somewhat reasonable in the small group market (ranging from a decrease of 1 percent to an increase of 17.8 percent), but the individual market was “experiencing serious disruptions in 2017” and “on the verge of collapse.” The four carriers that offered plans through MNsure had the following average rate increases in 2017:

  • Blue Plus = 55 percent
  • HealthPartners/Group Health (GHI) = 50 percent (HealthPartners is only offering plans in 10 of the 67 counties where they offered plans in 2016; their enrollment cap is 72,000 for 2017)
  • Medica = 57.5 percent (enrollment cap is 50,000 for 2017)
  • UCare = 66.8 percent (UCare capped enrollment at 30,000 for 2017, but only had 16,000 enrollees in 2016)

The enrollment caps that HealthPartners, Medica, and UCare employed for 2017 were approved as part of the rate review process, and are designed to protect carriers from further financial losses as they absorb BCBSMN’s enrollees who are shopping for new coverage during open enrollment.

In a news release relating to the rate announcement for 2017, the Minnesota Department of Commerce didn’t mince words. They noted that the individual market in the state was on the brink of collapse, and that they did everything in their power to save the market. While they succeeded in keeping the state’s individual market viable for 2017, with only one carrier exiting (BCBSMN, although their HMO affiliate, Blue Plus, remained in the exchange), they reiterated very clearly that substantial reforms would be needed to keep the market stable in future years, and highlighted the fact that rates would be sharply higher and that carriers would limit enrollment in 2017.

2018: Final rates for 2018 were approved in October 2017 (comprehensive information about the approved rates is here), based on the Minnesota Premium Security Plan (MSPS) being implemented but cost-sharing reductions (CSR) not being funded by the federal government (the cost of CSRs was added to on-exchange Silver plans). Average approved rate changes for MNsure insurers ranged from a 13.3 percent decrease for UCare to a 2.8 percent increase for Blue Plus. Three of the four MNsure insurers decreased their average premiums for 2018.

On September 21, MNsure had posted a notice indicating that if the reinsurance program were not approved, rates would be about 20 percent higher than they would otherwise be in 2018. Fortunately for Minnesota residents, the reinsurance program did receive federal approval, and average rates declined slightly for 2018.

But some enrollees who don’t get ACA premium subsidies still experienced a rate increase, due to the termination of the one-year, state-funded 25 percent premium rebates at the end of 2017.

PreferredOne, which exited MNsure at the end of 2014 and only offers coverage in the off-exchange market, proposed dramatically lower rates for 2018: a 38 percent average decrease if MSPS were to be approved, and a 23 percent average decrease if not. The 38 percent decrease was implemented, and no adjustments were necessary to account for CSR funding, since PreferredOne does not offer plans in the exchange, and CSRs are only available on silver exchange plans.

2019: Average premium decrease of 12.4 percent. Average premiums dropped for all five insurers in the individual market in 2019. This was the second year in a row of declining rates in Minnesota, but Blue Plus had a small rate increase for 2018, so 2019 was the first year that all five insurers decreased their average rates. Minnesota insurance regulators noted that rates in 2019 were about 20 percent lower than they would have been without the reinsurance program.

But most of Minnesota’s insurers charged higher rates in 2019 than they would have if the individual mandate penalty hadn’t been eliminated, and if access to short-term plans and association health plans hadn’t been expanded by the Trump administration. For example, UCare’s rate filing notes that while average rates were decreasing by about 10 percent, the rate decrease would have been nearly 15 percent if the individual mandate penalty had remained in place.

At ACA Signups, Charles Gaba calculated a weighted average rate decrease of 12.4 percent for 2019 in Minnesota, but noted that the average decrease would have been nearly 19 percent without those changes at the federal level.

2020: Average premium decrease of 1 percent. Four of the five insurers (including PreferredOne, which only offers coverage off-exchange) in Minnesota’s individual market decreased their average premiums for 2020. This was the third year in a row that average individual market premiums dropped in Minnesota’s individual market, due in large part to the reinsurance program that the state has established.

The following average rate changes were implemented for 2020:

  • Blue Plus: 1.5 percent decrease (Blue Plus had originally proposed a 4.8 percent increase)
  • Group Health/Health Partners (GHI): 1.26 percent decrease (GHI had originally proposed a 2.1 percent increase)
  • Medica: 1.01 percent decrease (Medica had originally proposed an average decrease of 1.4 percent)
  • UCare: 0.18 percent increase (UCare originally proposed a 0.3 percent increase)

PreferredOne, which only offers off-exchange coverage, reduced their rates by an average of 20 percent, on the heels of an 11 percent decrease in 2019.

MNsure enrollment reaches a record high for 2021

From 2014 through 2018, enrollment in MNsure’s individual market plans increased every year, reaching 116,358 people by 2018. Enrollment dropped for the first time in 2019, when 113,552 people enrolled in individual market plans through MNsure. In most states that use, enrollment peaked in 2016. But MNsure’s drop-off in 2019, which amounted to only a 2.4 percent reduction in enrollment, is the only time year-over-year enrollment has declined. Notably, the ACA’s individual mandate penalty was eliminated as of 2019, and regulations that the Trump administration implemented in late 2018 now make it more feasible for healthy people to use short-term plans instead of ACA-compliant plans (Minnesota has its own rules for short-term plans, but they’re more relaxed than the Obama-era federal rules that applied in 2017 and most of 2018).

For 2020, enrollment grew again, reaching a record high of 117,520 enrollees. And another record high was reached during the open enrollment period for 2021 coverage, when 122,269 people signed up for private coverage (in addition to 33,111 people who enrolled in Medicaid or MinnesotaCare, both of which have year-round enrollment).

Here’s a look at the number of people who have signed up for individual market plans through MNsure during each year’s open enrollment period:

  • 2014: 48,495 people enrolled
  • 2015: 59,704 people enrolled
  • 2016: 83,507 people enrolled
  • 2017: 109,974 people enrolled
  • 2018: 116,358 people enrolled
  • 2019: 113,552 people enrolled
  • 2020: 117,520 people enrolled
  • 2021: 122,269 people enrolled (plus an additional 12,700 who enrolled by July 12 during the special enrollment period that ended July 16)

These numbers all represent total enrollment at the end of open enrollment. Effectuated enrollment is always lower, and MNsure provides periodic effectuated enrollment data on their board meeting materials page. It’s also worth noting that the enrollment numbers reported by CMS are always lower than the numbers reported in MNsure’s press releases (for example,CMS reported an official enrollment total of 110,042 enrollees for 2020, whereas MNsure reported 117,520).

Insurer participation in MNsure: 2014-2021

2014: Five insurers offered individual policies through MNsure for 2014: Blue Cross Blue Shield of Minnesota, HealthPartners/Group Health, Medica, PreferredOne, and UCare. Kaiser Health News reported that Minnesota offered some of the lowest premiums for silver (mid-level) plans in the U.S. Four of Minnesota’s nine regions made Kaiser’s list of the 10 least expensive places to buy health insurance.

2015: But PreferredOne, which offered the lowest rates in the nation in 2014 and captured a large portion of 2014 enrollees, withdrew from MNsure for 2015. PreferredOne said remaining on the exchange was “not administratively and financially sustainable.” A Star Tribune business writer attributed PreferredOne’s departure as a market dynamics issue rather than a problem with MNsure.

However, Blue Plus (an affiliate of Blue Cross Blue Shield of MN, offering HMO plans) joined the exchange for 2015, so there were still five insurers offering plans for 2015: Blue Cross Blue Shield of Minnesota, Blue Plus, Health Partners/Group Health, Medica, and UCare. MNsure offered 84 plans statewide, up from 78 for 2014.

2016: BCBSMN, Blue Plus, Health Partners/Group Health, Medica, and UCare offered individual market plans through MNsure for 2016.

2017: In an effort to recruit more carriers to offer plans through MNsure for 2017 — particularly outside the Twin Cities metro area — state regulators sent out a request for proposals from health insurers on August 15, 2016. Regulators noted that insurers could propose waivers of regulations in order to make it feasible for them to offer coverage through MNsure, although any such waiver requests would have to be approved by regulators.

Steven Parente, a health insurance expert at the University of Minnesota, called the state’s effort to recruit insurers to MNsure a “distress call” and noted that August 15 is awfully late in the year to be putting out a request for insurer participation, given that open enrollment begins November 1. And ultimately, no new insurers opted to join MNsure for 2017.

Blue Cross Blue Shield of MN dropped their individual market PPO plans at the end of 2016 due to significant financial losses. That left Blue Plus (which offered HMOs and covered roughly 13,000 people in 2016 in the individual market) as the only BCBSMN affiliate in the exchange. Roughly 103,000 people had to select new plans during open enrollment.

Most of those BCBSMN enrollees had off-exchange coverage, though. There were only about 20,400 MNsure enrollees (a little more than one in five MNsure enrollees) with coverage under BCBSMN who needed to switch to another plan during open enrollment. BCBSMN had individual PPO options available in all 87 counties in Minnesota through MNsure in 2016, while the Blue Plus coverage area — comprised of four separate HMO networks — was available in 77 of the state’s counties.

Nationwide, carriers have been shifting away from PPOs and towards HMOs and EPOs. In Colorado, Anthem Blue Cross Blue Shield also dropped their PPOs at the end of 2016. In Indiana, there were no PPOs available in the individual market by 2017. Blue Cross Blue Shield of New Mexico dropped all of their individual market plans at the end of 2015 except one off-exchange HMO. Blue Cross Blue Shield of Texas dropped their individual market PPO plans at the end of 2015.

Minnesota does still have PPO options available however. There are PPOs offered by Blue Cross Blue Shield of Minnesota and HealthPartners for 2021.

The broad network offered by PPOs tends to be attractive to enrollees who have health problems; they’re often willing to pay higher premiums in trade for access to broad network of hospitals and specialists. But PPOs are expensive for carriers, as enrollees don’t need primary care referrals to see specialists, and it’s more challenging for carriers to hold down costs when there are more providers in the network.

All of the MNsure carriers except Blue Plus are also limiting their total enrollment for 2017. By November 11, 2016, less than two weeks into open enrollment for 2017 coverage, Medica had hit their 50,000 member enrollment cap for 2017 (including on and off-exchange enrollments, and also accounting for expected renewals of 2016 Medica plans), and their policies were no longer available in the individual market in Minnesota, on or off-exchange. The only exception was five counties (Benton, Crow Wing, Mille Lacs, Morrison, and Stearns) where Medica agreed not to limit enrollment, as all of the other available carriers in those counties have imposed enrollment caps too. In those five counties, Medica plans continued to be available.

At that point, Medica’s market share in MNsure for 2017 stood at 34.2 percent. By December 14, Medica’s market share had dropped to 27.7 percent, as enrollments had continued to climb for the remaining carriers.

On January 31, Medica re-opened enrollment for 2017. This was because a smaller-than-expected number of 2016 Medica enrollees renewed their plans for 2017, meaning that the carrier still had some wiggle room under their 50,000 member cap; at that point, they had room for about 7,000 more enrollees. Medica plans were thus available throughout the duration of the special enrollment period that was added on at the end of open enrollment, and continue to be available for people with qualifying events.

2018: Plans continued to be available from Blue Plus, Health Partners/Group Health (GHI), Medica, UCare. In the months before a decision was reached regarding an extension of the open enrollment window for 2018 plans (the first year that the federal government imposed a shorter, month-and-a-half enrollment window), two of MNsure’s participating insurers had differing positions: UCare believed the exchange should add an additional two-week special enrollment period, while Medica did not want the exchange to have the option to extend the newly-scheduled six-week enrollment window. Notably, Medica capped their enrollment very early during the 2017 open enrollment period, and while UCare also had an enrollment cap, it was set with a target of nearly doubling their 2016 enrollment. But Medica is the only MNsure insurer that didn’t set an enrollment cap for 2018.

As was the case for 2017, enrollment caps were used in the individual market in Minnesota for 2018 by all insurers other than Medica (Medica did have an enrollment cap for 2017, which they hit very early in open enrollment; however, they resumed enrollments at the end of January 2017). Details about the insurers’ enrollment caps are in the plan binders in SERFF. For 2018, MNsure insurers implemented the following enrollment caps:

  • Blue Plus: 55,000 member cap (aiming for a target of 50,000 effectuated enrollees, but effectuated enrollment is always lower than the number of people who initially enroll)
  • Health Partners/Group Health (GHI): 73,400 member cap (aiming for a target of 70,000 effectuated enrollees)
  • Medica: no enrollment cap
  • UCare: 35,000 member cap (aiming for a target of 30,000 effectuated enrollees)

MNsure confirmed in May 2018 that none of their insurers had hit their enrollment caps for 2018.

Outside the exchange, PreferredOne had an enrollment cap of 3,000 members, although their 2017 membership was only about 300 people.

2019 and 2020: Blue Plus, Health Partners/Group Health, UCare, and Medica have continued to offer plans through MNsure, and all of them continued to participate in 2020 as well. Blue Plus expanded to once again offer statewide coverage in 2020, for the first time since 2016.

2021: Quartz joined the exchange for 2021, joining the four existing insurers. HealthPartners and UCare both expanded their coverage areas for 2021.

Minnesota Premium Security Plan: 1332 waiver proposal approved by CMS, but with a significant funding cut for MinnesotaCare

In May 2017, Minnesota Governor Mark Dayton submitted a 1332 waiver proposal to CMS. The 1332 waiver was based on H.F.5, which was enacted without Dayton’s signature in April 2017 (Dayton had proposed an alternative measure that would have allowed people in Minnesota to buy into MinnesotaCare; that measure was not able to pass the state’s Republican-dominated legislature).

[For more than two decades, MinnesotaCare was a state program subsidizing health insurance for low-income residents.  As of January 1, 2015, it transitioned to a Basic Health Program under the ACA, becoming the first BHP in the nation.]

H.F.5 created the Minnesota Premium Security Plan (MPSP), which is a state-based reinsurance program (similar to the one the ACA implemented on a temporary basis through 2016, and that Alaska created for 2017; several other states have since implemented reinsurance programs). The reinsurance program, which took effect in Minnesota in 2018, covers a portion of the claims that insurers face, resulting in lower total claims costs for the insurers, and thus lower premiums (average individual market premiums in Minnesota decreased from 2017 to 2018 as a result of the reinsurance program). The reinsurance kicks in once claims reach $50,000, and covers them at 80 percent up to $250,000 (this is similar to the coverage under the transitional reinsurance program that the ACA provided from 2014 through 2016).

H.F.5 was contingent upon approval of the 1332 waiver, because it relies partially on federal funding, in addition to state funding. Under the federal approval that was granted in September 2017, the federal government is giving Minnesota the money that they save on premium tax credits, and that money is combined with state funds to implement the reinsurance program (lower premiums — as a result of the reinsurance program — result in the federal government having to pay a smaller total amount of premium tax credits, since the tax credits are smaller when premiums are smaller).

It was expected that CMS would approve the state’s 1332 waiver proposal, and Governor Dayton requested that the approval process be swift so that the state could move forward with the implementation of the Minnesota Premium Security Plan in time for the 2018 plan year. Dayton indicated that his office had been told that approval would come in August 2017, but CMS didn’t approve the waiver until September 22. And the waiver approval letter noted that the federal savings for MinnesotaCare (the state’s Basic Health Program, or BHP) resulting from the reinsurance program would not be eligible to be passed along to the state — in other words, CMS would keep those savings instead.

[Federal BHP funding is equal to 95 percent of the amount that the federal government would have otherwise spent on premium subsidies and cost-sharing reductions for the population that ends up being eligible for the BHP. So lower premiums — as a result of reinsurance — for qualified health plans in the exchange means that the amount the federal government would have had to spend on premium subsidies for that population is lower. That translates into a smaller amount of funding for the state’s BHP, according to the approach that HHS took for Minnesota’s waiver approval.]

And based on the scathing letter that Dayton sent CMS a few days earlier, it appeared at that point that Minnesota could actually lose money on the deal — losing more in federal funding for MinnesotaCare than they gain in reinsurance funding. Dayton noted in his letter that the 1332 waiver approval process had been “nightmarish,” and that Minnesota went to great lengths to follow instructions from CMS at every turn, throughout the process of drafting H.F.5 and the 1332 waiver proposal. He explains that CMS provided Minnesota with explicit guidance in terms of how to draft the reinsurance program while maintaining full federal funding for MinnesotaCare, and highlighted the fact that the state never deviated from the instructions that were provided.

The StarTribune editorial board called out then-Secretary of HHS, Tom Price and the Trump Administration for their lack of clarity on the issue, for apparently misleading the state during the 1332 waiver drafting process, and for effectively punishing the state of Minnesota for taking an innovative approach to ensuring that as many people as possible have health insurance.

Insurers filed rates based on reinsurance being available. And by the time the waiver was approved, there was very little time to evaluate the potential impacts of the funding changes, as rates had to be finalized by October 2 in Minnesota. The finalized rates did incorporate the reinsurance program; the state has accepted the approved waiver, but Gov. Dayton sent a letter to HHS on October 3, asking them to reconsider the MinnesotaCare funding cuts, but the issue has remained unresolved.

Elimination of CSR funding results in additional funding cut for MinnesotaCare, but a lawsuit has partially restored that funding

Nationwide, 54 percent of exchange enrollees benefit from cost-sharing subsidies. But in Minnesota, only 13 percent of exchange enrollees are receiving cost-sharing subsidies. This is because of MinnesotaCare, which covers all enrollees with income up to 200 percent of the poverty level. That’s the same group that would otherwise benefit the most from cost-sharing subsidies, so the fact that MinnesotaCare is available means that most of the people who would otherwise be enrolled in cost-sharing subsidy plans are instead enrolled in MinnesotaCare.

At first glance, this would appear to have made the uncertainty surrounding cost-sharing subsidy funding in 2017 a little less of a pressing issue in Minnesota than it was in many other states, since private insurers weren’t facing the sort of losses that insurers in other states were facing without federal funding for CSR. But when the Trump Administration eliminated federal funding for CSR in October 2017, HHS took the position tha t since CSR funding had been eliminated, the CSR portion of the federal funding for the BHPs in New York and Minnesota would be reduced to $0. This was not a cut-and-dried conclusion, however, as explained earlier in 2017 by Michael Kalina.

In January 2018, the Attorneys General for New York and Minnesota filed a lawsuit against the US Department of Health and Human Services, seeking to restore funding for their Basic Health Programs. A judge ruled in favor of the states in May 2018, ensuring that MinnesotaCare would continue to receive at least some CSR-based funding. The amount awarded to the state for the first quarter of 2018 was just over half of what the state had initially expected in CSR-related funding, but a larger chuck of the funding was restored later in 2018. According to the Star Tribune, however, Minnesota still ended up losing $161 million in federal funding for MinnesotaCare due to the CSR funding cuts.

In early 2019, the Trump administration proposed yet another funding cut (a third, after the cuts imposed by the reinsurance program and the elimination of CSR funding) as part of a new methodology for calculating BHP funding. This one was much smaller than the other two cuts, but taken together the funding reductions are pushing MinnesotaCare towards a looming budget shortfall.

SHOP exchange: down to one carrier as of 2016, zero by 2018 (and still zero in 2019)

In 2015, there were two carriers in MNsure’s SHOP exchange for small businesses: Blue Cross Blue Shield of Minnesota, and Medica. But Medica announced in 2015 that they would exit the SHOP exchange in Minnesota, North Dakota, and Wisconsin at the end of the year. That left BCBS as the only small group carrier available through MNsure in 2016, but it didn’t change much from a practical standpoint, since 83 percent of MNsure’s small groups were enrolled in plans through BCBS in 2015. Indeed, Medica’s reason for exiting the small business exchange was based on low enrollment in the first two years.

Blue Cross Blue Shield of Minnesota continued to be the only insurer offering SHOP coverage via MNsure in 2017, but announced in July 2017 that they would no longer offer SHOP coverage in 2018, and would instead transition their SHOP enrollees to small business coverage outside the exchange. At that point, there were only 3,287 people enrolled in SHOP coverage in Minnesota — far below the 155,000 people that were originally projected to have coverage through MNsure’s SHOP program by 2016 (this much lower-than-anticipated enrollment has been the case in nearly every state’s SHOP exchange; this situation is not unique to Minnesota).

State law provided 25% premium rebate in 2017; amendment to allow plans without essential benefits was cut from final legislation

Throughout 2016, then-Governor Dayton called for a state-funded premium rebate for people who buy their own insurance but aren’t eligible for the ACA’s premium subsidies (those are only available for people with income up to 400 percent of the poverty level, or $100,400 for a family of four in 2019).

Governor Dayton also noted that the government needed to act quickly to stabilize the individual market in Minnesota, and by late November 2016, his patience with lawmakers was wearing thin. In a November 23 press conference, Dayton said that House Republicans needed to “stop dilly-dallying” and decide whether to move forward with Dayton’s rebate proposal.

Dayton had also indicated that he was considering calling a special session of the legislature after election day to address the situation, and that was being negotiated for December 20. But the talks fell through when Dayton and Republican House Speaker Kurt Daudt couldn’t agree on the three bills that would have been addressed in the special session; as a result, there was no special session.

Instead, the issue was taken up by lawmakers as soon as the 2017 legislative session began. On January 5, Minnesota Senators Michelle Benson (R, 31st District) and Gary Dahms (R, 16th District) introduced S.F.1. The bill called for using $300 million in state funding to provide a 25 percent rebate to roughly 125,000 people in Minnesota.

S.F.1 passed the Minnesota Senate by a 35-31 vote on January 12. Only one DFL Senator (Melisa Franzen, from Edina) voted with Republicans in favor of the legislation. It was then sent to the House, where an amendment was added that stripped out the requirement that health plans provide various mandated benefits (see “Journal of the Day” section “Top of page 154” in this version of the bill; under the terms of the amendment, as long as a carrier offered at least one plan with all the mandated benefits, they would have been allowed to offer others without mandated benefits).

The amended bill was sent back to the Senate on January 23; differences between the bills that the two chambers passed had to be reconciled before being sent to Governor Dayton for his signature. By that point, the amendment to allow less-robust plans to be sold had garnered national attention, and public outrage helped to push lawmakers away from the provision. S.F.1 had also called for $150 million to be appropriated for fiscal year 2018 (through June 30, 2019) from the state general fund to a state-based reinsurance program to stabilize the individual market (Alaska did something similar in 2016, preventing a market collapse), but that provision was also removed in the final version (Minnesota did ultimately set up a reinsurance program, effective in 2018, which has served to stabilize the market and reduce premiums).

A Conference Committee in the Senate recommended that the House “recede from its amendments” and the Conference Committee report passed the Senate on a 47-19 vote. The House passed the bill a few hours later, 108-19. It was sent to Governor Dayton, who immediately signed it into law. DFLers did have to compromise on one issue during the process: S.F.1 allows for-profit HMOs to begin operating in Minnesota’s individual market, which had long been limited to non-profit HMOs.

Consumers were told to expect the premium rebates to show up by April 2017, but they were retroactively effective to January 2017. So a person who had been paying full price for a plan since January 2017 saw a substantial premium reduction on the April or May invoice. Going forward, for the remainder of the year, a 25 percent rebate applied each month.

Since S.F.1 was signed into law with only a few days remaining in open enrollment (it ended January 31 that year), Governor Dayton and exchange officials were worried that there wouldn’t be enough time for people to learn about the rebate and apply for coverage before January 31. In December, Dayton had asked HHS to allow MNsure to extend its enrollment deadline to February 28 (instead of January 31) in order to allow lawmakers more time to work out the details of a state-based premium rebate while still allowing people to enroll after the legislative process is complete.

HHS denied the request for a blanket extension, but MNsure used their own authority on January 28 to grant a one-week special enrollment period (February 1 to February 8) due to exceptional circumstances. Although the state-based 25 percent premium rebate was available on or off the exchange, the one-week extension was only valid through MNsure; health insurers did not have to accept off-exchange enrollments without a qualifying event after January 31.

The 25 percent premium rebate program in Minnesota was only authorized for one year, so the rebates did not continue into 2018. And although almost 100,000 people received premium relief through the program in 2017, it ended up costing less than the legislature had allocated, and about $100 million was returned to the state’s budget at the end of 2017.

Protecting Medicaid enrollees from estate liens

In every state, Medicaid is jointly funded by the state and the federal government. Longstanding federal regulations, which predate the ACA, require states to “seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services” for any Medicaid enrollee over the age of 55. This applies essentially to long-term care services, but states also have the option to go after the individual’s estate to recover costs for other care that was provided by Medicaid after age 55.

Prior to 2014, this wasn’t typically an issue, as Medicaid eligibility was generally restricted by asset tests or requirements that applicants be disabled or pregnant (although Minnesota did have much more generous Medicaid eligibility guidelines than most states prior to 2014). But as of 2014, in states that expanded Medicaid under the ACA, the only eligibility guideline is income. Applicants with income that doesn’t exceed 138 percent of the poverty level are directed to Medicaid, regardless of any assets they might have.

When applicants use the health insurance exchange — MNsure in Minnesota — they’re automatically funneled into Medical Assistance (Medicaid) if their income is under 138 percent of the poverty level. But what these enrollees didn’t know was that the state also had a program in place to put liens on estates for Medicaid-provided services for people age 55 and older.

The combination of these systems caught numerous residents off guard. They were enrolled in Medical Assistance through MNsure based on their income, but were not aware that liens were being placed on their homes so that the state could recoup the costs upon their deaths.

State Senator Tony Lourey (DFL, District 11) addressed the issue with language included in HF2749, the Omnibus supplemental budget bill, which was signed into law by Governor Dayton on June 1, 2016. The legislation limits estate recovery to just what’s required under federal Medicaid rules (ie, essentially, long-term care costs for people age 55 or older), and makes the provision retroactive to January 1, 2014.

Early tech struggles

MNsure opened for business in the fall of 2013, but technological issues persisted well into 2015, despite numerous improvements throughout 2014. Given MNsure’s difficult launch, the state conducted a series of audits and reviews.  The first audit reviewed how MNsure spent state and federal money. Auditors concluded that the exchange has generally adequate internal controls and found no fraud or abuse. The review was conducted by the state Office of the Legislative Auditor, and the report was published in October 2014.

Another audit, also conducted by the Office of the Legislative Auditor and released in November 2014, found that the MNsure system in some cases incorrectly determined who qualified for public health benefits. The errors occurred during the first open enrollment period, before a series of system fixes were implemented. The audit did not quantify the total financial impact of the errors. The state Human Services commissioner said a consultant working on technical fixes to MNsure concluded that the eligibility functionality was working correctly as of June 2014.

A third audit, a performance evaluation report released in February 2015, said “MNsure’s failures outweighed its achievements.” Among other criticisms, auditors said MNsure staff withheld information from the board of directors and state officials, the enrollment website was seriously flawed and launched without adequate testing, and the first-year enrollment target was unrealistically low.

In April 2014, MNsure hired Deloitte Consulting to audit MNsure’s technology and improve the website to make enrolling in coverage and updating life events easier and more streamlined. Deloitte has been involved in successful state-run marketplaces for Connecticut, Kentucky, Rhode Island and Washington.

Software upgrades were installed in August 2014, and system testing continued right up until the start of open enrollment. To reduce wait times for consumers and insurance professionals, MNsure increased its call center and support staff and launched a dedicated service line for agents and brokers.

More in-person assisters were available in Minnesota for the 2015 open enrollment period. MNsure encourages residents to utilize the exchange’s assister directory to find local navigators and brokers who can help with the enrollment process.

MNsure has improved dramatically in terms of its technology since the early days of ACA implementation, and enrollment increased every year from 2014 through 2019.

Lawmakers approved switching to as of 2019, but governor vetoed

On May 9, 2017, lawmakers in Minnesota passed SF800, an omnibus health and human services bill. Among many other things, the legislation called for switching from MNsure to the federally-run marketplace ( starting in 2019 (see Section 5). But Governor Dayton vetoed it.

Gov. Dayton has long been supportive of MNsure, and had previously clarified that he would veto the bill. In noting his plans to veto the legislation, Dayton made no mention of the transition to that was included in the legislation, but focused instead on the sharp budget cuts in the bill. But his veto ensured that MNsure would remain in place, at least for the time being.

The Senate’s original version of SF800 did not call for scrapping MNsure, but the bill went through considerable back-and-forth between the two chambers, and the version that passed was the 4th engrossment of the bill.

In March 2015, Dayton had asked the legislature to create a Task Force on Health Care Financing that would study MNsure along with possible future alternatives. Dayton noted in his letter that he supported making MNsure “directly accountable to the governor and subject to the same legislative oversight as other state agencies” and his budget included half a million dollars devoted to the task force. The spending bill was approved by the legislature in May, and the 29-member task force was appointed in the summer.

One of the possibilities that the task force considered was the possibility of switching to, but it’s clear that there was no cut-and-dried answer to the question of whether Minnesota is better served by having a state-run exchange, switching to a federally-run exchange, or teaming up with the federal government on either a supported state-based marketplace or partnership exchange.

In a December 2015 meeting of the task force, the MN Department of Human Services presented a financial analysis of the alternatives available to MNsure. They determined that switching entirely to would cost the state an additional $5.1 million in one-time costs from June 2016 to June 2017. And switching to a supported state-based marketplace would cost an additional $6.6 million during that same time frame. If the state had opted to switch to, the soonest it could have happened was 2018, since HHS requires a year’s notice from states wishing to transition to, and Minnesota wouldn’t have been in a position to make a decision until sometime in 2016.

There were significant reservations about making that switch prior to the Supreme Court’s ruling on King v. Burwell. The Court ruled in June 2015 that subsidies are legal in every state, including those that use Prior to the decision, a switch to could have jeopardized subsidies for tens of thousands of Minnesota residents. But once it was clear that’s subsidies are safe, some stakeholders began calling for Minnesota to scrap its state-run exchange and use instead. Because the MNsure task force was included in the 2016 budget, no hasty decisions were made.

In January 2016, the task force submitted their recommendations to the legislature. They covered a broad range of issues, but did not recommend that MNsure transition to the federal enrollment platform. Lawmakers essentially left the exchange alone during the 2016 legislative session.

The magnitude of the 2016 rate increases that were announced in October resulted in MNsure opponents renewing their calls to switch to But it’s important to keep in mind that the 41 percent weighted average rate hike in Minnesota was market-wide, and did not just apply to MNsure enrollees. In fact, the off-exchange carrier (PreferredOne) had among the highest rate hikes in the state for 2016, at 39 percent, and the exchange’s weighted average rate increase (38.5 percent) was lower than the weighted average rate increase for the whole individual market (41 percent).

Allison O’Toole, who led MNsure as CEO for three years, announced her resignation in March 2018, and the exchange named Nate Clark, the MNsure COO, as acting CEO. A few months later, the MNsure board named Clark as the permanent CEO. O’Toole left MNsure to work as director of state affairs for United States of Care, a non-profit created by Andy Slavitt, who was the acting administrator of CMS under the Obama Administration.

Minnesota health insurance exchange links

855-3MNSURE (855-366-7873)

State Exchange Profile: Minnesota
The Henry J. Kaiser Family Foundation overview of Minnesota’s progress toward creating a state health insurance exchange.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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