What MNsure's loss of PreferredOne means to health insurance customers

MNsure Board Chair Brian Beutner
MNsure Board Chair Brian Beutner and CEO Scott Leitz.
Bridget Bennett / MPR News

The news Tuesday that PreferredOne and MNsure are going their separate ways came as an unpleasant surprise to Deanna Wyman of White Bear Lake. She turned 26 in July. That meant she became ineligible for her parents' health plan, so she clicked over to the MNsure website. After shopping around she found a good deal from Preferred One.

"What I liked is that their rates were low and they covered a lot. So I was really excited about having low costs up front, low deductibles, and having high quality insurance," she said.

Wyman, a real estate agent who does not have health insurance through her job, said the cost of her plan was only $153 a month -- a good deal, in her eyes. What's really disappointing to her, beyond the cost, is that she just got her new insurance cards on Monday and now will have to begin shopping again before long.

"I just got through this whole process. I just found out that my application was approved, and now I have to start it all over in a few months, which is not at all what I want to be doing," she said.

Wyman is not alone. As of Aug. 6, around 31,000 people had enrolled in PreferredOne health plans. The company's low premiums attracted six in 10 people who signed up for a commercial health plan on MNsure.

It's possible Wyman could stay with PreferredOne if she wants. The company has to renew her policy by law, but has the option of charging more.

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For other customers -- those who qualify for federal tax subsidies because of their income -- PreferredOne may not be an option anymore. The only way to receive the federal subsidies is to enroll in coverage through the state's insurance exchange, and PreferredOne plans will not be available there. That may force some people to switch carriers.

Among the companies selling commercial plans through MNsure, PreferredOne was the smallest by revenue, but offered the lowest prices. Consequently it won the biggest slice of the pie.

But were those prices too low for the company to make money? PreferredOne won't say why it pulled the plug on MNsure. Calls and emails from MPR News were not returned. In a letter to MNsure officials, the company said only that continuing to provide coverage through the exchange is not sustainable.

MNsure CEO Scott Leitz tried to put a positive spin on the company's decision, saying it shows that the market MNsure set up is working like it's supposed to.

"We level the playing field for consumers. We are a competitive marketplace and we don't pick winners and losers. We provide options so Minnesotans can make wise choices," he said.

Meantime, people who bought PreferredOne plans will receive information from MNsure in early October about options for new coverage.

Dannette Coleman, a vice president at Medica who handles individual and family coverage, said her company will continue to sell insurance on MNsure, even though that connection has been challenging at times because the technology behind the program hasn't always worked as hoped.

"It has created manual workarounds for our staff, but we're very much committed to work together with MNsure to make sure that our customers are getting the coverage that they need," she said.

Blue Cross and Blue Shield of Minnesota also says it will continue to sell MNsure plans.

Julie Brunner, the executive director of the Minnesota Council of Health Plans, an insurance trade group, said she was surprised by PreferredOne's move. But at the same time, Brunner said companies have to decide whether MNsure is a market for them.

"Each of the plans makes their own business decisions, and I expect that this was a result of incredible analysis and work by PreferredOne staff and its board to make what I'm sure was a very difficult decision for them to make," she said.

Other companies that sell through MNsure -- Medica, Blue Cross and Blue Shield of Minnesota, HealthPartners, and UCare -- will now compete for former PreferredOne customers.

The next open enrollment period for MNsure begins Nov. 15. But the race for new business among the big insurance companies hasn't officially started yet. MNsure isn't expected to release the new premium rates for 2015 until early next month.