Minnesota's largest health insurer, Blue Cross and Blue Shield of Minnesota, has decided to stop selling health plans to individuals and families in Minnesota starting next year.
The insurance carrier's parent company, which goes by the same name, will continue to sell a much more limited offering on the individual market through its Blue Plus HMO.
The insurer explained extraordinary financial losses drove the decision.
"Based on current medical claim trends, Blue Cross is projecting a total loss of more than $500 million in the individual [health plan] segment over three years," BCBSM said in a statement.
The Blues reported a loss of $265 million on insurance operations from individual market plans in 2015. The insurer said claims for medical care far exceeded premium revenue for those plans.
"The individual market remains in transition and we look forward to working toward a more stable path with policy leaders here in Minnesota and at the national level," the company stated. "Shifts and changes in health plan participation and market segments have contributed to a volatile individual market, where costs and prices have been escalating at unprecedented levels."
The decision will have far-reaching implications.
Blue Cross and Blue Shield says the change will affect about, "103,000 Minnesotans [who] have purchased Blue Cross coverage on their own, through an agent or broker, or on MNsure."
"We understand and regret the difficulty we know this causes for some of our members," the insurer wrote. "We will be notifying all of our members individually and work with them to assess and transition to alternative coverage options in 2017."
In response Gov. Mark Dayton highlighted gains in enrolling more Minnesotans in health insurance plans since the implementation of the Affordable Care Act. He also acknowledged the BCBSM departure reflects the instability in the market for individual and family coverage.
"This creates a serious and unintended challenge for the individual market: the Minnesotans who seek coverage there tend to have greater, more expensive health care needs than the general population," said Dayton. "Blue Cross Blue Shield's decision to leave the individual market is symptomatic of conditions in the national health insurance marketplace.
University of Minnesota health economist Roger Feldman called the Blues' departure a major blow to Minnesota's already troubled individual market.
"What this says about the individual market is that it is very unstable and it has been disrupted by a number of events and we still don't know whether it will recover or not from those disruptions," said Feldman.
Although Blue Cross Blue Shield is leaving the individual market, its much smaller subsidiary , Blue Plus, will continue to offer plans on the individual market, according to the company statement. Blue Plus, has only about 13,000 members according to his message.
MNsure spokesperson Shane Delaney said about 20,000 Minnesotans purchased Blue Cross and Blue Shield of Minnesota plans through MNsure. He said the vast majority of them qualified for tax credits to help pay premiums.
Delaney said all of the Blue Cross and Blue Shield customers losing their coverage next year should look for other options on MNsure, the only place eligible applicants can secure federal tax credits.
Editor's note (June 24, 2016): This version of the story clarifies the distinction between the parent company and the insurance carrier that both use the name Blue Cross Blue Shield of Minnesota.
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