Minnesota health plans claim massive 2016 losses

Updated: 4:30 p.m. | 11 a.m.

Minnesota's major health insurance companies said Monday their combined 2016 operating losses totaled $687 million.

Expenses that exceeded revenue for state public health programs including Medical Assistance were responsible for more than half of last year's losses, followed by continued losses on the individual market, the Minnesota Council of Health Plans reported.

The health plans say they drew down almost $560 million in reserves to help cover losses and that most of that reserve money — $374 million — was used to cover revenue shortfalls for state-sponsored programs, primarily those that provide care for children and families.

State officials have held up a relatively new competitive bidding process for those contracts as an innovative way to drive down costs.

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Jim Schowalter, president of the Minnesota Council of Health Plans, argued that the public plans are digging into their own pockets to get savings state officials credit the competitive bidding for accomplishing.

"The competition and the bids helped the state save money," he said. "That's what they wanted do and that's what they did."

In previous years, announcements of major operating losses preceded massive price hikes for Minnesotans who buy health insurance on their own on the individual market. State lawmakers have been working on plans to try to stabilize the volatile individual market where about 4 percent of Minnesotans get coverage.

News of the 2016 operating losses came on the same day Gov. Mark Dayton dropped his opposition to a more than $500 million individual market reinsurance plan that that won approval in both houses of the Legislature.

The plan will pay health insurers hundreds of millions of dollars over the next two years to help cover expenses of high-cost customers.