Minnesota HMO Enrollment Dropping

April 4, 2005 (PLANSPONSOR.com) - Enrollment in Minnesotan state-regulated HMO products is dwindling, a sign of both over regulation and more flexible alternatives, according to the Minnesota Council of Health Plans (MCHP).

State enrollment in such health programs fell 10.6% between 2003 and 2004, according to the group; there are now only 1.1 million state residents enrolled in such plans. For small group products (between 2 and 50 employees), the fall was moderate, at -2.3%. However, for larger group products, the decline was more pronounced , at – 22.6%. Overall, 12.3% of state residents were in such plans.

This follows trends in other states, with Wisconsin noting recently that there has been a fall in HMO participation, according to the Council. However, HMO enrollment levels have become steady in both Oregon and Washington (See HMO Decline Stabilizing in Oregon and Washington, Study Says ).

Julie Brunner, the executive director of the Council, said this shift was not unexpected. “The shift is not a surprise. We’ve cautioned about the erosion of this segment of the market and watched employers move to other coverage over the past few years,” she said. “Employers are looking for every possible way to save on health care costs, and the state’s design requirements for fully insured HMO products make it difficult to meet employer’s needs for flexible, affordable coverage.”

HMO product taxation on employers and individuals amounted to $98.6 million, another deterrent to purchasing such plans. These taxes went towards Medicaid surcharges that go towards the state’s General Fund, MinnesotaCare premium taxes, and the Minnesota Comprehensive Health Association, which supports those unable to purchase individual health care. The burden of such taxation falls primarily on the shoulders of those who purchase state-regulated products, according to MCHP.

Over-regulation is also a problem, according to the Council. With 62 mandates applying to state residents regarding health care regulation, MCHP claims that this is a deterrent to consumers because of confusion and complexity.

Other trends noted by the group, taken off annual filings, include the fact that the industry’s operating margin remained steady in 2004, at 1.8% of revenue. Also, state enrollment in Medicaid and General Assistance Medical Care increased 5%, while enrollment in MinnesotaCare fell 5% on the year.

MCHP, a trade association of eight licensed nonprofit health plans, was established in 1985 with the goal of improving quality and satisfaction within the state’s health systems.