Minnesota

June 5, 2025                                                           Contact: Allan Baumgarten, 952/212-8589

Minnesota Health Market Review 2025 finds:

HMOs Post Record Losses as Enrollment and Revenues Drop,

But Medical Expenses Increase

            (Minneapolis-St. Paul) HMO profitability plunged in 2024, as HMOs and County-Based Purchasing plans reported lower revenues, higher medical expenses and large losses on operations. The number of enrollees in Medicaid managed care plans dropped by about 207,000 in 2023 and 2024, although it is still higher than before the COVID-19 pandemic.

            Minneapolis-based analyst Allan Baumgarten reports on these and other findings in Part One of Minnesota Health Market Review 2025, released today. This is the 36th edition of the report, which he first published in 1990. His reports in Minnesota and five other states examine key trends and competitive strategies for health plan companies and hospital systems in those markets. Later this year, the Part Two report for Minnesota will present an analysis of the state’s hospital systems and how they compete, examining 2024 Medicare cost report data on their financial results and measures of inpatient utilization.

The new report finds that:

• Total enrollment in HMOs and County-Based Purchasing (CBP) plans dropped by 168,000 or 9.7% in 2024. While membership in Medicare Advantage plans grew by 8.7%, enrollment in Medicaid and other state programs decreased by 15%, as the state completed re-evaluating the eligibility of Medicaid recipients.
• As enrollment dropped, premium revenues for HMOs dropped by more than $1 billion, or 6.5%. However, their medical costs increased, and they had combined underwriting losses of $1.067 billion. UCare had the largest underwriting losses at $606.5 million, followed by HealthPartners ($170.9 million) and Medica Health Plans ($154.3 million). Hennepin Health had underwriting losses of $56.2 million.
• Most of the losses were in two key lines of business: Medicaid and other public programs and Medicare Advantage. HMOs and county plans lost $640.4 million on Medicaid plans in 2024 after reporting underwriting profits of $367.8 million in 2023 and $726.5 million in 2022, their best results ever. Even with the large losses in 2024, Medicaid plans have posted underwriting income of $939.5 million in the last 10 years. That includes the results for Minnesota Senior Health Options, a managed care program for beneficiaries of both Medicare and Medicaid, where the health plans have reported combined underwriting income of $720.3 million in the last nine years.
• Enrollment in Medicare Advantage plans has grown steadily since 2016, but they have not been profitable in Minnesota since 2022. In 2024, UCare lost $266.7 million on its Medicare Advantage plans, including $102.3 million in reserves set aside in anticipation of future revenue shortfalls. It already spent $47 million from that reserve in the first quarter of 2025 but still lost $25.5 million. Other health plans reported improved results in the first three months of 2025.
• Data from 2023 show that 96% of Minnesotans have health insurance, but that is likely to drop sharply if the budget bill passed by the U.S. House of Representatives is enacted. Cuts to Medicaid are projected to result in about 253,000 Minnesotans losing Medicaid benefits. Changes to subsidies sold on the MNsure exchange, where individual enrollment has grown to 167,000, will likely result in thousands losing coverage.

            Excerpts from the report, including the “Minnesota Health Plans at a Glance” page can be viewed at AllanBaumgarten.com. Subscriptions to Minnesota Health Market Review 2025 in interactive PDF format, including both Parts One and Two, can be ordered and downloaded for $160.00 at www.AllanBaumgarten.com. Phone: 952/212-8589. E-mail address: Baumg010@gmail.com

Allan Baumgarten currently publishes reports analyzing health care payer and provider markets in Minnesota and five other states: Colorado, Florida, Michigan, Ohio and Texas. He conducts project research for his clients and has completed four studies of health plan and provider system strategies for the Robert Wood Johnson Foundation. More information about those projects is available at his website.

NEWS RELEASE

For Release on Wednesday, December 18, 2024

Enrollment in Medicaid HMOs Falls 20%,

But Rates of Care Utilization Are Higher

Twin Cities Hospital Systems Returned to Profitability in 2023.

            By the time Minnesota completed its review of eligibility for Medicaid recipients, enrollment had dropped by 20%. However, the remaining beneficiaries were, on average, higher users of care. After posting losses of $425.5 million in 2022, Twin Cities hospitals were profitable again in 2023. Led by the Mayo Clinic health system, hospitals serving Greater Minnesota communities increased their profits by 68.2% in 2023.

            Part Two of Minnesota Managed Care Review 2024 uses data from Medicare facility cost reports for 2023 to analyze hospital financial results and utilization measures, and updates changes in Medicaid managed care enrollment and medical expenses through the first half of 2024. The report compares data for 32 hospitals in the Twin Cities area, including four in western Wisconsin that are part of Minnesota systems, and more than 50 hospitals serving communities in Greater Minnesota, including the Mayo and Gundersen hospitals in La Crosse, WI and the Sanford and Essentia hospitals in Fargo and Sioux Falls. The report organizes the financial and utilization data around the major health systems: Fairview, Allina and HealthPartners in the Twin Cities and Mayo Clinic, Essentia, CentraCare and Sanford Health serving communities in Greater Minnesota.

            Key findings in the new report:

• Enrollment in Medicaid HMOs dropped by 20% between June 2023 and June 2024, dealing a sharp blow to their revenues and profits. Enrollment dropped from 1.2 million to 974,000 and their revenues dropped by $372 million. Their medical loss ratios increased from 87.2% for the first six months of 2023 to 93.9% for the first six months of 2024. Rate of inpatient hospital admission increased, suggesting that many still covered by Medicaid were above average utilizers of care.

• After losing $425.5 million in 2023, hospitals in the Twin Cities area reported combined net income of $147.7 million, or 1.1% of their net patient revenues. They lost $949 billion on patient care but collected other revenues from investments, philanthropy and government grants) of $1.117 billion. By comparison, they had net income of $671.6 million in 2021 or 5.7% of revenues and net income of $308.8 million in 2020, the first two years of the COVID-19 pandemic. Since 2013, these hospitals had combined net income over $600 million four times and net income above $500 million three other times.

• The HealthPartners hospitals posted the strongest net income for the fifth straight year, and the Fairview hospitals posted a modest profit for the first time since 2019. HealthPartners hospitals, including Methodist and Regions, had combined net income of $167.5 million in 2023. The Fairview hospitals, including the University of Minnesota hospital, the largest in the region, had combined net income of $53 million. However, the Allina Health hospitals in the Twin Cities reported a loss of $179.2 million in 2023, even more than their loss of $144.6 million in 2022. North Memorial Health was strongly profitable in Maple Grove but lost money at its main Robbinsdale facility.

• Hospitals serving Greater Minnesota communities increased their net income by 68.2% from $1.139 billion in 2022 (6.7%of revenues) to $1.917 billion in 2023, or 10.8% of revenues. After reporting net income of $1.073 billion in 2022, the Mayo Clinic hospitals in Minnesota and La Crosse, WI, increased their net income by 16.7% to $1.252 billion in 2023. The Sanford Health hospitals in Minnesota, Sioux Falls and Fargo improved their net income from $180.5 million in 2022 to $342.5 million in 2023. The CentraCare/Carris hospitals in central Minnesota improved their results from a loss of $6.6 million in 2022 to net income of $116.1 million in 2022.

Inpatient hospital days at Twin Cities hospitals have mostly been flat for the past 15 years. They increased s little in 2023 to 1.56 million, about the same as before the COVID-19 pandemic. Inpatient days fell by 3% in 2023 at the outstate hospitals in this analysis.

This is the 35th year that we have published Minnesota Health Market Review. Part One of the 2025 edition is scheduled for release in May. The Part One report will examine 2024 data on the enrollment trends and financial results of Minnesota health plans as well as legislative developments in health policy and regulation. Excerpts from the market reports and subscription information can be found at www.AllanBaumgarten.com

Exhibit 1: Minnesota Health Plans at a Glance, 2025

Click Here to Download

2025 data set for Minnesota

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Minnesota Part One

Minnesota Part Two

• Christopher Snowbeck wrote in the Minneapolis StarTribune: "Operating Losses Swamp Investment Gains at Health Plans in Minnesota" Click here to view​​

• Christopher Snowbeck wrote in the Minneapolis StarTribune: "Study: Big hospitals outside Twin Cities grow profits." 
• David Montgomery wrote about the 2015 report in the St. Paul Pioneer Press: "Metro hospital profits fell in 2014, while outstate earnings rose"
• Dan Diamond wrote about the 2015 report in Poiltico Pulse: "The Mayo Clinic had a nearly 18 percent profit margin"

Minnesota Health Market Review 2016, Part One, released May 25: "HMO Profits for Public Programs Surpass $230 Million; Medicaid Enrollment Grows But Individual Market Remains Volatile; Hospitals Double Down on Health Plan Strategy"

• Christopher Snowbeck wrote in the Minneapolis StarTribune: "Record HMO profits from state programs." Click here to view