Minnesota

NEWS RELEASE

July 11, 2024                                                          Contact: Allan Baumgarten, 952/212-8589

Minnesota Health Market Review 2024 finds:

Enrollment in Medicaid HMOs drops 13.5% in first quarter

Will Likely Reduce Their Revenues by More Than $1 Billion

             (Minneapolis-St. Paul) Enrollment in Medicaid managed care, the largest and most profitable line of business for Minnesota HMOs, has dropped sharply, affecting their premium revenues and profitability and likely reducing revenues to hospitals and clinics.

            These and other findings are reported in Part One of Minnesota Health Market Review 2024, released today by Allan Baumgarten. This is the 35th edition of the report, first published in 1990. His research analyzes key trends and competitive strategies for health plan companies and hospital systems serving Minnesota communities. Later this year, the Part Two report will present an analysis of the state’s hospital systems and how they compete, examining 2023 data on their financial results and measures of inpatient utilization.

The new report finds that: 

• In the past 10 years, Minnesota HMOs and County-Based Purchasing plans have recorded $1.579 billion in underwriting income on Medicaid managed care and other public programs. Those enrollees now account for 72% of the membership of the HMOs and County-Based Purchasing (CBP) plans.

• In the first quarter of 2024, enrollment in Medicaid HMOs dropped by about 156,000 or 13.6%. Enrollment decreased by almost 61,000 at UCare and by 52,000 at Blue Plus. Beginning in July 2023, Minnesota began the process of reverifying eligibility for Medicaid. As of June 2024, more than 354,000 have been disenrolled from the program, most of them in managed care plans, and many of them dropped for “administrative reasons.” On an annual basis, those enrollees losing benefits in the first quarter would account for more than $1 billion in revenues to the health plans.
• After posting record profits in 2022, driven by strong results for the public programs, net income for Minnesota HMOs dropped by 77.5% in 2023. Minnesota HMOs had net income of $148.9 million in 2023, or 0.9% of their premium revenues. That was down from net income of $635.8 million in 2022, or 4.3% of revenues. Underwriting income from the public programs dropped from $726.5 million in 2022 to $393.9 million in 2022. UCare, the largest HMO in the state, saw its underwriting income on public programs drop from $276.4 million in 2022 to only $8.5 million in 2023. HealthPartners had underwriting income of $186.9 million on its public programs but lost $167 million on its commercial and Medicare plans. Blue Cross Blue Shield was profitable on its employer group plans but lost $103.4 million on its Medicare Advantage plans.

            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 2024 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@umn.edu

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 Thursday, April 4, 2024

Twin Cities Hospital Systems Report $425 Million in Losses in 2022.

Profits for Minnesota HMOs drop sharply in 2023.

Enrollment in Medicaid HMOs Falls 5.2% in 3d Quarter of 2023

            After posting record profits in 2022, Minnesota HMOs are expected to report more moderate profits for 2023. And while the Twin Cities hospital systems reported significant losses in 2022, the Mayo Clinic and Sanford Health hospitals continued their strong profitability. Further, the “Great Unwinding” resulted in a 5.2% drop in enrollment in Minnesota Medicaid HMOs in the 3d quarter of 2023.

            Part Two of Minnesota Managed Care Review 2023, released today, analyzes hospital system finances and inpatient utilization based on data from Medicare cost reports for 2022, and it updates health plan profitability data through the first three quarters of 2023. The analysis examines 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. 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. Based on quarterly statements for the first nine months of 2023, the report shows reduced profitability for Minnesota HMOs, including Blue Plus, Medica and HealthPartners, and a loss for UCare.

            Key findings in the new report:

• In 2022, Twin Cities area hospitals posted combined losses of $425.5 million, or 3.4% of net patient revenues. They lost $1.263 billion on patient care operations but had other revenues from investments, philanthropy and government grants (including Provider Relief Funds) of $787 million. 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. This was the only time these hospitals had such losses in the past 20 years, decades in which hospital financial results have been strong. Since 2013, these hospitals had combined net income over $600 million four times and net income above $500 million three other times.

• Even though they reported a combined loss of $11.2 million, the HealthPartners hospitals had the best results for the fourth year in 2022: In 2021, they had net income of $221.3 million, or 10.8% of net patient revenues. Allina Health reported losses of $144.6 million, including $89.6 million at Abbott Northwestern, down from net income of $76.6 million in 2021. Fairview Health, including the University of Minnesota hospital, had losses of $123.2 million, compared to losses of $10.2 million in 2021. North Memorial saw its net income decrease from $118.6 million in 2021 to a loss of $33.3 million in 2022.

• Led by the Mayo Clinic hospitals, hospital systems in Greater Minnesota had strong net income in 2022. They had combined net income of $$1.124 billion in 2022, down from $2.049 billion in 2021. The Mayo Clinic’s hospitals in Minnesota and La Crosse had net income of $1.073 billion or 22% of net patient revenues. The Sanford Health hospitals in Minnesota, Sioux Falls and Fargo had net income of $416.4 million in 2021 but that dropped to $180.5 million in 2022.

 Inpatient hospital days at Twin Cities hospitals increased from 1.5 million in 2021  to 1.551 million in 2022, but that was still less than pre-COVID levels. The Fairview hospitals provided 24,000 more days of care and the HealthPartners hospitals added 9,000 inpatient days.

• As Minnesota and other states begin the “Great Unwinding” of re-verifying eligibility for Medicaid, Minnesota HMOs saw their Medicaid enrollment, a key source of revenues and profits, drop by 5.2%. According to KFF Health, Medicaid enrollment in Minnesota dropped by more than 211,000 between June 2023 and February 2024.

• After setting profitability records in 2022, mainly from their Medicaid plans, Minnesota HMOs saw their profitability drop by 53.8% in 2023, comparing the results for the first nine months of the year. Their net income dropped from $506.9 million to $234.3 million.

This is the 34th year that we have published Minnesota Health Market Review. Part One of the 2024 edition is scheduled for release in June. The Part One report will examine 2023 data on the enrollment trends and financial results of Minnesota health plans as well as legislative development in health policy and regulation. Excerpts from the market reports and subscription information can be found at AllanBaumgarten.com

NEWS RELEASE

September 27, 2023:                                             

Contact: Allan Baumgarten, 952/212-8589

Minnesota Health Market Review 2023 finds:

Minnesota HMOs Continue Strong Profits, Enrollment Growth into 2023

            (Minneapolis-St. Paul) After posting record profits and gaining enrollment in 2022, Minnesota HMOs continued their profitability and enrollment growth through the first half of 2023. Medicaid and other public programs are the largest lines of business for Minnesota HMOs and the source of most of their profits.

            These and other findings are reported in Part One of Minnesota Health Market Review 2023, released today by Allan Baumgarten. First published in 1990, this is the 34th edition of the report, which analyzes key trends and competitive strategies for health plan companies and hospital systems operating in Minnesota. Part Two of the report, to be released later this year, will present our analysis of the state’s hospital systems and how they compete, examining 2022 data on their financial performance and measures of inpatient utilization. The new report finds that:

• Enrollment in Minnesota HMOs grew by 3% and they reported average profit margins of 3.2% in the first half of 2023. Enrollment grew to 1.651 million, the highest HMO membership in history. Enrollment has grown by 28.8% since the end of 2019, in the first three years of the COVID-19 pandemic. Most of the growth has been in Medicaid managed care and other public programs, which now cover about 24% of the state’s population. UCare grew by 54.2%, while Blue Plus added 20.6% and the new UnitedHealthcare HMO went from zero to about 39,000 members.
• In the first half of 2023, Minnesota HMOs reported net income of $213.4 million, or 3.2% of underwriting revenues. Four HMOs--Blue Plus, UCare, UnitedHealthcare and Hennepin Health--reported margins of 5% or higher. This comes after HMOs and County-Based Purchasing plans for public programs posted record profits in 2022 of $720.8 million, driven by net income from state public programs, especially Medicaid ($478.2 million) and Minnesota Senior Health Options ($137.2 million). UCare accounted for $325.7 million of that, with about 85% coming from its public program contracts. In 2016, UCare was struggling with the loss of state contracts and revenues and agreed to be acquired by Fairview Health, although that deal was later cancelled.
• Enrollment in Medicare Advantage HMO and PPO plans in Minnesota increased by almost 47,000 as of January 2023. In 2023, 55% of the state’s Medicare beneficiaries in the state are in Medicare health plans, above the national average. UCare’s HMO plans have grown to 135,000 and Blue Cross Blue Shield increased enrollment in its Medicare PPO plans from 162,000 to more than 212,000. Enrollment in Humana’s PPO plans has dropped as several major provider systems dropped out of the Humana
• Spending on administrative expenses increased by about $278 million for Minnesota HMOs, reaching $1.395 billion in 2023, or 9.3% of underwriting revenues. Expenses for UCare increased by $124 million, including $28 million in contributions to its own foundations. Administrative spending for Blue Plus increased by $!00 million.
• Even with large transfers of dividends to parent companies and investments outside of Minnesota, capital accumulated by HMOs has almost doubled in the last five years. Minnesota HMOs added $526 million to their capital in 2022, reaching $3.773 billion, three times as much as the minimum required by state law. Since 2020, Medica Insurance Company paid dividends of $575 million to its parent company, while Blue Cross Blue Shield transferred $208.3 million to its parent company.

            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 2023 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@umn.edu

Exhibit 1: Minnesota Health Plans at a Glance, 2021

2022 data set for Minnesota

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