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Minnesota’s Health Plans:
Leaders. Innovators. Employers.
Supporting Minnesota’s Economy
Minnesota’s eight nonprofit health plans are headquartered locally: this means Minnesota jobs, state tax
revenues, a community presence and focus on our community. Nearly 16,000 Minnesotans know these
companies as their workplace.
As employers, these local companies contribute billions of dollars each year to Minnesota’s economy.
Thousands of employees and their families are your friends and neighbors. You’ll find them working in
communities throughout our state including Aurora, Mankato, Moorhead, Rochester, Virginia, Crookston,
St. Cloud, Duluth, Two Harbors, Proctor, Silver Bay and more than 70 locations in the Twin Cities.
Minnesota’s nonprofit health plans are:
Blue Cross Blue Shield/Blue Plus of Metropolitan Health Plan
Minnesota PreferredOne
First Plan of Minnesota Sioux Valley Health Plan
HealthPartners UCare Minnesota
Medica
These health care companies provide coverage Where Minnesotans Get Their Health Insurance (2005)
Preliminary Data
to more than four million people, spending $10 Total Population, 5.1 Million
billion dollars annually in payments to hospitals, Uninsured
7.4%
clinics and others that provide medical care. MA, GAMC, MnCare,
MCHA
11.6%
Self-funded plans
In addition, Minnesota’s health plans give more 40.5%
than $10 million in grants and other direct
support to research, teaching and community Medicare
13.5%
service organizations, and pay more than $87
million each year in property and payroll taxes
and unemployment insurance. Fully-insured HMOs
12.0%
Indemnity, Blue Cross
Blue Shield MN
15.0%
Source: MN Dept. of Health
Investing in Quality Care
As nonprofit organizations, Minnesota’s health plans have a strong commitment to the community, not
shareholders. These companies are recognized throughout the country for their collaborative efforts to
improve health care. Most recently the health plans, in collaboration with the Minnesota Medical
Association (MMA), launched MN Community Measurement (MNCM). Minnesota’s health plans also
fund the internationally recognized Institute for Clinical Systems Improvement (ICSI).
Revised: 3/20/06 Page 1
Prepared by the Minnesota Council of Health Plans, 2550 University Ave. W., Suite 255 South, St. Paul, MN 55114. 651-645-0099
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Graph 1shows that Difference Between Premiums & Spending per Person
margins at Minnesota’s (1994 to 2004)
health plans are tight. 10% Minnesota Fully-Insured Private Market
As nonprofits, any 8% 6.7%
operating gains are 6% 4.1%
added to reserves and 4% 2.3%
0.8% 1.2%
2%
are used to lower 0%
premium increases, -2%
fund programs to -4% -2.5%
-3.4% -0.4% -0.9%
-2.3%
-6% -4.2%
improve the health of
-8%
Minnesotans and -10%
protect consumers. 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Graph 2 shows that in
the past 10 years, the Graph 1
average spending Note: a positive number indicates that premiums were higher than spending, and a negative number
increase has topped Indicates that spending was higher than premiums.
Source: MDH Health Economics Program.
premium increases by .6
percent, reinforcing the
need for health plans reserves.
Private Health Insurance Premium and Spending Increases over 10 Years
% Premium Increase = 10 yr. Avg. Expense Increase (8.6%)
% Expense Increase = 10 yr. Avg. Premium Increase (8.0%)
18.0%
16.0%
14.0%
Percent Increase over Prior Year
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Graph 2
Data Source: MN Department of Health
Unlike traditional fee-for-service models, managed care organizations do much more than pay claims and
manage enrollment. Disease management programs that focus on patients with chronic conditions
improve the health of Minnesotans, yet also increase administrative costs. Minnesota health care taxes
and assessments add $175 million in costs, representing more than 14 percent of administrative spending.
Still, Minnesota’s administrative costs are low. According to the Minnesota Department of Health, 90
percent of health care premium dollars go to medical care spending, leaving Minnesota health plans with
one of the lowest administrative costs in the country.
Another unique aspect of Minnesota’s nonprofit environment and commitment to our community
is the fact that these health plans serve all Minnesotans. In the late 1980s enrollees in Minnesota
Revised: 3/20/06 Page 2
Prepared by the Minnesota Council of Health Plans, 2550 University Ave. W., Suite 255 South, St. Paul, MN 55114. 651-645-0099
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Health Care
Programs found Prepaid Minnesota Health Plan Government Programs
Revenue, Expense, Operating Gain/Loss
it difficult in 1995 - 2005
Prepaid Health Plan Government Program Premium Revenue
some areas to Prepaid Health Plan Total Expense
Prepaid Health Plan Net Operating Gain/Loss ($)
access health $1,800,000,000
care services. $1,600,000,000
Since then, $1,400,000,000
health plans $1,200,000,000
worked with the $1,000,000,000
state to increase $800,000,000
access to health $600,000,000
care and $400,000,000
improve $200,000,000
$0
quality, all 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
(estimated)
-$200,000,000
while providing
the state with Graph 3
Data Source: Health Plan Data
value. As Note: Expenses include medical & administrative
Graph 3
illustrates, the state’s payments to health plans have tracked closely with expenses for the public health
care programs, posting an average gain of 1.6 percent over 10 years.
Graph 4 shows
that during the DHS Rate Increases Compared to
Private Market Premium Increases
past six years, 1999 - 2004
rate increases
paid to the health 16.0%
plans by the 14.0%
Minnesota
12.0%
Department of
Human Services 10.0%
have been lower 8.0%
than private
6.0%
market premium
increases in all 4.0%
but one year. 2.0%
0.0%
1999 2000 2001 2002 2003 2004
% Premium Increase (Private Market) % DHS Rate Increase
Graph 4
Source: MN Dept. of Human Services
Competing in the Marketplace
Minnesota’s insurance industry is not unlike other mature markets (auto manufacturers, oil companies,
grocers, computers, etc.), which typically result in a small number of major competitors. While many
people assume that more insures will result in more competition and therefore lower premiums, a review
of markets across the nation does not support the assumption.
Revised: 3/20/06 Page 3
Prepared by the Minnesota Council of Health Plans, 2550 University Ave. W., Suite 255 South, St. Paul, MN 55114. 651-645-0099
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For example,
Wisconsin has a mix
of more than 20 for-
profit and nonprofit
health plans, yet
overall their
M
premiums are higher
than Minnesota’s
where three large
plans share more than
70 percent of the
market. Graph 5
illustrates the mix
between the percent
of the marketplace
held by the three
largest companies and
the cost of premiums
in the state. Graph 5
Graph 6 shows that when compared the insurance markets throughout the county, Minnesota is in the
middle of the trend, with more than 70 percent of the market shared among three companies. $10,000
Market Share of Three Largest Insurance Carriers, by State, 2001
A Final Note
While many
know
Minnesota’s
managed care
companies as
their health plan –
the name on the
health card – it is
e rag e , 2 0 01
thanks to the
health plans’
partnerships with
employers and
state government,
that Minnesota
has the lowest
uninsured rate in
the country, Graph 6
$9,000
Source: Chollet, Deborah, et al. “Mapping State Health Insurance Markets, 2001: Structure
provides high And Change,” AcademyHealth, July 2003.
quality health
care and premium costs comparable to other states.
Revised: 3/20/06 Page 4
Prepared by the Minnesota Council of Health Plans, 2550 University Ave. W., Suite 255 South, St. Paul, MN 55114. 651-645-0099
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