What’s happening to health insurance in Minnesota?

1. Important points about Blue Cross Blue Shield MN:

1. Blue Cross Blue Shield Minnesota is dropping over 100,000 people from individual health insurance policies — with the explanation of losing too much money.  You should know that:

2.  Despite $126 M overall reported loss for 2015, Blue Cross and its Blue Plus subsidiary had, over the last 5 years — including 2015 — $301 M in cumulative profits, especially from investment income. meanwhile, there are additional profits, which are not reported.  There are no public numbers on the profits Blue Cross gets from its other subsidiaries, especially its Comprehensive Care Services unit which provides Third Party Administrator work (hired by corporations to manage the health care funds for employee benefits), and its Prime Therapeutics pharmacy benefit manager unit (serving as a middleman to arrange prices between drug manufacturers and insurance companies).  In addition, there is no public reporting of the consolidated revenue, expenses and profits of the entire Blue Cross system in Minnesota.  The true profit or loss for 2015 is hidden from public view.

(Note: the other three big Health Plans – HealthPartners, Medica and UCare – all claim overall profits for 2015, unlike Blue Cross Blue Shield MN.

3.  Blue Cross has huge financial reserves, far bigger than the other Plans.  Their 2015 loss reduced it by only 7.5%. They have over one billion dollars more in reserves than what they are required by regulations to have.  The reserves are in essence “money in the bank” to use if the insurance policies run at a loss.

4. Blue Cross stands to make much larger state program profits in 2016 compared to 2015, thanks to taking over most of the lucrative public program enrollments which had been with UCare.

5. In the Allina-MN Nurses Assoc. dispute over health care benefits, Allina and Blue Cross are refusing to provide the actual employee medical claims data to prove their assertion of a $10 million/yr extra expense of the RNs’ health care coverage. Blue Cross is the Third Party Administrator for Allina, and it could easily be getting large, illegal, undisclosed profits through the operations of this division.

2. Big picture:  Current system is not working:

(A) The insurance company business model is broken.  Their viability – including generating profits — had heavily depended on cherry –picking healthy enrollees, and rejecting those who needed coverage the most.  The Affordable Care Act outlawed that cruel and unethical practice.  As a result, we now see that the insurance companies are not able to provide useful, affordable insurance to tens of thousands of people.

(B) You need everyone in, to spread the riskThe private market can’t do that.  Forcing people to buy private insurance is not working. The Affordable Care Act tried, with the flawed individual mandate penalty, but hasn’t achieved its goal.  It would be politically unfeasible to make the penalties large enough to economically force people to buy policies – that is, make the penalty as big or bigger than the insurance premiums.

(C) The only way you can get everyone in is with a universal public program where all residents are automatically included.      That has the additional huge benefit of spreading the risk across the population, as it should be.

D)  If the big Health Plans didn’t have huge profits off of the state programs to subsidize their losses in the private market, they would have had to close up shop long ago. This is another symptom that the private insurance market is broken and can’t be fixed.

3. Also important to know:

1. Overall health care cost is bloated with huge profits (insurance co profits, as well as drug, medical equip and other), insurance co fraud, huge unnecessary admin costs of insurance cos (including huge executive compensation), and the huge admin work they force hospitals and clinics to do.  A third or more of the total is spent on things other than actual medical care.

2. Strong regulation could eliminate the insurance co profits, but would require expensive, intensive oversight.  Cutting out waste and unnecessary administrative cost due to multiple insurers, can only be done with single payer, universal coverage. Changing it away from a market-based system would remove the perverse dynamic of financial winners and losers.

3.  The huge profits in the state programs are wasteful, unnecessary, and fraudulent. The state programs would cost much less in taxpayer dollars if there weren’t insurance company middlemen taking a huge slice.  (Ditto for Medicare Advantage.)

4.  Blue Cross, HealthPartners, and Medica are probably also ripping off self insured companies with their Third Party Administrator work overseeing employee health plans.  The income and profits from these are not publicly reported, and very likely are large numbers.


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