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MCHP member health plans spent nearly $20 billion on care in 2013

$120 million invested in ACA technology; operating margin below 1 percent

ST. PAUL, Minn., April 1, 2014 /PRNewswire-USNewswire/ -- Health plans in Minnesota paid $19.7 billion—$54.1 million every day—for medical care on behalf of their members for doctor visits, prescription drugs, hospital stays and other covered medical services in 2013. In all, spending for care was up nearly $1 billion or 4 percent over 2012. According to the Minnesota Council of Health Plans (MCHP), the change between 2012 and 2013 in medical care by category was:

  • Spending on care provided at home under the direction of a physician up 37.5 percent.
  • Spending on care for chemical dependency and mental health services provided in both inpatient and outpatient settings, excluding prescription medications and supplies, up 13 percent.
  • Spending on care for people who were hospitalized up 7.7 percent.
  • Spending on care provided at a skilled nursing facility up 5 percent.
  • Spending for care provided by chiropractors, therapists, social workers, nurse practitioners (health professionals other than physicians and dentists) up 3 percent.
  • Spending for care provided by hospitals in outpatient settings up 2 percent.
  • Spending for care provided in emergency centers up 1 percent.
  • Spending on durable medical goods such as wheelchairs, eyewear, hearing aids, oxygen, equipment rental, etc., down 4 percent.
  • Spending on prescription drugs and non-reusable medical supplies spending down 3.5 percent.
  • Spending for physician services, including costs for all services provided by or under the supervision of licensed medical doctors and doctors of osteopathy, down 1.6 percent.

Overall, medical care spending per person increased 2 percent over 2012.

In work related to the implementation of the federal Affordable Care Act (ACA), Minnesota's health plans invested nearly $120 million industrywide in technology systems to administer the numerous provisions associated with ACA implementation.

"This IT investment represents a sliver of the work that took place last year and will continue in 2014 as the ACA is implemented," said Julie Brunner, executive director of the Minnesota Council of Health Plans. "In addition to the overall ACA-related IT investments, Minnesota's health plans have contributed thousands of hours to MNsure to ensure Minnesotans have the coverage they selected."

Average industry operating margin below 1 percent

The uptick in spending on care brought the overall industry-wide operating margin to 0.67 percent ($146.5 million) on $21.9 billion of premium revenue. Investment income of $149.4 million made the 2013 contributions to reserves 1.3 percent ($286.8 million) of total revenue.

National and state standards exist to ensure that health plans have sufficient reserves for continuous payment of members' medical bills and for investing in technology and other improvements – even when there are unexpected catastrophic claims, natural disasters or market instability.

Revenue from state public programs serving 641,414 Minnesotans was $4.4 billion in 2013 and the health plans spent more than $11 million a day on care for enrollees. The year ended with an operating margin of 2.6 percent ($115.3 million.) The average operating margin over the past 10 years on public programs is 1.8 percent of revenue.

Year

Operating

Margin as % of premium revenue

2013

0.67%

2012

0.57%

2011

1.8%

2010

1.52%

2009

0.83%

2008

0.39%

2007

(0.45%)

2006

(0.59%)

2005

(0.59%)

Taxes on premiums up 24 percent; enrollment increases

Premium taxes paid by smaller employers and individual policyholders increased 24 percent to $323.8 million in 2013. The increase was driven by a $160 million assessment to help pay for care provided to enrollees of the Minnesota Comprehensive Health Association (MCHA). Smaller employers and individual policy holders make up for costs not covered by the premiums paid by MCHA members. This assessment was up 21 percent from the previous year.

Taxes and assessments account for about 12 percent of the premium paid by these policyholders. 

In all, enrollment in MCHP's seven member health plans topped 4.5 million, up 2 percent from 2012. Data reported also show the following for 2013:

  • Enrollment in coverage sponsored by large employers that self-fund their claims expenses increased nearly 3 percent to 2.3 million people.  
  • Enrollment in insurance company products remained steady at 1.5 million people and HMO product enrollment increased 2 percent to just more than 902,000 people. Group coverage for companies with 50 or fewer employees declined 1 percent to 344,599.  
  • Enrollment in Medicare products increased to 496,194, up 8 percent over 2012.
  • Enrollment in Special Needs BasicCare, coverage for people ages 18 through 64 who have a disability and qualify for Medicaid, increased from 18,000 in 2012 to 38,293 as the state moved from fee-for-service coverage to managed care. (Individuals had the choice to opt out of the move.)
  • More than 60,000 Minnesotans were enrolled in health care coverage under the federal expansion of Medicaid.
  • Overall, enrollment in all public programs combined (MinnesotaCare, Prepaid Medical Assistance Program, Special Needs BasicCare, Minnesota Senior Health Options and Minnesota Senior Care Plus) reached 653,008.

State statute requires Minnesota's health plans to submit reports on their financial status. The reports are independently audited to ensure they meet requirements of the Financial Accounting Standards Board, and definitions and standards promulgated by the National Association of Insurance Commissioners and the State of Minnesota. The Minnesota Council of Health Plans (MCHP) is the trade association for Minnesota's seven nonprofit health plan companies.
MCHP promotes the delivery of high-quality, affordable health care.

SOURCE Minnesota Council of Health Plans

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