The largest insurer with the lowest premium rates on Minnesota’s Obamacare exchange is dropping out because the government health-exchange is unsustainable, the company announced Tuesday.
PreferredOne Health Insurance told MNsure, the state-run exchange, Tuesday morning that it would not continue to offer its popular insurance plans on the marketplace in 2015. It’s “purely a business decision,” spokesman Steve Peterson told KSTP-TV. The company is losing money on administrative costs for plans offered on the bureaucratic and glitchy government exchange.
Part of the problem, according to PreferredOne, is that MNsure hasn’t even been able to verify its customers’ information. PreferredOne said that some of its customers have turned out not to even live in Minnesota.
Insurers are required to accept customers who’ve been approved by the exchange for coverage, but states and the federal government have been struggling for months to determine which applicants are actually eligible for the benefits. (RELATED: Obama Admin Is Kicking 115K Off Obamacare Plans)
“Our MNsure individual product membership is only a small percentage of the entire PreferredOne enrollment but is taking a significant amount of our resources to support administratively,” the company said in a statement. “We feel continuing on MNsure was not sustainable and believe this is an important step to best serve all PreferredOne members.”
PreferredOne was Minnesota’s largest exchange insurer with 59 percent of individual MNsure sign-ups, according to KSTP. Another four insurance companies — Blue Cross Blue Shield, HealthPartners, Medica and UCare — will continue to offer plans on the exchange next year.
This leaves Minnesota Obamacare customers in a tricky situation. PreferredOne had significantly lower rates than any other insurer on the exchange. When these plans disappear, customers will see a significant rate hike if they choose to continue on the Obamacare exchange, independent of yearly rate hikes.
Minnesota is scheduled to announce premium rates for 2015 Obamacare plans in October and signs point to looming price hikes that will hit Minnesotans doubly hard.
Scott Leitz, CEO of the state exchange, released a joint statement with PreferredOne CEO Marcus Merz, emphasizing that the company will work with MNsure to “minimize impact” to current enrollees.