The insurance company that covers about 60 percent of Minnesota’s Obamacare enrollees will no longer sell plans when the enrollment period opens this year, delivering the latest blow to the state’s already-troubled exchange.
In a statement on Tuesday, insurer PreferredOne announced that “continuing on MNsure was not sustainable” for its business model due to the high administrative costs associated with the law. The Star Tribune reports that PreferredOne hired 50 new employees to deal with the various changes facing the company after last year’s launch, even as it constituted a small number of the firm’s customers.
The decision to drop out will vastly change the landscape for MNsure customers from the year before: 59 percent of all enrollees bought a plan through PreferredOne, which had offered the lowest-priced plans. Policyholders will be able to renew their plans with the company, but not if they receive a federal subsidy, as most enrollees do.
University of Minnesota political expert Larry Jacobs told KSTP that PreferredOne’s decision could also have political implications: with PreferredOne no longer on the exchange to drive competitors’ prices down, rates could jump in October, a month before the midterm elections.
But MNsure officials say PreferredOne’s announcement to exit is an indication that the exchange is working as planned:
MNsure officials painted PreferredOne's exit as sign that the exchange is functioning as a competitive marketplace
— Kyle Potter (@kpottermn) September 16, 2014