A report found that operating margins from the four state public health programs were the highest since 2004.
Minnesota's health insurers turned in a profitable year in 2010, as fewer people sought medical care and the flu bug stayed mostly at bay.
Data released Friday showed that the state's seven nonprofit insurance companies -- which include Blue Cross and Blue Shield of Minnesota, Medica and HealthPartners -- generated a combined operating profit margin of 1.5 percent on premium revenue of $19.3 billion last year. In 2009, that margin was 0.8 percent.
The numbers from the Minnesota Council of Health Plans showed a profit margin of 2 percent when taking investment income into account, as the financial markets showed more strength. Net income for the plans increased 75 percent to $385.7 million.
A particular spotlight has shone recently on the four state public health programs, with Gov. Mark Dayton pushing insurers to do their part to ease the projected $5 billion budget deficit. The operating margin for those programs was 3.84 percent of revenue, the highest since 2004.
"There's always more scrutiny when plans earn money than when they lose it," said Julie Brunner, executive director of the Minnesota Council of Health Plans. "The silence is deafening in those years. This year there's a lot of interest on the part of policymakers to understand how the state is spending its health care dollars."
With health care costs accounting for the fastest-growing part of the state budget, Dayton has questioned whether insurers are unfairly profiting off of taxpayer-funded programs and are holding onto larger reserves than necessary.
A spokeswoman for the governor declined to comment on the plans' financial numbers until Monday.
Brunner said the insurance companies are committed to keeping costs down and streamlining the system, saying the industry's reserves are necessary to stay solvent in case of catastrophe.
"It's easy to focus on reserves as being excessive until you have a crisis -- like the one the state budget is in," she said. "The biggest part of increasing the dollar amount of the reserve is the increasing cost of health care."
This year's profit margin on state programs is well above the 10-year average of 1.77 percent in large part because the still-flagging economy means the number of Minnesotans turning to government programs after layoffs and loss of coverage through the workplace continues to rise. And for whatever reason, those who qualified for subsidized care didn't seek as much medical attention.
The state already has lowered the rates it pays to the plans for health coverage for 2011, and the council estimates that will reduce state spending on public programs by at least $64 million.
"This was a strong year for [the plans] because they got an influx of public assistance patients who weren't heavy users of care," said Allan Baumgarten, an independent analyst and author of the annual Minnesota Health Market Review. "The question for state programs is how the state is setting rates. The state is increasing them forward, without any sense of how much is being spent and whether you can inject some competition into the process to hold down the state's costs."
Dayton recently outlined a plan to introduce competition into the mix, forcing insurers and providers to compete for state-subsidized care based on cost and outcomes. Currently, prices are based on past history.
When UCare donated $30 million in excess reserves to the state's general fund in March, Dayton called on other insurers to step to the plate based on their past and present earnings on government programs and reserve levels.
The plans as a group boasted about keeping the growth in health costs per person to 2.6 percent during the year, about half of the national average. Premiums rose an average of 4.8 percent. Enrollment in the state's health plans grew about 1 percent to 4.3 million, giving Minnesota the nation's third-lowest uninsured rate.
Friday was the deadline for the plans to file their financial statements with the Department of Commerce.
The state's biggest plans released their own numbers, though each uses its own calculations.
Blue Cross and Blue Shield of Minnesota: After rough seas a couple of years ago that led to layoffs of about 10 percent of its workers, the Eagan-based company posted a second straight year of positive operating results. Blue Cross said it posted an operating margin of 3 percent on combined revenue of $3.85 billion in commercial and public plans. Operating margin on the state's four public programs was 4.5 percent. Its five-year average is 0.2 percent.
Medica: The Minnetonka-based company said strong growth in Medicare and individual and family coverage helped boost enrollment 5.5 percent to 1.6 million. Operating margin from commercial and public programs was 2.5 percent, with $72.1 million in operating income. Separating public programs, Medica's margin was 2.1 percent, compared with the five-year average of 1.2 percent.
HealthPartners: Enrollment in its dental and health businesses grew by 4.6 percent to 1.36 million members. The Bloomington-based company said operating margins were 3 percent on income of $95 million. It posted $16 million in operating income on public programs, with a margin of 5.4 percent.
Jackie Crosby • 612-673-7335