State regulators have come up empty on a last-ditch effort to recruit more health insurers to the MNsure exchange next year, particularly to sell coverage outside the Twin Cities metro area.
Last month, state officials asked potential insurers to specify waivers of state laws or rules that might allow them to newly offer coverage to residents buying insurance outside the seven-county metro area.
No applicants surfaced as of Friday's deadline. Two county-based groups that manage care for Medicaid enrollees in certain rural areas said they were interested, but couldn't make the timeline work for 2017.
In a statement on Monday, the Minnesota Department of Health said it "will continue those discussions and explore those opportunities, even though it is unlikely that coverage options could come together for the upcoming enrollment period."
MNsure is one of several government-run exchange markets that were launched in late 2013 under the federal Affordable Care Act.
The websites are an option for people who don't get coverage from an employer or government programs like Medicare, Medicaid or MinnesotaCare.
Currently, about 5 percent of Minnesota residents buy coverage in the individual market, either through insurers, brokers or MNsure.
There's growing concern nationally about a lack of competition on exchanges next year as health insurers pull back due to mounting financial losses.
Minnetonka-based UnitedHealthcare will exit next year from government-run exchanges in 30 of 33 states where it currently competes. Like United, two other large national carriers have announced pullbacks that don't affect Minnesota.
In Minnesota, Eagan-based Blue Cross and Blue Shield of Minnesota said in June that next year it would drop individual market policies for about 100,000 people. Blue Cross will still sell health maintenance organization (HMO) plans to individuals, but those policies aren't available in 11 rural counties.
That could leave some of those counties with options from just two carriers. It's not clear if there are any other potential gaps in competition, since ongoing negotiations between insurers and state regulators about 2017 options aren't public.
State requested proposals
The state departments of health and commerce — not MNsure — issued the request for proposals (RFP) in August without specifying if they had concerns about a lack of competition in particular counties. Instead, regulators said they were interested in boosting competition in a market where Golden Valley-based PreferredOne dropped out of MNsure in 2015.
"Changes in the Minnesota health insurance market have contributed to a gradual contraction of the number of health insurance products being offered in the private individual insurance market," the RFP states.
While the RFP highlighted the need for choices among rural consumers, it said responders might also have the chance to sell in the metro area and in the "off-exchange" portion of the individual market.
Two county-based purchasing organizations sent letters to regulators last week saying they were interested in the chance of selling coverage in the individual market, but raised concerns about the timeline for doing so in 2017.
"PrimeWest Health would need substantially more time than the RFP allows to develop, test, propose and launch an individual insurance product that is both financially sustainable and affordable to rural Minnesotans," wrote James Przybilla, chief executive of the Alexandria-based group.
"Given the aggressive timeline of the RFP with the proposed start date of January 1, 2017, SCHA is unable to submit a formal proposal at this time," wrote Leota Lind, chief executive of Owatonna-based South Country Health Alliance.
County-based purchasers are governmental groups that manage care for people in the state's Medical Assistance and MinnesotaCare programs. They are an alternative to HMOs that manage care for most state residents in the public insurance programs.
MNsure spokesman Shane Delaney said Monday via e-mail: "The RFP identified potential coverage opportunities for certain parts of the state in future coverage years. We encourage market competition, even if it's down the road."
Issues in rural areas
Competition can be a problem in rural counties because insurers can't sell policies across a large population base, and they sometimes struggle to get competitive prices from doctors and hospitals in small communities, said Cynthia Cox, a researcher with the Kaiser Family Foundation. Add those factors to the chance that residents in a rural county might have unusually high health risks, and insurers struggle to set premiums that will cover their costs, Cox said.
"There's not a lot of incentive for insurance companies to go into rural areas," she said.
Across the country, pullbacks announced by insurers mean that an estimated 2.3 million enrollees in health exchange coverage, or 19 percent of all enrollees, could have a choice of a single insurer in 2017, according to an August analysis from the Kaiser Family Foundation.
The report also said the share of all counties where a single insurer sells exchange plans is likely to increase from 7 percent to 31 percent next year.
Minnesota regulators aren't the only ones taking steps to shore up competition.
In Arizona, regulators negotiated with the state's Blue Cross insurance company to make sure that at least one option remained for people buying exchange policies in a suburban county between Phoenix and Tucson, Cox said.
In Alaska, she said, state officials created a "reinsurance" program that will help health insurers cover large financial losses in the individual market, thereby promoting participation by health plans.