Minnetonka-based UnitedHealthcare is the first for-profit health insurer to receive an HMO license in Minnesota, a move made by possible two years ago when state lawmakers eliminated a 40-year-old law that reserved the HMO market for nonprofit groups.

The Minnesota Department of Health issued the license Wednesday to UnitedHealthcare, which is both the state’s largest publicly traded company and the nation’s largest health insurer. The company has been making a push to sell more coverage in its home state, including certain Medicare health plans that are new for 2019.

With the license, UnitedHealthcare likely will compete against nonprofit HMOs as well as county-based purchasing organizations for managed-care contracts in the state’s Medical Assistance and MinnesotaCare programs. During 2017, the primary state contract in those programs generated more than $3 billion in revenue for Minnesota’s nonprofit health plans.

“UnitedHealthcare is pleased that we were able to obtain an HMO license from the state of Minnesota, which can be used for multiple lines of business,” the insurer said in a statement. “Having this license will give us more flexibility in the ways we serve our fellow Minnesotans.”

UnitedHealthcare has been operating in Minnesota through a separate insurance company license, which has always been an option for for-profit carriers that want to do business in Minnesota. For that reason, the trade group for Minnesota’s nonprofit health insurance companies issued a statement Wednesday saying that competition from for-profit insurers isn’t new.

“The change in law just gives the state more options when deciding how it will operate state-funded health insurance,” said Jim Schowalter, chief executive of the Minnesota Council of Health Plans. “That’s their call. Our nonprofit companies have been working with the state to make sure Minnesotans get the care they need for more than 30 years.”

There could be more for-profit HMOs on the horizon. State Health Department officials said Wednesday that Kentucky-based Humana, another for-profit carrier, has applied for an HMO license in Minnesota.

Medical Assistance is Minnesota’s name for the state-federal Medicaid program, which provides coverage for many groups including low-income state residents. MinnesotaCare provides coverage for a slightly higher-income group including those whose jobs don’t provide health care benefits.

Across all public programs, HMOs and county-based purchasing groups this month are managing care for about 900,000 state residents. The majority access coverage via three nonprofit HMOs — Eagan-based Blue Cross and Blue Shield of Minnesota, Bloomington-based HealthPartners and Minneapolis-based UCare.

The state Department of Human Services (DHS) issues requests for proposals from companies to manage care for people enrolled in the programs. Licensed HMOs are required to submit a bid in good faith for Medical Assistance and MinnesotaCare, although Health Department officials said the requirement factors an HMO’s volume of commercial health insurance business in a given county. DHS said it soon will be seeking bids for two contracts in the public programs.

UnitedHealthcare has become one of the nation’s largest Medicaid health insurers, although Medicaid enrollment of 6.45 million people at the end of 2018 was down slightly from the previous year. This month, UnitedHealthcare announced it had been selected as one of four managed-care organizations to administer North Carolina’s statewide Medicaid program starting in November.

In Minnesota, Medicaid HMOs have operated for decades and been controversial at times, with some lawmakers arguing that insurers have made too much money on the state business.

Former Gov. Mark Dayton and HMOs agreed to a profit cap at one time, and the state moved to competitive bidding for awarding contracts. The most recent statewide contract for the largest portion of Medical Assistance has been a money-loser for the insurers, with Minnetonka-based Medica dropping out of one large contract as a result.

In 1973, state lawmakers first blocked for-profit insurers from getting licenses to sell coverage as health maintenance organizations. The legislation was driven by consumer-protection concerns, and it was a particularly big deal during periods like the 1990s when HMO coverage was popular.

Over time, however, many employer health plans in Minnesota moved out of HMOs to coverage via carriers operating with insurance company licenses, which trigger different regulatory costs and requirements. Most nonprofit carriers in the state have been licensed as both HMOs and insurers.

When state lawmakers eliminated the ban on for-profit HMOs, some hoped the change would bring more competition to the market where individuals buy health insurance. UnitedHealthcare has largely retreated from that market, however, and Humana has pulled back as well.