One of Minnesota’s biggest health insurers is catching flak from Gov. Mark Dayton and consumer advocates for transferring $120 million from its nonprofit Minnesota HMO to other operations, including a for-profit insurance unit.

Medica Health Plans transferred the money this month to shore up the finances of its for-profit and Wisconsin insurance businesses, using reserves from its nonprofit HMO.

The move is also reigniting a debate about the role of Minnesota’s nonprofit health plans. Earlier this year, the Legislature passed legislation that allows for-profit HMOs to operate in Minnesota for the first time in 40 years and made it easier for HMOs to transfer reserves.

“Perhaps this is now legal in Minnesota but it is not moral,” said the Rev. Grant Stevensen of ISAIAH, a coalition of religious groups that protested Medica earlier this year after it pulled out of the Minnesota Medicaid program. “This is one of the concerns many people have about the nonprofit HMO business in this state and how much in fact they function like for-profit entities,” he said.

Dayton, who opposed the legislative changes, said ­Thursday that they have created a “misguided policy.”

“That $90 million came from the Minnesotans, who bought their health insurance from Medica. It’s their money [and] it should be returned to them through lower rates for more affordable health care,” the DFL governor said in a statement.

Minnetonka-based Medica said it requested the transfers due to shifting regulatory reserve requirements for its businesses, and that state regulators approved the transfer. Medica has nonprofit HMOs serving Minnesota and Wisconsin. It’s for-profit Medica Insurance Co. has business lines in the Upper Midwest, including the individual market in Iowa, Nebraska and Kansas. Altogether, Medica serves about 1.2 million people.

“Health care is more volatile today than it has ever been before,” the company said in a statement. “We continue to assess where within our organization those funds will be required to support the health care needs of our members. Our goal is to ensure adequate reserve levels for each and every one of our members.”

The Minnesota Health Department said Thursday that, because of the new state laws, it had no legal basis to deny the transfers, which included a $90 million dividend payment from the nonprofit HMO to a for-profit Medica subsidiary.

At the same time, Health Commissioner Dr. Ed Ehlinger said that the transactions “are not in the public interest.”

“As Minnesota’s regulator of HMOs, we have serious concerns with this transaction and with the law recently enacted by the Minnesota Legislature,” he said in a statement.

The Health Department said it could block the transfer only if it were a “substantial” amount, noting that the $90 million itself represented about 11 percent of Medica’s 2016 year-end assets.

Minnesota Attorney General Lori Swanson, however, challenged the idea that the transfer met state requirements and said regulators should have asked Medica for more information.

“From our perspective, we believe $90 million is a substantial amount of money,” said Ben Wogsland, a spokesman for the attorney general’s office. “We are disappointed that the agency approved the payment of the dividend and would hope that the agency might reconsider.

“Nonprofit HMO dollars that were generated from Minnesota policyholders should stay in Minnesota and benefit Minnesota policyholders,” Wogsland added.

The Health Department said Medica intended to transfer $90 million from its Minnesota HMO, which lost $189.9 million last year, to the coffers of the for-profit insurance company, which lost $28.7 million, according to statements filed with state regulators.

Another $30 million went from the Minnesota HMO to Medica Health Plans of Wisconsin, which lost $32.3 million last year, according to regulatory filings.

This year Medica pulled out of the Minnesota Medicaid market, where it served more than 300,000 members, because of large losses it suffered under the program. It then unsuccessfully sued the state, claiming that competitors were unfairly offered better deals.

No strings attached

Medica’s move also drew criticism Thursday from a prominent Minnesota social advocacy group.

“They are funneling money from Minnesota to Wisconsin at the same time they were going to the Legislature saying we need money for reinsurance to keep premiums down,” said Kenza Hadj-Moussa, communications director for TakeAction Minnesota, which opposed the legislative changes that allowed for the transfer.

The reinsurance program, which was passed by the Legislature and recently approved by the federal government, will allow the state’s health plans to moderate premiums in the individual market.

“We are entrusting these insurance companies to do the right thing, considering the reinsurance package came with no strings attached,” said Hadj-Moussa.

Most Minnesota health plans operate nonprofit HMOs along with other subsidiaries, including traditional health insurance, preferred provider organizations, self-insured management companies and other types — some nonprofit and others for-profit.

However, no other companies have requested to transfer funds among companies since the law was changed, according to the Health Department.