The health plans that cover most Minnesotans, including Blue Cross and Blue Shield, HealthPartners and Medica, broke even last year after three years of operating losses and look poised for a strong 2009.

Enrollment in public programs, in particular Medical Assistance, grew sharply in a weak economy. So did enrollment in plans with health savings accounts, which put more risk on the individual rather than the insurer and are gaining popularity with Minnesota employers.

Overall enrollment was up 2.6 percent to 4.3 million, according to the Minnesota Council of Health Plans, which released its annual report on health plan financial results Tuesday.

Just as well, since, like many other organizations, the not-for-profit health plans absorbed big investment losses last year. Income from investments shrank to $11 million from $207 million in 2007. As a result, net income was more than halved at $50.73 million from $118 million a year earlier.

"We're happy they broke even, given the anxiety people feel about health care," said Julie Brunner, executive director of the council.

Good outlook

Average premium increases for the plans were between 5 and 8 percent last year. That helped bring in combined premium revenue of $16.8 billion, up 6.8 percent from 2007.

Medical costs were up 6 percent to $15.2 billion, working out to $3,549 per enrollee.

Administrative costs ate up 10.7 percent of premiums, up 0.6 percent.

Enrollment in public programs, including Medical Assistance, was up 10.4 percent to 411,456. Health plans linked to health savings accounts and health reimbursement accounts grew even faster. They were up 20 percent to 547,642 enrollees, 13 percent of insured Minnesotans.

Self-insured employers, the biggest single group, had 2.1 million enrollees in 2008, up 4.2 percent from a year earlier.

For 2009, "the outlook is good for a couple of reasons," said Allan Baumgarten, an independent health consultant.

First, the blow to investments is unlikely to be repeated, at least not to the same degree, Baumgarten said.

Second, in the past couple of years, health insurers have off-loaded some of the risk they used to manage. More employers are self-insuring and simply paying fees to insurers for administrative services and for access to their provider networks. For insurers, these fees are potentially less lucrative but also more predictable.

Also, more health plans now include high deductibles, shifting risk to consumers who are now responsible for the first few thousand dollars out-of-pocket. Hospitals are also taking on more risk because they now have to collect from patients, which is messier than collecting from insurers.

"I tend to think that between hospitals and health insurers, health insurers are better positioned today to meet the downturn in the economy," Baumgarten said.


The Minnesota Council of Health Plans doesn't break out numbers for individual insurers. However, separate statements released Tuesday showed 2008 performances varied among plans.

Blue Cross and Blue Shield of Minnesota said it had a net loss of $15.7 million on revenue of $8.8 billion, almost all because of investment losses. Blue Cross is the state's No. 1 health insurer, with 2.8 million members.

Bloomington-based HealthPartners, the third-biggest insurer, said it had a record number of new enrollees in 2008. In a statement Tuesday, it said it added more than 97,000 medical and 22,000 dental members in 2008 and now has nearly 1.25 million members.

HealthPartners had net income of $53.1 million in 2008, up from $48.2 million, according to Baumgarten. He added that HealthPartners is less reliant on investment income.

Medica, the second biggest insurer with 1.48 million members, said it would release its numbers in the next few weeks.

Chen May Yee • 612-673-7434