HealthPartners reports sharply higher income for 2017

Improvement in the state's troubled market where individuals buy health insurance boosted financial results last year at HealthPartners as the Bloomington-based health system continued to generate most of its net income from hospitals and clinics.

In 2017, HealthPartners posted net income of $175.5 million, an increase of roughly 75 percent over the previous year when the health insurance business provided even more of a financial drag.

The individual market has generated losses for insurers and escalating premiums for consumers since major changes under the federal Affordable Care Act (ACA) began in 2014. That started to change last year for several Minnesota health plans including HealthPartners, which recorded a gain of $30 million in the individual market.

"That was after several years of losses accumulating to more than $115 million," said Todd Hofheins, chief financial officer at HealthPartners, during the nonprofit group's annual meeting in St. Paul. "We hope that 2017 is the beginning of the stabilization of this program for us and for the community."

While premiums last year finally started covering the cost of medical claims in Minnesota's individual market, consumers said they still feel pinched by the prices as well as the tight networks for doctors and hospitals with their health plans. The market's improvement hasn't been cheap for taxpayers, since the state government provided $137 million in consumer rebates last year. This year, the state has pledged $271 million for a "reinsurance" program to promote stability.

"The individual market has been incredibly tumultuous," said Andrea Walsh, HealthPartners' chief executive. "This past year I think we saw some stabilization of the individual market."

HealthPartners is distinct from other large health insurers in the state for also running a large network of hospitals and clinics. It includes Regions Hospital in St. Paul, Methodist Hospital in St. Louis Park and the Park Nicollet system in the west metro.

As a health insurer in 2016, HealthPartners posted a slight loss in terms of net income, the health plan's worst showing in five years, according to a Star Tribune analysis. At the time, HealthPartners said it lost about $50 million in the individual market, which serves people who are self-employed or don't get health insurance benefits from their employer.

With the individual market improvement, the health insurance business in 2017 generated $37.8 million in net income. The health insurance margin was less than 1 percent, Walsh said. After factoring net income of $137.7 million from the hospitals and clinics, HealthPartners overall saw net income of $175.5 million on roughly $6.6 billion of revenue, for a profit margin of 2.6 percent.

One of the big changes coming for health insurance consumers, Walsh said, is the scheduled "sunset" for Medicare Cost plans that now provide coverage for many seniors in Minnesota. The plans will survive in some Minnesota counties, but consumers in places like the Twin Cities likely will need to switch to a new health plan.

HealthPartners, along with Eagan-based Blue Cross and Blue Shield of Minnesota as well as Minnetonka-based Medica, sell Medicare Cost plans. All three insurers introduced for 2018 new Medicare Advantage plans that likely will become the norm next year.