Medica will stop selling health insurance to small businesses through MNsure, leaving just one insurer on the portion of the state’s health exchange for firms with 50 employees or fewer.
The Minnetonka-based health plan cited a lack of interest among small employers and their insurance agents.
“It’s not a MNsure-specific issue,” said John Naylor, senior vice president of commercial markets at Medica, which is also dropping out of small-business exchanges in North Dakota and Wisconsin. “If you look across the country, the participation on the [small-business] exchanges — it just isn’t there.”
Policies for small businesses sold through MNsure were originally expected to cover 155,000 people by next year, but the enrollment tally this month was less than 1,300.
MNsure officials said there’s reason to think the loss of Medica won’t have a huge impact on its Small Business Health Options Program (SHOP).
About 83 percent of current SHOP enrollees are in plans from Blue Cross, said MNsure spokesman Shane Delaney. The exchange is spending about $60,000 to promote the small-business portion of MNsure, Delaney said, adding that MNsure has new partnerships with four certified broker agencies focused on the small-business market.
“We are seeing across the board less expensive SHOP plans for 2016, which will be great for employers and employees,” he said in a statement. “In 2016, individuals seeking to purchase platinum plans through MNsure can do so only on the SHOP exchange.”
Minnesota launched the MNsure exchange in 2013 to implement the federal Affordable Care Act, which also standardized the quality of benefits in “metal levels” ranging from bronze to platinum.
With the new exchanges in Minnesota and across the country, most of the attention has been focused on individuals who can buy coverage through the marketplaces.
Small businesses can buy coverage through MNsure, too, but insurance agents in Minnesota have complained the process is cumbersome. Plus, relatively few tax credits are available for small businesses through the health law..
“From what a lot of [insurance agents] have said, the juice isn’t worth the squeeze in terms of the tax credits,” said Medica’s Naylor.
Subsidies have been a bigger selling point for MNsure in the individual market, where about 51,000 people currently are covered by policies sold through the exchange.
In 2014, Eagan-based Blue Cross and Blue Shield of Minnesota and Golden Valley-based PreferredOne sold small-business coverage through MNsure along with Medica. PreferredOne dropped out for 2015, which means a single insurer — Blue Cross — will be selling small group coverage through Minnesota’s exchange in 2016.
Across the country, SHOP exchanges were challenged during their first year of operation by a lack of competition among insurers, said Jon Gabel, a health policy researcher at the University of Chicago.
One of the selling points for the small-business exchanges is an “employee choice” feature that lets workers select between health plans offered by different insurance companies, Gabel said. Having only one health insurer in the market “reduces the attraction” of that feature, he said.
Delaney of MNsure acknowledged the point, but added: “Employers can still offer multiple plans at multiple metal levels and allow the employee to choose which plan works best for them.”
Including those who bought directly from insurers, about 268,000 Minnesotans were covered by small-business plans during 2014, a decline of about 16 percent from the previous year, according to figures from the state Commerce Department. Insurers said the small group market declined in size because many of the smallest employers opted to drop group coverage and buy on the individual market, where premiums for comparable coverage were lower.
The outlook has switched for 2016. Individual market policies are seeing an average premium jump of 41 percent for next year, compared with an average increase of just 1 percent for small groups. Insurance agents say some individuals who left the small-group market might now return, since there are tax advantages for offering group coverage.
Medica says it will continue selling small group policies in the market outside MNsure. In the individual market, Blue Cross, HealthPartners, Medica and UCare will sell policies through the exchange for 2016.