HMOs Post Record Losses as Enrollment and Revenues Drop, But Medical Expenses Increase
HMO profitability plunged in 2024, as HMOs and County-Based Purchasing plans reported lower revenues, higher medical expenses and large losses on operations. The number of enrollees in Medicaid managed care plans dropped by about 207,000 in 2023 and 2024, although it is still higher than before the COVID-19 pandemic.
The analyst reports on these and other findings in Part One of Minnesota Health Market Review 2025. This is the 36th edition of the report, which was first published in 1990. The reports in Minnesota and five other states examine key trends and competitive strategies for health plan companies and hospital systems in those markets. Later this year, the Part Two report for Minnesota will present an analysis of the state’s hospital systems and how they compete, examining 2024 Medicare cost report data on their financial results and measures of inpatient utilization.
The new report finds that:
- Total enrollment in HMOs and County-Based Purchasing (CBP) plans dropped by 168,000 or 9.7% in 2024. While membership in Medicare Advantage plans grew by 8.7%, enrollment in Medicaid and other state programs decreased by 15%, as the state completed re-evaluating the eligibility of Medicaid recipients.
- As enrollment dropped, premium revenues for HMOs dropped by more than $1 billion, or 6.5%. However, their medical costs increased, and they had combined underwriting losses of $1.067 billion. UCare had the largest underwriting losses at $606.5 million, followed by HealthPartners ($170.9 million) and Medica Health Plans ($154.3 million). Hennepin Health had underwriting losses of $56.2 million.
- Most of the losses were in two key lines of business: Medicaid and other public programs and Medicare Advantage. HMOs and county plans lost $640.4 million on Medicaid plans in 2024 after reporting underwriting profits of $367.8 million in 2023 and $726.5 million in 2022, their best results ever. Even with the large losses in 2024, Medicaid plans have posted underwriting income of $939.5 million in the last 10 years. That includes the results for Minnesota Senior Health Options, a managed care program for beneficiaries of both Medicare and Medicaid, where the health plans have reported combined underwriting income of $720.3 million in the last nine years.
- Enrollment in Medicare Advantage plans has grown steadily since 2016, but they have not been profitable in Minnesota since 2022. In 2024, UCare lost $266.7 million on its Medicare Advantage plans, including $102.3 million in reserves set aside in anticipation of future revenue shortfalls. It already spent $47 million from that reserve in the first quarter of 2025 but still lost $25.5 million. Other health plans reported improved results in the first three months of 2025.
- Data from 2023 show that 96% of Minnesotans have health insurance, but that is likely to drop sharply if the budget bill passed by the U.S. House of Representatives is enacted. Cuts to Medicaid are projected to result in about 253,000 Minnesotans losing Medicaid benefits. Changes to subsidies sold on the MNsure exchange, where individual enrollment has grown to 167,000, will likely result in thousands losing coverage.
Table of Contents
- Introduction
- Market Structure
- Health Plan Companies
- Network Arrangements and Provider Systems
- Trend Analysis
- Health Plan Enrollment
- Individual Markets and MNsure
- State Health Care Programs
- Medicare Health Plans
- Health Plan Profitability
- Financial Results by Line of Business
- Health Plan Capital
- A Look Ahead
Methodology
The reports analyzing state health care markets are intended to be a resource to health care organizations facing a full range of challenges but also seeking to identify and benefit from opportunities that present themselves.
This report is presented in three main sections. The first part, Market Structure, describes the major health insurers and hospital systems in the state, showing recent entrants and the high-level of consolidation that has occurred in both the health plan and provider markets. Market Trends, the next section, presents our analysis of enrollment trends and financial results for the health insurers. The last section contains our analysis of financial and inpatient utilization data on the hospitals in the state.
The analysis of health plan companies is based on their annual and quarterly statements filed with the Department of Insurance, including forms prescribed by the National Association of Insurance Commissioners and supplemental reports required by the state. The publisher also uses Medicaid data from the Department of State Health Services and Medicare health plan and hospital data from the Centers for Medicare and Medicaid Services. The publisher has that data together with insights that they have gained in interviews with dozens of leaders in health care organizations in the state.
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