Minnesota Health Market Review 2025 Reveals Sharp Declines in HMO Profitability and Medicaid Enrollment
It has released Part 1 of the “Minnesota Health Market Review 2025”, marking the 36th edition of this comprehensive report series first launched in 1990.
The report paints a concerning picture of Minnesota’s health insurance market in 2024, particularly for Health Maintenance Organizations (HMOs) and County-Based Purchasing (CBP) plans. These plans saw a significant downturn in financial performance, driven by reduced revenues, escalating medical expenses, and operating losses. One major trend was a decline in Medicaid managed care enrollment, which fell by roughly 207,000 members between 2023 and 2024, although totals remain higher than pre-pandemic levels.
Key Findings from the Report:
- Enrollment Drops:
Combined membership in HMOs and CBP plans fell by 168,000 individuals (a 9.7% decline) in 2024. While Medicare Advantage enrollment increased by 8.7%, Medicaid and state-sponsored program enrollment declined by 15%, largely due to the state’s Medicaid eligibility redetermination process. - Revenue Decline and Growing Losses:
The drop in enrollment led to a $1 billion decrease in premium revenues (down 6.5%) for HMOs. However, despite this revenue loss, medical costs rose sharply, resulting in combined underwriting losses of $1.067 billion.- UCare reported the largest loss: $606.5 million
- HealthPartners: $170.9 million
- Medica Health Plans: $154.3 million
- Hennepin Health: $56.2 million
- Medicaid Takes a Hit:
Losses were concentrated primarily in Medicaid and Medicare Advantage plans. HMOs and CBPs posted $640.4 million in Medicaid losses in 2024, a sharp reversal from profits of $367.8 million in 2023 and $726.5 million in 2022. Despite this downturn, over the past decade, Medicaid plans in the state have still generated $939.5 million in cumulative underwriting income, thanks in part to strong performance from programs like Minnesota Senior Health Options, which alone delivered $720.3 million in profits over the last nine years. - Medicare Advantage Growth Without Profitability:
Since 2016, Medicare Advantage enrollment has consistently grown, yet profitability has been elusive since 2022. In 2024, UCare lost $266.7 million on its Medicare Advantage plans, which included $102.3 million in reserves set aside for expected revenue shortfalls. By early 2025, it had already used $47 million of that reserve and still reported a $25.5 million loss in Q1. Other insurers, however, showed some signs of recovery in early 2025. - Potential Coverage Crisis Ahead:
As of 2023, 96% of Minnesotans had health insurance, but that figure could drop significantly if federal budget proposals become law. Medicaid funding cuts under the U.S. House’s proposed bill could lead to 253,000 Minnesotans losing coverage. Additionally, reductions in subsidies for individual plans on MNsure, Minnesota’s health insurance exchange (which currently serves 167,000 enrollees), could further increase the number of uninsured residents.
What’s Next:
Later this year, Part 2 of the Minnesota Health Market Review 2025 will focus on hospital systems, using Medicare cost report data to analyze financial trends and inpatient utilization. The full series—produced annually for Minnesota and five other states—tracks health plan strategies, market dynamics, and competitive shifts within hospital systems and insurers.
For further details or to purchase the report, visit ResearchAndMarkets.com.
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