Plans provided more than $2.6 billion in COVID-related medical costs over three years of the pandemic
Over the three years of the COVID-19 pandemic, overall medical costs increased by more than 18%. During the same period, pharmaceutical costs grew at a faster rate than overall spending at 23%, and in 2022 represented over 17% of all expenditures. In 2022, plans reported a collective operating margin of 3.3%. As mission-based, nonprofit organizations, health plans use this operating margin to support their members, including maintaining medical reserve funds to address unexpected or large-scale emergencies, like the COVID-19 pandemic.
These funds will be especially important this year, as healthcare utilization continues to rebound to pre-pandemic levels and Medicaid enrollment is projected to see a major shift due to the unwinding of policies tied to the expiring federal pandemic health emergency. The nonprofit health plans are playing a critical role to ensure Minnesotans have the support they need to stay connected to care during this period.
Keeping Minnesotans Covered During the Unwinding of Pandemic-Era Policies
The return of eligibility reviews after the sunset of the continuous coverage mandate for those enrolled in the state’s public healthcare programs, Medical Assistance and MinnesotaCare, is a major challenge for Minnesota. With one in four Minnesotans having this type of coverage, estimates indicate as many as 375,000 people could transition off state programs over the next 12 months. “Minnesota’s nonprofit health plans are working to ensure no Minnesotan faces an avoidable gap in coverage,” said Lucas Nesse, President and CEO of the Minnesota Council of Health Plans. “The plans are undertaking a variety of efforts, including assisting members with renewals, supporting those transitioning to other programs, and pursuing a dedicated equity strategy to address the barriers facing those most at risk for losing coverage.”
Those needing to find new coverage will have more affordable options on the individual market due to enhanced federal premium subsidies and the state’s reinsurance program. Reinsurance has reduced premiums an average of 20% and enabled Minnesota to continue to offer some of the lowest average premiums in the nation.
Plans continued to safeguard health of Minnesotans in third year of the public health emergency
In 2022, health plans continued to play a leading role in safeguarding the health of Minnesotans during the third year of the COVID-19 pandemic, covering COVID-related medical costs, enabling expanded access to telehealth services, and keeping people connected to care during a time of critical need.
Along with the 2.6 million Minnesotans enrolled in fully insured and government program coverage, Council members also support large, self-insured employers that fund insurance for 1.9 million employees. With all markets combined, more than $600 million was spent in 2022 on COVID-19 related costs, including $295 million in testing and vaccinations and $350 million in inpatient claims. Including all markets, total costs related to COVID-19 have now exceeded $2.6 billion since the start of the pandemic.
In addition to the sunset of the Medicaid continuous enrollment provision, the end of the COVID-19 public health emergency will have implications for healthcare coverage in other areas, including the wind down of federal support for testing, vaccines, and treatment, which will transition to the commercial market.
“As we look ahead to the next chapter in recovering from the COVID-19 pandemic, our health plans are committed to working to keep Minnesotans insured and connected to high-quality, equitable care,” Nesse said.
Note: The financial results reported for 2022 are an industry average and therefore vary by individual health plan.