Plans paid $21B in medical bills, including $3.5B in pharmaceutical costs
ST. PAUL, Minn. (April 21, 2025)—2.3 million Minnesotans had coverage through the state’s six nonprofit health plans in 2024, accounting for more than $21 billion in medical bills, including $3.5 billion in pharmaceutical costs, according to the Minnesota Council of Health Plans. The trade association reported the nonprofit plans posted an overall margin of negative 4.2% for the year. Council health plan members also served as administrators for another 1.6 million Minnesotans covered through self-insured entities, for a combined total of 70% of Minnesotans receiving services through Minnesota’s nonprofit health plans.
Margins for Council members, which include Blue Cross and Blue Shield of Minnesota, HealthPartners, Hennepin Health, Medica, UCare, and Sanford Health Plan of Minnesota have historically averaged 1-3%, with some of the lowest administrative costs in the nation.
“As nonprofits our first obligation is to ensure that Minnesotans have access to affordable, high-quality care year after year,” said Lucas Nesse, president and CEO of the Minnesota Council of Health Plans. “That said, higher costs are making it extremely challenging to continue offering affordable coverage.”
Public programs—shrinking enrollment, growing costs
Minnesota health plans collectively lost over $565 million administering state public programs, with enrollment dropping significantly post-COVID health emergency policies but medical costs continuing to grow. The resumption of regular enrollment processing was completed in 2024 which reduced the number of participants by more than 165,000. Overall, Minnesota’s Medicaid program, Medical Assistance, had enrollment figures drop by 265,500 enrollees over the multi-year “redetermination” process. The 15.6% enrollment drop from 2023 to 2024 meant that Minnesotans with significant health needs retained Medicaid coverage. The medical expenses for enrollees retaining coverage had very high trends, resulting in a negative 5.6% margin. The Medicare marketplace experienced similar high cost challenges, resulting in a negative 6.1% margin and a $340 million loss for the plans.
Medical Assistance GLP-1 coverage for obesity
Minnesota is one of 13 state Medicaid programs that opted to expand GLP-1 coverage to include treatment for obesity. Minnesota’s 2024 Medical Assistance trends for GLP-1s specific to weight loss ranged from 100% to as high as 700%, depending on the program, with an even higher trend seen for the first 3 months of 2025. The average annual cost per patient for GLP-1 treatment is $12,000 with total expenditures now representing more than 12% of Minnesota’s overall pharmaceutical costs. Nationally, many states that include coverage of GLP-1s for obesity treatment are now examining ways to manage the high costs given the pressure it exerts on the state budget.
High costs drive higher premiums
The fully insured market, which includes nearly one million Minnesotans who receive coverage from small and mid-sized employers plus 180,000 others who buy their own insurance on the individual market, also had a negative margin in 2024.
Buoyed by the state reinsurance program and federal premium tax credits, enrollment in the individual market increased 12.2% to 181,000 in 2024. However, medical expenses outpaced this growth, increasing 27%, including a 24% increase in pharmaceutical costs. Overall medical costs exceeded $1 billion for the first time.
Beyond general cost increases last year, state mandates and their associated costs have also been incorporated into premium increases, including 13 new mandates for 2025. The federal government requires certain new mandated costs to be covered by the state. A proposal authored by Senator Nick Frentz (DFL-North Mankato) and Representative Bernie Perryman (R-St. Augusta) would require all new mandate costs to be covered by the state.
“Higher costs result in higher premiums,” Nesse said. “State mandates have added up to 5% in new costs for 2025, but defrayal of all new mandated costs would help keep premiums lower and coverage more affordable.”
Support for extending the state reinsurance program
Although medical costs have continued to grow, Minnesota’s reinsurance program has lowered premiums 20% on average to keep coverage more affordable. Governor Walz has proposed making the reinsurance program permanent and an extension has earned strong bipartisan support from legislators.
“Unless action is taken, 2026 will present an insurmountable financial cliff for thousands of Minnesotans,” Nesse said. “We look forward to working with the governor and legislators to extend the successful reinsurance program and keep Minnesotans covered.”
Nonprofit health plan initiatives to support healthy communities
As part of their nonprofit mission, each Council member supported initiatives throughout 2024 that were designed to improve health care access, quality and outcomes. Key priorities included:
- Blue Cross Blue Shield of Minnesota supported the opening of a new Rural Behavioral Health Clinic in partnership with Minnesota State University, Mankato to provide mental health services and act as a teaching center for students pursuing future careers in mental health professions.
- HealthPartners Teen Leadership Council develops the next generation of resilient leaders by giving youth a platform to make change and learn about how many different factors can influence a community’s health.
- Hennepin Health is reducing hospital readmissions at inpatient psychiatry departments by supporting the integration of spiritual care into treatment.
- Medica supports Washburn Center for Children school-based program to address mental health challenges that pose major barriers to student learning through mental health care provided by therapists embedded in community schools.
- UCare is supporting providers with free cultural competence education to foster inclusive health care delivery and improve health outcomes in partnership with Violet Health, ensuring culturally diverse patients will have an in-network provider who understands their background and needs.
Established in 1985, the Minnesota Council of Health Plans is an association of licensed nonprofit health plans that includes: Blue Cross and Blue Shield of Minnesota (Blue Plus), HealthPartners, Hennepin Health, Medica, Sanford Health Plan of Minnesota and UCare.