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Bait and switch: Key MNsure company pulls out

tom allen's picture

The big news today in Minnesota is the withdrawal of PreferredOne from the state ACA exchange, MNsure. Nearly six in ten patients chose it this year, presumably because it had the lowest prices nationwide. But it won't be offered on the exchange next year -- so patients will either have to do without the tax credits that made it so affordable, or switch to an insurer with a higher premium.

PreferredOne's single year on the Obamacare exchange did allow it to effectively grab a sizable market share (it surged from 6% to 28%) from dominant BlueCross BlueShield. And now that they have that foothold, they apparently think it will be more profitable to sell outside the exchange.

I wonder if this is the case in other states. I've read that in New York, for example, some companies offered deliberately underpriced plans this first year to gain customers. Will their prices rise next year, or will they too take their winnings and pull out of the exchanges?

Average: 5 (1 vote)


Submitted by Dromaius on

The reason they're pulling out is because they gambled that even tho they were going to get a sicker group on the Exchange, they figured they'd get enough of an influx of customers who weren't sick that it would pay off. They lost on that gamble. People who can justify the cost of insurance now as unaffordable as it was and still is are a sicker group.

Another reason they pulled out is that the lousy government infrastructure surrounding the Exchanges has made the cost of even knowing who they were insuring not worth the revenue gained. They were not getting proper reporting from the government.

The reason they pulled out is not just bait and switch, although low-balling likely played a roll in their strategy. It's also a product of the law as it's (terribly badly) written and implemented.

CMike's picture
Submitted by CMike on

It had seemed to me that the chronically ill would choose from among the higher priced plans, a gold or platinum one, and people who thought themselves to be fairly healthy would choose from among the less expensive bronze ones so insurance providers would offer competitively priced bronze plans and overpriced or no gold or platinum plan.However, I think your analysis about what happened here is likely the correct one.