May 3, 2001

St. Paul, Minnesota -- Another sign that health insurance options for Minnesota consumers are increasingly limited to HMOs has just surfaced in a letter to insurance agents. World Insurance has just notified their Minnesota agents by mail that the company will no longer write insurance in Minnesota.

The letter from William J. Eilers, Executive Vice President, Secretary & Chief Marketing Officer of World Insurance states that no applications for insurance will be accepted after May 11, 2001, but current enrollees will not be discontinued. Eilers explains their rationale:

"To continue to offer health insurance in a state where the regulatory environment is not conducive to improving our position would be irresponsible. Such a decision simply doesn't make business sense and would be unfair to our policyowners across the country because of possible effects on the company's financial security."

"Unfortunately, the Minnesota legislature is responsible for the dwindling supply of health insurance options," says Twila Brase, president of St. Paul-based Citizens' Council on Health Care (CCHC). "Since 1992, the legislature has crafted legislation favorable to the growth of a few managed care companies. As a result, traditional insurance companies have been exiting the state and taking consumer choice with them."

At least 43 percent of the insurance carriers offering small group insurance in 1992 have left the Minnesota Market, with "one to two leaving every year" according to a November 1999 conversation Brase had with John Gross, director of health care policy at the Commerce Department.

In 1992, the Minnesota legislature passed a sweeping piece of legislation called MinnesotaCare. It created the MinnesotaCare subsidy program and implemented major health insurance redesign. To encourage the development of prepaid health care across the state, HMOs were given tax-exempt status, allowed to count their premiums tax as patient care, and permitted to merge together without violating anti-trust laws.

Traditional companies have not been able to adequately compete against these financial advantages granted by the legislature. According to recent testimony at the Minnesota state legislature, the "Big Three" -- Allina/Medica, HealthPartners, and Blue Cross Blue Shield Minnesota -- have 85% of the Minnesota population enrolled in their plans, including all MinnesotaCare and Medicaid recipients.

"Every time an insurance company exits the market, there's one less choice for consumers. Less choice means less competition. Less competition means higher prices. And higher prices mean more uninsured people. That is exactly the opposite of what the 1992 legislature said they wanted," says Brase.

She adds, "Monopoly-type markets are not patient- or price-friendly, but HMOs won't give up the market unless they are forced to do so. The legislature needs to use proven tools to restore health insurance choices in Minnesota. They could start by removing the HMO's tax-exempt status, providing state and federal tax deductions for individual insurance, and encouraging personal and medical savings accounts."

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Citizens' Council on Health Care is a non-profit health care policy organization located in St. Paul, Minnesota.