To earn or not to earn: House health committee debates HMOs in Minnesota

Whether health maintenance organizations should be allowed to earn a profit in Minnesota is once again a subject of debate.

Sponsored by Rep. Liz Reyer (DFL-Eagan), HF3529 would require all HMOs in the state to convert to a nonprofit status. On a party-line voice vote, the House Health Finance and Policy Committee approved the bill Thursday and sent it to the House Commerce Finance and Policy Committee.

HMO legislation in Minnesota dates to 1973 when HMOs were required to be nonprofit and based in Minnesota. In 2017, the law changed, mandating that HMOs must be for-profit operated by either a corporation or a local government entity such as a county.

The switch back would disallow for-profit HMOs from operating as of Dec. 31, 2025.

“When we changed this law in 2017, concerns were raised that nonprofit plans would be at a disadvantage” Reyer said. “In fact, there were bipartisan comments making sure that nonprofits could compete fairly was important. Now, in 2024, we see that the playing field is not level,” referring to higher prices and lower quality.

Rep. Anne Neu Brindley (R-North Branch) and Rep. Danny Nadeau (R-Rogers) voiced opposition to the bill.

“There isn’t data to support eliminating an option for people,” Nadeau said.

The regulation of HMO conversions and mergers is the subject of an ongoing study by the Department of Health, thanks to a 2023 state law. The first of the two-part study was issued Feb. 2, 2024; the second is expected June 30, 2024.

“The report states clearly that right now the information is inconclusive,” said Michelle Benson, a former state senator representing Health Plan Partnership of Minnesota.

Since the 2017 law, three for-profit HMOs have begun operating in Minnesota, according to the report. As of 2022, they are providing coverage to 40,000 Minnesotans, or 2.4% of the total HMO market.

“For-profit plans’ position in Minnesota is limited right now so it’s time to act,” Reyer said.

In the executive summary of the report, Health Commissioner Brooke Cunningham stated the final report will provide analysis of how other states regulate HMO conversions and options for legislators to consider.