Outgoing HealthPartners CEO Says Divisiveness Is Hampering Progress

April 14--In some ways, the final year running one of the state's largest health insurers has been unlike any other for Mary Brainerd, the chief executive at Bloomington-based HealthPartners.

The insurance industry is going through an unusually anxious period due to unresolved questions with the federal Affordable Care Act (ACA), said Brainerd, who is retiring in June after 15 years as CEO.

"There's more uncertainty and more questions -- and particularly more questions around public policy -- than I can ever remember," Brainerd said during an interview Thursday

Health plans don't know whether the federal government will enforce a health law mandate that insurers believe is key to getting healthy people into the troubled individual market, Brainerd said. Just this week, President Donald Trump told the Wall Street Journal that he's still considering whether the government will fund certain subsidies that currently help thousands in the individual market afford coverage.

"What's happening at the federal level is completely in flux," Brainerd said following the HealthPartners annual meeting in St. Paul. "That would make a huge difference if the subsidies were pulled."

HealthPartners is both a health insurer and a large operator of hospitals and clinics, including Regions Hospital in St. Paul and the Park Nicollet system based in St. Louis Park. Overall, the nonprofit employs more than 22,500 people.

For 2016, HealthPartners posted net income of $99.86 million on roughly $6 billion in revenue for a profit margin of 1.7 percent. The overall results were roughly comparable with 2015, although the fortunes of the insurance and health care businesses moved in opposite directions.

As a health insurer, HealthPartners posted a slight loss in terms of net income for 2016, which was the health plan's worst showing in five years, according to a Star Tribune analysis of regulatory filings. Last year, HealthPartners says it lost about $50 million in the individual market, which serves people who are self-employed or don't get health insurance benefits from their employer.

The individual market has undergone sweeping changes with the ACA, with many health insurers struggling to make the business profitable.

But on the health care side, HealthPartners saw strong demand for a variety of hospital and physician services, Brainerd said. During her tenure, she has overseen significant growth in the health care side of HealthPartners, including mergers that added Park Nicollet plus hospitals and clinics in the east metro and western Wisconsin.

"Our margins from a health plan point of view were down," Brainerd said. "Conversely, our care delivery organization was extraordinarily busy."

Brainerd received a standing ovation from a crowd of more than 500 people when she was introduced during Thursday's meeting. She will be succeeded by Andrea Walsh, a longtime executive who has held a variety of leadership positions at HealthPartners.

The ACA has helped drive an important expansion in the number of people with health insurance, she said, but big problems remain with the affordability of the coverage.

Changes are needed with the ACA, Brainerd told the audience, but it's unclear how they will happen.

"The divisiveness that we see, both state and federal, is getting in the way of us making needed progress," Brainerd said.

She applauded Minnesota lawmakers for creating a "reinsurance" program that next year will provide a financial safety net for health insurers in the individual market. Such moves give insurers reason to compete at a time when some states are struggling with dwindling insurance options.

During an interview, Brainerd pointed to the example of Iowa, where two large insurers recently announced they won't sell coverage in the individual market for 2018. For most counties in the state, that means consumers could only have one option -- Minnetonka-based Medica, which only recently expanded into the Iowa market.

HealthPartners recently created a joint venture with a hospital system in Iowa to start selling Medicare coverage in the state. But the insurer will not enter the individual market, Brainerd said.

In the debate over the reinsurance program, Gov. Mark Dayton criticized health plans for not giving a complete guarantee that they will offer coverage throughout Minnesota for 2018. On Thursday, Brainerd said HealthPartners is planning to compete in the market next year, but still can't offer a guarantee.

"The federal government is such a question mark right now it just makes it hard to plan ahead," she said. "We want to be in. We're planning to. We're approaching it as if we can be. But there could be a card played that would change that picture dramatically."

Twitter: @chrissnowbeck

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