UCare laying off 80 workers, trimming open positions amid mounting financial challenges

Christopher Snowbeck, Star TribuneThe Minneapolis Star Tribune

UCare is laying off 80 workers while eliminating vacant positions and halting most new hires as part of a strategic turnaround plan announced Friday.

After it reported an operating loss of $504 million last year, the health plan, which is the state's second largest Medicare Advantage insurer for seniors, announced steps in early April to avoid layoffs, such as suspending certain broker commissions.

But in a regulatory filing this month, Minneapolis-based UCare reported red ink from first quarter operations was even worse than during the same period last year.

The 80 layoffs amount to roughly 4% to 5% of its overall workforce, UCare said. The insurer told the Minnesota Star Tribune in April its headcount stood at more than 1,600 people.

"We value every employee at UCare, and we minimized layoffs as best we could," Hilary Marden-Resnik, the UCare chief executive, said in a statement.

"Our new organizational structure is necessary to deliver on our strategic priorities and financial turnaround plans," Marden-Resnik said. "We are shaping UCare for long-term success, and we're confident that these changes lay the groundwork for a stronger, more sustainable future."

Affected workers will receive outplacement support and resources to help navigate the transition, UCare said.

The insurer's financial reserves slipped by another $81 million during the first quarter. To stabilize operations, UCare's strategic turnaround plan calls for streamlining operations, merging departments, consolidating vendors and launching internal cost-saving strategies, all while prioritizing ongoing services and support for members.

The insurer says it's looking for more efficiency in high-cost areas including claims accuracy and pharmacy. Marden-Resnik took a salary reduction in 2024 to contribute to administrative cost savings.

"For more than 40 years, UCare has followed its mission to serve Minnesotans who face barriers to care," Dr. Jim Van Vooren, the HMO's board chair, said in a statement. "The board of directors has every confidence in the organization's leadership team and realignment plans to successfully chart a path forward."

UCare's financial struggles have been particularly acute in the Medicare Advantage business, where private insurers sell a privatized version of government benefits for seniors.

The market has been lucrative over the years for health insurers. But, recent cuts in Medicare risk adjustment payments combined with greater use of medical services among seniors have dealt a financial blow to some carriers including UCare and UnitedHealthcare, the Minnetonka-based health insurance giant that's recently seen a massive sell-off in its stock price.

UCare is Minnesota's sixth-largest nonprofit group in terms of revenue. It was created by family medicine doctors at the University of Minnesota in the 1980s to demonstrate whether an HMO could effectively and efficiently manage care for low-income patients covered by the state's Medicaid program.

A number of insurers including UCare have said state payment rates in Medicaid have been falling short as medical spending trends increase. Already this year, Bloomington-based HealthPartners froze enrollment in its Medicaid HMO and exited a program for state residents with disabilities after losing nearly $200 million in operations in 2024.

Federal data at the end of March showed about 182,000 people were enrolled in Medicare Advantage plans from UCare. State data this month shows about 404,000 lower-income residents are enrolled in UCare health plans for people qualifying for coverage via Medicaid, MinnesotaCare and related programs funded by the state and federal governments.

UCare also provides insurance for individuals buying coverage through the state's MNsure exchange. Current enrollment was not available, but at the end of last year, UCare membership in the individual market stood at about 49,000 people.