Why Minnesota seniors face the nation’s biggest health insurance shake-up

More Minnesotans are losing their Medicare Advantage health plans next year than residents of any other state, with insurers terminating options, abandoning counties and reducing benefits in new plans, according to a Star Tribune analysis.

The changes are forcing hundreds of thousands of seniors across Minnesota to scramble for new health insurance at a time when many popular Advantage plans are going away and the new options expose patients to more bills if they get sick.

It signals a reset in the market for the popular Medicare plans, sold by Blue Cross and Blue Shield of Minnesota, UnitedHealthcare and others. After years of aggressively competing for seniors’ business with generous benefits, insurers are now preparing for an uncertain future amid rising medical costs and tighter federal funding.

In Minnesota, more than 60% of the people who enrolled in Advantage plans are being forced to change insurance for 2027, compared with about 13% of enrollees nationwide, according to the Star Tribune analysis.

Last year’s shutdown of UCare, a popular health insurer in Minneapolis, catalyzed the change by forcing more than 150,000 people to find other coverage last fall.

But many of those enrollees, including some who have expensive health conditions, switched to insurers whose Medicare Advantage businesses were already struggling to be profitable.

“This just amplified it,” said Nolan Heppner, president of Heppner Group, a Medicare brokerage based in Eagan.

Now insurers are trying to shore up their business for 2027. The challenge: they’re starting in a marketplace shaped by past offerings that were designed to compete with UCare. But UCare’s plans had rich coverage that became unsustainable, resulting in the insurer going out of business.

Blue Cross and Blue Shield of Minnesota, the largest insurer for the state’s seniors, says the changes it’s making to its Advantage plans are so substantial that Medicare rules require it to discontinue existing options and offer new ones.

The changes are frustrating for seniors, Dana Erickson, the chief executive at Eagan-based Blue Cross of Minnesota, acknowledged in an interview.

It’s necessary, she said, because insurers have been losing money or laboring to break even since a growth spurt in the state’s Medicare Advantage market eight years ago.

“We have to have a viable product where we don’t have health plans that have been in a perpetual state of loss,” Erickson said.

Medicare is the massive government health insurance program used mainly by people 65 and older.

A growing numbers of seniors over the past two decades have opted to receive their benefits through private Medicare Advantage insurance companies; nearly half of Minnesota’s 1.2 million Medicare members use them.

These private Medicare plans typically offer extra benefits like vision and dental coverage, and gym memberships. But they often have more limited networks, meaning patients have coverage for fewer doctors and hospitals.

Every October, these companies court seniors with TV ads and paper mailings during the open enrollment period.

The changes for 2027 mean 340,000 Minnesotans are losing their Advantage insurance because of plan terminations or insurer decisions to pull out of certain counties, according to the Minnesota Star Tribune analysis of federal data. Independent analysts have confirmed the Star Tribune’s findings.

The impact in Minnesota is bigger than anywhere else — including Florida, a more populous state with more health plan closures, but fewer people forced to change their coverage.

In general, the new Advantage plans for 2027 will require Minnesota seniors to pay more out-of-pocket if they use health care services.

Insurance companies say the changes are meant to help them better cover costs. But they make plans less attractive to people who need frequent care, potentially prompting them to switch insurers, said Roger Feldman,an emeritus professor of health policy at the University of Minnesota School of Public Health.

Many seniors, however, don’t enjoy shopping for insurance.

Switching plans creates the risk that a member’s doctors, hospitals or prescription drugs won’t be covered. Seniors who opt for original Medicare may get a wider doctor network, but typically pay higher premiums for recommended supplemental coverage.

“I just am too overwhelmed,” said Pam Pommer, 72, of Bloomington.

At the end of last year, Pommer lost UCare coverage that she said provided great benefits, but “ended up being too generous maybe.”

This year, she’s been happy with her new coverage from Blue Cross and Blue Shield of Minnesota, but it’s being discontinued for 2027.

At the start of 2026, Blue Cross added about 70,000 former UCare members.

The sudden surge pushed tens of thousands of new enrollees to Blue Cross when it lacked historical claims data to adjust prices and benefits for the new risk, CEO Erickson said.

“Were they sicker? Maybe,” she said of UCare enrollees, adding that the company’s entire Medicare Advantage business should be “right-sized” to fit the real-world costs of patient care.

The UCare shift was the latest in a series of Minnesota market disruptions dating back to the end of 2018, when more than 300,000 seniors lost what’s called Medicare Cost plans, which are a different type of privatized coverage.

Going into 2019, that seismic shift opened the door for big enrollment gains by UCare and Kentucky-based Humana, as well as the introduction of plans from Eden Prairie-based UnitedHealthcare, the nation’s largest Medicare Advantage insurer.

In subsequent years, insurers kept adding benefits to attract more members because Medicare Advantage was seen as such a lucrative business. Minnesota was catching up since Advantage plans comprised more than half of all Medicare enrollments nationwide.

But the pandemic made it hard to forecast health care costs, since so many patients delayed procedures. Then hospital prices rose as the pandemic lifted. Then UCare dumped membership onto its competitors.

“From the Cost transition, to COVID, to kind of where we are now, we’ve seen such tremendous market shifts,” said Mike Daly, vice president of sales at Medica, a health insurer based in Minnetonka.

Frequent insurer changes make it harder to collect the diagnosis information needed for the complex math that leads to specific payments, insurers say.

“It can take up to 18 months to get all of the information that a plan needs to come up with that patient’s true risk score,” said Ceci Connolly, president and CEO of the Alliance of Community Health Plans, a trade group for nonprofit insurers.

Minnesota’s market has yet to stabilize with profitable insurers and stable consumer choices, as has happened in other states.

Many seniors here have opted for Advantage plans that charge more money per month to be a member, and then provide access to a wider network of doctors and hospitals. In other states, $0-per-month plans are more common, though they typically require referrals and offer less choice in covered health care providers.

National insurers are signaling a preference for Advantage plan markets in states described as “more mature,” where doctors and hospitals more often share the financial consequences when patients’ care costs exceed a budget.

Humana, the second-largest provider across the country, will stop selling Advantage coverage next year to individuals in Minnesota. UnitedHealthcare’s membership in Minnesota has declined amid a broader company strategy to shed membership in unprofitable markets.

In Minnesota, the question going forward is whether insurers will move Minnesota Advantage plans closer to the norm elsewhere, by cutting wide access to doctors and hospitals and imposing more rules for how patients use the health care system, said the U’s Feldman.

His own plan from Blue Cross is closing next year. The company’s only alternative with drug coverage in Hennepin County would cap his annual exposure to in-network medical bills at $9,850 — a jump from $5,900 with his current plan.

The increase would have been “laughed out of the room,” he said, if proposed just a few years ago. Not today.

“Will that be sustainable,” Feldman asked, “or will we move further in the direction of narrow benefits, narrow networks and more care management?”

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