UnitedHealthcare, which was based in Minnesota, could not directly sell HMO plans to Minnesotans or Minnesota employers because of the legal prohibition, even as it was growing into the largest health insurer in the country.
Minnesota’s ban on for-profit HMOs was eliminated in 2017 when Republicans in the state Legislature sought to bring more competition to the health insurance market. UnitedHealthcare became the first for-profit to obtain an HMO license and used it to win a contract in the state managed care public programs, where only HMOs can serve as vendors.
In May, state lawmakers instituted a new version of the old for-profit ban — companies could keep their HMO licenses, but DHS could no longer award them public insurance contracts. DFL leaders argued service to patients could be compromised by shareholder demands for profit.
In August, UnitedHealthcare filed its lawsuit, which cited a recent state report that asserted “little to no data are available to assess whether differences across for-profit and non-profit HMOs exist.” The complaint also said for-profit HMOs are not reimbursed at a higher rate than nonprofits, since DHS allows a profit margin of roughly 1% for all health plans.
The lawsuit named as defendants Ellison, DHS and the state of Minnesota. The attorney general in September gave notice to the court that he would be filing a motion to dismiss UnitedHealthcare’s complaint.
