Minneapolis-based UCare seeks to expand into Iowa health insurance market


UCare plans to bid on a contract that would allow the Minneapolis-based health plan to begin managing care for a large group of Iowa Medicaid recipients.

If successful, the move would expand the nonprofit insurer’s service area beyond its current health plan offerings in Minnesota and Wisconsin.

Iowa began hiring private managed care companies to administer coverage for Medicaid beneficiaries in 2016. But the transition was bumpy, with two carriers quickly entering and leaving the market in the first few years.

Currently, Medicaid benefits in Iowa are provided to individuals through contracts with subsidiaries of two for-profit insurers – Indiana-based Anthem and Missouri-based Centene.

“We were looking for geographic expansion opportunities that fit in with areas where we really feel we have expertise..” said Ghita Worcester, senior vice president of public affairs at UCare. “This idea of ​​being able to market a non-profit health plan and really try to build partnerships…is very well received when we talk to people there.”

Medicaid is jointly funded by states and the federal government to provide health insurance primarily to low-income people under age 65.

In 2015, two other Minnesota-based nonprofit carriers — Bloomington-based HealthPartners and Minnetonka-based Medica — expanded into other parts of the Iowa health insurance market. These insurers continue to do non-Medicaid business in Hawkeye State.

Minnetonka-based UnitedHealthcare, which is the nation’s largest health insurer, also sells some types of coverage in Iowa.

With nearly 1,200 employees, UCare was Minnesota’s fourth-largest nonprofit health plan in 2019. It provides coverage for people participating in Medicare and Medicaid as well as people who purchase individual policies through the MNsure health insurance exchange.

Worcester said UCare would compete in Iowa for a state contract that is now held by Amerigroup, a subsidiary of Anthem that currently covers more than 400,000 people. The state’s request for proposals is due this spring and contracts with select managed care organizations are expected this summer, she said.

Work covering beneficiaries would begin in July 2023. UCare announces that it is hiring local senior staff and plans to open an office in Iowa.

“Medicaid would be the first product offering we would consider,” Worcester said. “We would consider Medicare and the individual and the family, but we start with Medicaid.”

In the first nine months of 2021, UCare’s operations in Minnesota recorded operating profit of $43.1 million on $3.65 billion in revenue. More than half of the insurer’s revenue and enrollment comes from contracts with Minnesota’s Medicaid program.

For decades, Minnesota has hired private HMOs, including UCare, to manage the care of Medicaid beneficiaries. The state reserved the market for not-for-profit insurers until a 2017 law opened it up to for-profit competition.

UnitedHealthcare then competed for a contract and is entering the market this year. In Iowa, United was one of two health insurers to drop Medicaid in the early years of the state’s move to managed care.

In 2015, HealthPartners announced plans for a joint venture with a Des Moines-based hospital system to create a health insurance company to sell Medicare health plans. The following year, Medica began offering individual market coverage in Iowa, at one point becoming the largest seller of health exchange policies in the state.


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