The "Blue Ox" of Minnesota Obamacare is calling it quits.
PreferredOne, the insurer that sold nearly 60 percent of all private health plans on Minnesota's Obamacare exchange, on Tuesday said it would leave that marketplace. PreferredOne's plans were the lowest-cost options on that exchange, known as MNSure.
PreferredOne cited the costs of doing business on MNSure as the reason for its surprising decision, saying that selling plans is "not administratively and financially sustainable going forward," according to KSTP.com, the website of that Minnesota TV News network.
"Our MNsure individual product membership is only a small percentage of the entire PreferredOne enrollment but is taking a significant amount of our resources to support administratively," a company statement obtained by KSTP said. "We feel continuing on MNsure was not sustainable and believe this is an important step to best serve all PreferredOne members."
The insurer's move came just two months before the start of open enrollment in Obamacare plans for 2015 and a month before insurers are expected to release their plan rates for next year.
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PreferredOne's decision is likely to have significant effect not only on its current Obamacare enrollees, but also on people who will be shopping for plans for next year on the exchange, which is now left with just four insurers. The remaining players on the exchange are Blue Cross and Blue Shield, Health Partners, Medica and UCare.
PreferredOne's relatively low-priced plans on MNSure for the 2014 enrollment season were a big reason why 59 percent of the 47,902 people who bought health coverage on the exchange by mid-April selected the insurer.
Those customers now face the prospects of higher rates if they want to remain in those same plans next year, as is their option, while existing customers of other insurers and new customers in the market will have fewer price options from which to choose.
In a statement released Tuesday, MNSure noted that "all consumers currently enrolled through Preferred One will have continued coverage through their existing plan for the rest of 2014."
And the statement said that under state law, customers have the right to renew their current coverage for 2015, but "this mandate does not require it to be offered at the same price."
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In a joint statement, MNsure's CEO, Scott Leitz, and Preferred One CEO Marcus Merz said, "Today Preferred One made the decision to not offer health plans through the health insurance exchange in 2015. Simply put, both organizations understand that MNsure is still an evolving partnership. This decision impacts 2015 enrollment."
"Consumers still have at least four, well-known, Minnesota-based carriers who are committed to providing important health coverage to Minnesotans through MNsure, including people who qualify for tax credits and public programs," the CEOs said.
"MNsure and Preferred One will work closely to minimize impact to current enrollees in a Preferred One Plan through MNsure."
PreferredOne is owned jointly by three medical providers in the Minneapolis-St. Paul area. The insurer is Minnesota's fifth largest by revenue, and will continue selling health plans outside of the Obamacare exchange.
—By CNBC's Dan Mangan.