Medicare in Minnesota: Key takeaways
- Just under 18 percent of Minnesota’s population was enrolled in Medicare in 2018.
- About 20 percent of the state’s beneficiaries have Medigap coverage.
- As of 2016, individuals who qualified for Medicare by virtue of their age alone made up 87 percent of Minnesota Medicare recipients.
- As of 2016, Medicare paid about $8,452 annually per beneficiary in Minnesota.
- About 56 percent Minnesota Medicare beneficiaries had Medicare Advantage plans in 2017.
- Two-thirds of the national enrollees in Medicare Cost plans are in Minnesota.
- About 320,000 Medicare Cost enrollees in Minnesota must switch to different coverage for 2019.
- About 44 percent of the state’s beneficiaries were enrolled in stand-alone prescription drug plans in 2017.
Medicare enrollment in the North Star State
As of August 2018, there were 992,669 Medicare beneficiaries in Minnesota, which is just under 18 percent of its total population — roughly the same as the percentage of the overall United States population enrolled in Medicare.
Private managed care programs for Medicare beneficiaries are particularly popular in Minnesota. More than half of all Minnesota Medicare enrollees are in Medicare Advantage plans, as opposed to a national average of 33 percent (in Minnesota, it’s 56 percent; Hawaii has the second-highest percentage of their Medicare beneficiaries covered by Medicare Advantage, at 45 percent).
And Minnesota residents also account for two-thirds of the national total enrollment in Medicare Cost plans. The state was the first to participate in a demonstration program to pilot Medicare Cost plans in the 1970s, and the plans have remained popular over the decades. They didn’t catch on in many other states, however, and Medicare + Choice came on the national scene in the 1990s, replaced by Medicare Advantage in 2003 (there are still Medicare Cost plans in Arizona, California, Colorado, District of Columbia, Florida, Iowa, Maryland, North Dakota, Nebraska, New York, South Dakota, Texas, Virginia, and Wisconsin, but their total enrollment is only about a third of the 625,072 people who have Medicare Cost plans in 2018 — the other two-thirds are in Minnesota).
320,000 Medicare Cost enrollees in Minnesota need new coverage for 2019
The legislation that introduced Medicare Advantage also created a competition clause that banned Medicare Cost plans from operating in areas where they faced substantial competition from Medicare Advantage plans, but the implementation of the competition clause was delayed for many years. In 2015, legislation (MACRA) called for the competition clause to be implemented as of 2019.
As a result, an estimated 320,000 Medicare Cost enrollees in Minnesota need new coverage for 2019. There are 21 counties where Medicare Cost plans will continue to be available, but Medicare Cost enrollees in the remaining counties cannot keep their Cost plans. Instead, they can either enroll in a Medicare Advantage plan (some will be automatically enrollees in a comparable Medicare Advantage plan, although they’ll have an option to pick something else instead), or select a Medigap plan to supplement their Original Medicare (enrollees whose Medicare Cost plans are ending have guaranteed issue rights to a Medigap plan, so they can purchase one even if they have pre-existing medical conditions).
One of the reasons Medicare Cost is so popular in Minnesota is that the state has a large population of “snowbirds” — retirees who live in Minnesota during the summer, but head south to warmer climes in the winter. With Medicare Cost plans, the enrollee still has Original Medicare — including the large nationwide network of providers who work with Medicare — in addition to the Medicare Cost coverage. Medicare Advantage plans, in contrast, tend to have localized networks that might not be suitable for a senior who lives in two different states during the year. A Medigap plan plus Original Medicare will allow a person in that situation to have access to health providers in both locations, although Medigap tends to be more expensive than Medicare Advantage. There are pros and cons to both options, and no one-size-fits-all solution.
Medigap in Minnesota
According to an AHIP analysis, 116, 464 people had Medigap coverage in Minnesota as of 2016. That’s about 27 percent of the state’s Original Medicare beneficiaries. (Medigap plans cannot be used with Medicare Advantage plans).
Breakdown of the aged vs. disabled
As of 2016, individuals who qualified for Medicare by virtue of their age alone made up 87 percent of Minnesota Medicare recipients. The balance 13 percent – were on Medicare as the result of a disability.
Medicare spending per recipient
As of 2016, Medicare paid about $8,452 annually per enrollee in Minnesota. That’s according to a standardized spending report from CMS, which eliminates spending differences that stem from strictly geographic differences in costs (eg, higher labor costs or overhead expenses in higher cost-of-living areas). The report only considers spending in Original Medicare, as opposed to Medicare Advantage.
Medicare spending overall
In total spending on Medicare, Minnesota ranked #24 in 2014, with $8.8 billion per year. With the largest and smallest numbers of recipients, itʼs no surprise that California accounted for $64.8 billion of overall Medicare spending, while Medicare spent only $741 million in Alaska. Total Medicare spending for all states and the District of Columbia was $581 billion in 2014 (latest available data).
Medicare Advantage in Minnesota
Medicare Advantage offers health benefits for Medicare beneficiaries through private plans instead of through Original — or traditional — Medicare (the federal government’s fee-for-service program). These plans are one option for consumers who desire additional benefits beyond what Original Medicare offers, but are not considered a wise option by some consumers who are concerned that government spends more per enrollee on the private plans than it does on Original Medicare. Medicare Advantage plans are available with no premium other than the cost of Part B, but they also have provider networks that are more limited than Original Medicare, and total out-of-pocket costs can be considerably higher than enrollees would pay if they had Original Medicare plus a Part D plan plus Medigap.
In 2017 in Minnesota, 56 percent of all Medicare recipients chose a Medicare Advantage plan. That’s far higher than the national average of 33 percent, and Minnesota is the only state where more than half of Medicare beneficiaries are enrolled in a Medicare Advantage plan.
Alaska, in contrast, has just 1 percent of its Medicare beneficiaries enrolled in Medicare Advantage. Two other states have Medicare Advantage enrollment (as a percentage of the state’s Medicare enrollees) in the single digits: Wyoming with 3 percent, and Vermont with 8 percent.
Stand-alone Medicare Prescription Drug plans
Minnesota had 422,807 Medicare beneficiaries – about 44 percent of the state’s total – enrolled in stand-alone prescription drug plans in 2017 (that does not count the portion who have Part D coverage as part of a Medicare Advantage plan). The state has 23 plans in 2018, with premiums that start at about $20/month.
Medicare prescription drug coverage — called Medicare Part D — was the result of legislation passed in 2003 and signed into law by President George W. Bush in 2006. It is a bit of a controversial program because it was an unfunded liability — meaning that the vast majority of costs fell on taxpayers — and the law also barred Medicare from negotiating lower drug prices with drug makers. But by the end of its first decade, Medicare Part D was providing coverage for almost three quarters of all eligible Medicare beneficiaries, including those who have Part D coverage as part of their Medicare Advantage plan).
For those under 65 in Minnesota
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.