Medica criticized for transferring money to for-profit unit

Gov. Mark Dayton and others are criticizing one of Minnesota's biggest health insurers for transferring $120 million from its nonprofit Minnesota HMO to other operations, including a for-profit insurance unit.

Medica Health Plans used money from its nonprofit HMO this month to bolster its for-profit and Wisconsin insurance businesses, The Star Tribune reported .

State lawmakers passed legislation this year that allows for-profit HMOs to operate in Minnesota and made it easier for HMOs to transfer reserves.

Dayton opposed those legislative changes, which he said are a "misguided policy." He said the reserves should be returned to customers through lower rates for more affordable health care.

The new state laws mean the Minnesota Health Department doesn't have a legal basis to deny the transfers, department officials said.

But Health Commissioner Dr. Ed Ehlinger said the transactions aren't in the public interest.

"As Minnesota's regulator of HMOs, we have serious concerns with this transaction and with the law recently enacted by the Minnesota Legislature," Ehlinger said.

Minnetonka-based Medica said it requested the transfers because of changing regulatory reserve requirements for its businesses, and that state regulators approved it.

"Health care is more volatile today than it has ever been before," the company said in a statement. "We continue to assess where within our organization those funds will be required to support the health care needs of our members. Our goal is to ensure adequate reserve levels for each and every one of our members."

Medica serves about 1.2 million people in the Midwest.

No other companies have requested to make a similar transfer of funds since the law has changed, health department officials said.

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Information from: Star Tribune, http://www.startribune.com