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UCare cuts 245 jobs after losing state health insurance contract

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The health insurance provider UCare announced Monday it's laying off 200 people and buying out the contracts of another 45 employees after losing out on state contracts to cover Minnesotans enrolled in public health insurance programs next year.

That amounts to a 27 percent cut in its workforce, the Minneapolis-based company said in an emailed statement.

UCare currently has 833 employees and another 112 open positions. After the cuts, that number will be about 580.

“Every UCare employee is a valued employee," said Jim Eppel, President and CEO, UCare, in the statement. "This has been a very difficult process for all of us across the organization.”

The company said it will provide the affected employees with assistance in finding new jobs.

Lost out on 2016 state contract

Under the bidding process used for the first time this year, Blue Cross Blue Shield won state contracts to provide health care through MinnesotaCare and Medical Assistance in the bulk of Minnesota’s counties. Health Partners and Medica were awarded the rest.

UCare's bid was rejected outright, except in Olmsted County where local officials appealed the decision.

That means some 350,000 people who are insured through U Care this year must switch to other carriers for 2016.

UCare had argued in a lawsuit it filed against the state that it was unfairly excluded during the state's bidding process. But it decided to drop the lawsuit last week and the job cuts followed.

State officials maintain the bidding process they used was fair and saved taxpayers money.

According to the Star Tribune, the state contract accounted for about half of the company's $3 billion revenue in 2014.

UCare continues to sell health coverage through MNsure and Medicare, according to the Minneapolis/St. Paul Business Journal.

UCare said it will have about 135,000 enrollees in its health care plans in 2016.

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