Even if Minnesotans don’t like our exchange, Minnesotans can’t keep their biggest insurer in the ObamaCare exchange. Preferred One, which offered the lowest rates and had the highest level of enrollments in the state for 2014, has notified the state that it won’t offer any exchange coverage to Minnesotans for 2015, declaring participation “not administratively and financially sustainable.” The decision leaves its consumers with the choice of going back onto the problem-plagued exchange for new coverage in the next few weeks, or sticking with Preferred One and giving up the government subsidies on premiums (via Gary Gross):

It’s a major blow to the MNsure health insurance exchange – the insurance company with the lowest rates and the most customers signed up through MNsure will not be back in 2015.

The decision is expected to have a major impact on health insurance customers and the governor’s race.

Golden Valley-based PreferredOne Health Insurance has notified MNsure and the Minnesota Department of Commerce of its decision. Sources told KSTP’s Tom Hauser that MNsure CEO Scott Leitz was notified by phone Tuesday morning. …

A PreferredOne spokesperson calls this a business decision, insisting the cost to enroll MNsure customers is “not administratively and financially sustainable.”

Jeff Johnson, who is challenging incumbent Governor Mark Dayton, called this yet another disaster for MNSure, and it’s certainly going to be so for the 30,000 or so who bought PreferredOne insurance through the exchanges. It also could mean that the absence of the low-price leader in the exchange will leave room for the other insurers to hike premiums even higher than they had planned, prices for which come out in two weeks. Clearly the current pricing structure wasn’t working for PreferredOne, and they apparently didn’t think they could raise premium prices enough in the exchange system to sustain the business.

Gary Gross provides some perspective on the marketplace, and the shift that will take place:

“As of Aug. 6, Preferred One had 59 percent of the individual market MNsure enrollees. Blue Cross Blue Shield was a distant second at 23 percent, with HealthPartners, Medica and UCare much further back. Preferred One got such a large share because they had the lowest rates of the five insurance companies in the program.”

Companies don’t get 60% of a market by offering products at a little cheaper price. They get that high of a percentage of the market by offering a significantly cheaper price. That increases the likelihood that health insurance premiums will jump significantly when MNsure open enrollment starts.

Will one or more of the other four insurers reach the same conclusion? Don’t forget that Minnesota forbids for-profit health insurance in the state, so while profit motives may not play a large role in those decisions, the ability to prevent losses certainly do. Thanks to the administrative headaches and the new mandates that MNSure imposes on insurers, it may well prove too much for some or all of PreferredOne’s former competitors.

Dayton calls this “competition in action,” but it’s really a command economy in action. Command economies drive out the providers and producers, and leave government with empty hands and promises to fill the gap. For some ObamaCare backers, that was always the end game, but that’s not what Dayton and Al Franken promised — and those new rates and any further departures from the exchanges will definitely impact their career arcs.