South Country Health Alliance officials updated the Wabasha County Board on the plan's 2024 finances, telling the board the insurer posted a $21.1 million net loss, booked an $11,422,000 premium deficiency reserve and is monitoring several state policy changes that drove higher costs.

Scott Sheffman, chief financial officer for South Country Health Alliance, told commissioners the plan recorded a net operating loss of $9.7 million in 2024 and established an $11.4 million premium deficiency reserve for contract year 2025. "Our loss ratio last year was 96.9 percent," Sheffman said, meaning about $0.97 of every premium dollar went to pay claims.

The reserve, Sheffman said, is an accounting step: if contracted premiums are inadequate to cover expected 2025 claims, a plan must book that shortfall in the prior year. "We will release one‑twelfth of that reserve each month in 2025 to offset expected losses," he said.

Why it matters: South Country administers county‑based Medicaid purchasing and other public programs that directly affect county budgets and local providers. Leota, a South Country representative who introduced the presentation and coordinated slides, briefed the board on the plan's financial drivers and policy work at the state level. She said South Country and counties are pressing the Department of Human Services (DHS) for midyear rate adjustments if utilization continues to outpace current rates.

Officials identified several causes for the swing to a large loss in 2024: enrollment churn after the end of the federal public health emergency, retroactive inpatient claim repricing by DHS, and rapid uptake of newly approved benefits. Sheffman highlighted two policy-driven cost increases: expanded adult dental benefits (including crowns and bridges) and strong, accelerating utilization of GLP‑1 weight‑loss drugs; he said use of those drugs doubled each quarter in 2024 and that the state’s preferred drug list and rebate mechanics affect plan net cost.

Sheffman summarized key figures the board heard: a $21.1 million net loss for 2024 (compared with a $27.3 million gain in 2023), a premium deficiency reserve of $11,422,000, investment income of about $4.5 million in 2024 that partially offset losses, and a year‑end risk‑based capital ratio of 555 percent (well above the 200 percent regulatory minimum).

Leota also briefed the board on legislative work to create a County Administered Rural Medical Assistance program, called KARMA (County Administered Rural Medical Assistance). She said the bill (House File 2955 / Senate File 3149) had bipartisan sponsorship and had been included in the conference omnibus at the time of the meeting; she described the inclusion as the furthest the proposal has advanced and said counties were "cautiously optimistic" about final passage and signature. "At this point, we are aware that it has been included in the final omnibus," she said, noting the bill’s language would create a separate procurement pathway for counties that choose the KARMA model.

Commissioners asked staff clarifying questions about operating versus capital costs and licensing; Commissioner Cheryl asked whether the operating loss reflected claims payments, and Sheffman confirmed it did.

No formal board action was taken on South Country items at the meeting. Commissioners were told South Country will continue to share utilization and cost data with DHS as it seeks midyear rate relief and that counties remain engaged in KARMA implementation discussions.

Looking ahead: South Country officials said they will monitor 2025 utilization — especially GLP‑1 drugs and dental services — and the organization will report back if data support midyear rate changes. The board will receive further updates as the state process develops and as South Country reports 2025 results.