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We must do more to contain the rising cost of health care in Minnesota

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Craig Samitt
As a nonprofit health plan, Blue Cross and Blue Shield of Minnesota is committed to improving health and helping Minnesotans live better, fuller lives. We’re also concerned. While we’re proud to be part of a community that offers some of the highest quality health care in the nation, our model of care delivery continues to become less and less affordable.  

The Minnesota Department of Health’s recent report on the cost of health care found that the total cost of care in our state is on track to double by 2026. By then, annual health care costs could reach $94.2 billion – equating to more than 18 percent of the state’s spending.

Health care costs continue to rise at an unsustainable rate across the nation. A new report from Health Affairs found that hospital prices for inpatient care increased by 42 percent between 2007 and 2014. This, along with the rising cost of prescription drugs, is one of the main reasons why the average American family spent 35 percent of their income on health care in 2015. According to the Council for Affordable Health Coverage, it could be more than 50 percent of household incomes by 2030.

Right here at home, the total cost of health care in Minnesota has been increasing faster than in most other states at an average rate of 5.3 percent for more than 20 years (1991-2014), according to data from the Kaiser Family Foundation. That’s more than twice the average rate of inflation in the U.S. over that time.

The Minnesota Business Partnership Health Care Performance Scorecard found that Minnesota ranks first in the nation in coverage and access, but only 22nd when it comes to cost. What’s more, the cost of care in this state is not slowing down any time soon. In fact, it’s expected to increase by more than 7.4 percent each year over the next decade, which is a concerning and unsustainable trend.

Minnesota has historically set an example for the nation of what high-quality, accessible and affordable health care looks like. With our state’s skyrocketing costs, it will be difficult to maintain our leadership position. We must work harder to ensure Minnesota maintains its focus on being the nation’s leader in delivering better care at a lower cost.  

This important work to maintain quality and reduce costs cannot be done in silos. We know that to truly make a difference, health plans, health care providers, employers, community leaders and patients must all work together to improve the long-term sustainability of health care. Working to assure that we deliver high-quality, consistent service and equitable access to affordable care requires new thinking and new approaches. For example, payment models that reward quality, outcomes, access and service over volume of services alone would have a major impact.

Likewise, assuring care is delivered in the right place, at the right time, and at the right price would be another step in the right direction. In this regard, the 2018 Minnesota Community Measurement report showed that on average, imaging services done in outpatient hospital settings were 45 percent more expensive than the same services provided at a specialty clinic. In response, we are seeing some examples of partnership in action. Several doctors in Minnesota have helped to manage costs by directing patients to lower-cost clinics instead of hospitals for certain outpatient services. At Blue Cross, we applaud these efforts and are working to improve our care management practices, in part, to make sure our members are being guided to lower cost options where the quality of care is as good or better.

These types of initiatives can make a difference on the overall cost of care. It’s important to understand that health care premiums reflect the costs and claims they cover, and more than 90 percent of every dollar we collect in premiums goes directly toward care for our members. While change is never easy, we must act now to make health care more sustainable for all Minnesotans. While we have much additional work to do, I’m confident that with the right focus on the right shared priorities, we will demonstrate to Minnesotans, and to the nation, that better care at a lower cost is an achievable goal.

In his role as president and chief executive officer of Blue Cross and Blue Shield of Minnesota and its parent company, Stella, Dr. Craig Samitt is responsible for overseeing the strategy and operations of the state’s first and largest health plan.


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Comments (10)

  1. Submitted by Pat Terry on 03/27/2019 - 10:04 am.

    Here is an idea to cut costs – eliminate companies like BCBS. Stop spending healthcare dollars on insurance companies and the multi-million dollar salaries of people like Samitt.

    • Submitted by Karen Sandness on 03/27/2019 - 10:24 pm.

      Yes, what Pat Terry said.

      Even non-profit status says nothing about how much executives can be paid, how lavish the headquarters can be, or what standards the companies have to use to approve or deny care. They maintain armies of people whose job it is to find reasons to deny compensation.

      Meanwhile, premiums and deductibles get higher and higher. We are the only industrialized nation that has deductibles. Some have copays, but none have deductibles.

      Before I was on Medicare, I would have had to pay $7500 out-of-pocket before I had any coverage. I’m pretty healthy, so I never incurred $7500 worth of medical charges, but I had some that were less than $7500 that were plenty burdensome. Between the deductible and the premium, I was paying over $10,000 a year for *nothing.*

      Furthermore, their “percentage of customary charges” racket makes care more expensive for uninsured people than for insured people.

      American insurance companies are like the layers of middlemen in the Japanese consumer market, profiteering (even the so-called “non-profit” ones treat their executives VERY well) but contributing no value.

      An insurance company executive to talking cutting health care costs is like a cattle rancher talking about going vegetarian.

  2. Submitted by Joel Stegner on 03/27/2019 - 04:53 pm.

    Insurers are very stingy in paying for mental health and addiction services, which if left untreated roll up huge medical costs. They need to look at their basic operating assumptions and be sure they pay generously for things people do to live healthy lifestyles.

  3. Submitted by Dimitri Drekonja on 03/27/2019 - 07:27 pm.

    Would Dr. Samitt care to share the annual compensation for himself and perhaps his 2-3 key executives? The Chief administrator of Medicare/Medicaid makes 165k— and runs a far larger organization. Perhaps it might shed some light on areas for cost-savings.

  4. Submitted by Todd Adler on 03/27/2019 - 09:02 pm.

    Could we start by reigning in the outrageous executive compensation package at Blue Cross? The VPs make what, $400,000 per year base salary? By contrast, the head of the VA makes $425,000 in total compensation, including benefits.

    And there are hundreds of VPs at Blue Cross, not just a couple. And those figures don’t include their benefits package, 50% bonus, and double digit COLA increase.

    Sure, BCBS is a nonprofit, but that’s in name only. There are no governors on the runaway compensation engine.

    The only sensible option to the outrageous healthcare costs in the United States is to enact universal healthcare along with price controls and compensation reform. Anything less than that is like handing the keys to your sports car to the nearest 16 year old and asking him to please drive sensibly. You can ask all you want, but we all know it ain’t gonna happen.

    • Submitted by Tim Smith on 03/28/2019 - 01:38 pm.

      Blue Cross MN has hundreds of VP’s? Can you prove that? so his salary costs an insured $.50 per year and that would be a huge savings for you?

      • Submitted by Todd Adler on 03/28/2019 - 08:03 pm.

        Sure, here you go. This page list -just- the CEO and the senior VPs. Add to that the VPs, directors, and managers. Overall, the company itself has thousands of employees.

        I’m curious though why you only picked the CEO to make your point that the insured would only save 50¢. Why did you ignore the hundreds of other executives at the company?

  5. Submitted by James Hamilton on 03/28/2019 - 09:23 am.

    Part of the solution: expand the number of medical schools, reduce tuition substantially, and make it a competitive profession.

    Consider this 2018 information:

    The average overall physician salary, including specialties and primary care, is $299,000. This represents a modest increase from last year: in 2017, primary care physicians earned 217,000, compared with 223,000 in 2018. Specialists earned 316,000 in 2017 compared with 329,000 in 2018.

    The highest-paid doctors are in the following fields:

    Orthopedics: $489,000.
    Plastic Surgery: $440,000.
    Cardiology: $410,000.
    Urology: $400,000.
    Otolaryngology: $389,000.
    Radiology: $396,000.
    Gastroenterology: $391,000.
    Dermatology: $386,000.

    • Submitted by Karen Sandness on 03/28/2019 - 12:08 pm.

      An acquaintance who lived in Israel for two years as a consultant to the Israeli government told me that one way that country keeps medical costs down is to make medical school free of charge and to admit everyone who qualifies.

      That way, doctors cannot claim either scarcity or student loans as a reason for charging high prices.

      Israel also guarantees all its residents basic health care free of charge, with charges only for extras like elective surgery or a private room.

      Germany, which relies on the private sector to achieve universal health care, keeps its insurance companies on a choke chain. They are all TRULY non-profit: executive compensation is limited, and all claims must be paid promptly unless the company can prove fraud. German insurance companies, therefore, do not have the expenses of paying their executives salaries that put them in the 0.01% or of maintaining an army of people whose job it is to figure out ways to deny claims.

      Like Israel, Germany does not charge tuition for medical school, so its doctors are free from having to repay six-figure loans.

    • Submitted by Frank Phelan on 03/28/2019 - 08:57 pm.

      NAFTA and other free trade agreements forced blue collar folk to face foreign competition. There’s no reason doctors should remain protected from competition. When foreign doctors come to the US, they have to go through all that training all over, even those that come from countries like Germany or Sweden.

      It doesn’t have to be that way, and it shouldn’t be that way.

      We can also make much greater use of nurse practitioners and physician assistants.

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