Joint Minnesota health care report has something to irk just about everybody

Given the vast amounts of money involved, trust doesn’t come easily.

So it’s probably not surprising that the official release of the “final” report by the seven major Minnesota health care plans on how the state should deal with public support of health care is raising eyebrows.

Start with the report [PDF].

It’s believed to be a unique approach by the seven major organizations — Allina Hospitals and Clinics, Blue Cross and Blue Shield of Minnesota, Fairview Health Services, HealthPartners, Medica, Park Nicollet Health Services and UCare — to offer a guideline to state officials on how the state can both deliver health care to more people and still cut costs.

Report claims potential savings of $1.5 billion
The bottom line is that the report claims that through a combination of reforms, service “optimizing” and tax increases, $1.5 billion of the state’s $6.2 billion deficit can be erased.

That may sound good. But there’s something in the report that will raise the hackles of just about everyone.

For example, the report suggests raising $280 million through “sin taxes.” It calls for an additional $1.50 tax increase on every pack of cigarettes, which the report says will raise $250 million. It also calls for an increase on beer and wine taxes to the national median level, which will raise $30 million.

That suggestion will offend both no-new-taxes conservatives and some progressive populists who claim those taxes are regressive in the extreme.

In vague terms, the report also implies cuts in some services now available to Minnesota’s poor. The providers call this suggestion “benefits design optimization.” That means “aligning” Minnesota’s current practices with other states. The “optimization” could save nearly $1 billion, according to the providers.

To people such as Sen. John Marty, that soft language means real agony to people. Other states don’t offer some basic medical/dental care that Minnesota does. To him, “benefits design optimization” and “aligning Minnesota with other states” means cutting some services, such as dental care and home care.

Ken Paulus
Ken Paulus

The size of the state’s deficit “means there has to be compromise,” said Ken Paulus, the CEO of Allina, in acknowledging that the plan will raise concerns among people on all sides of the health care debate.

Back up a moment. Wasn’t the decision by Gov. Mark Dayton to move health care for the poor into the federal system supposed to be a huge, money-saving step forward?

In fact, the report, much of which was completed before Dayton took office, recommends the state make that step. (You can read a summary of the recommendations [PDF] or view a PowerPoint presentation [PDF] here.)

Dayton decision called ‘good first step’
Paulus said moving to the federal system is “a good first step to reform.” More people will be covered. There are cost benefits.

But, he added, that step still doesn’t answer the question “What do we do to live within our means?”

He said it is that question and the budget crisis that brought these huge nonprofits together. The report says there were three primary goals: promote program expansion (access), make programs work better and fix the way “we pay for care and reward better care.”

What a complex and fundamental tussle this is: billions of dollars, nonprofits, private contractors, public contracts (at all levels of government), large bureaucracies all around.

Gov. Mark Dayton
MinnPost/Terry Gydesen
Gov. Mark Dayton

All of these forces are swirling around the health care needs of 800,000 low-income Minnesotans, many of whom have severe disabilities.

If the seven organizations were private-sector, for-profit corporations, their gathering together to formulate this plan, which will be delivered to Dayton’s administration on Tuesday, would surely be considered collusion.

“But we’re all nonprofits,” Paulus said, adding that only one other state, Massachusetts, has a 100 percent non-profit health-care delivery system.

The work of the seven organizations, Paulus said, was done “as a civic duty. … This is a special time. We have a sizeable deficit. It was our goal, rather than to wait and see what might happen, to come forward with a plan.”

Sen. John Marty skeptical of motives
Marty, for one, is not quick to accept the idea that these organizations are necessarily filled with civic nobility.

Overall, he believes that they’re making “a grab” to bring in the 95,000 new clients that will have access to health care because of Minnesota’s move to partner with the feds.

State Sen. John Marty
State Sen. John Marty

“HMOs are nonprofits, so they don’t have profits,” Marty said. “But they do have earnings.”

The DFL senator from Roseville claims that public contracts are more profitable to the industry than private, a claim Paulus disputes.

Furthermore, Marty, a member of the Senate’s human services finance committee, says that for far too long the state has been handing out more than $3 billion in contracts without competitive bidding. The auditing standards surrounding health care also do not measure up to the way the state handles other contracts.

“This is not meant to vilify health plans,” Marty wrote in a recent opinion piece. “There are good people working for them and they help people access medical care. But that doesn’t mean that we should leave the cash register open and blindly let them take as much money as they want.”

Before accepting this report with open arms, Marty says the Legislature must demand a major audit of how money is being spent and how much is actually being used to serve clients. In some cases, he believes the state could provide better — and more cost-effective — services than the companies being contracted.

Certainly, Marty said, if the state is going to demand competitive bids on everything from tree plantings to bridge construction, it should require the same on health care services.

Paulus is unruffled by the criticisms. He thinks bidding might be a worthy idea to lower costs.

Additionally, he points to a section of the report that calls for the creation of a “Minnesota Medicaid Institute.”

This would be a gathering place for health care providers, clients and political leaders to “analyze and inform all Medicaid-related topics and decisions that require public discourse and attention.”

Such an institute, Paulus said, would be more “transparent” than the current political system, in which it is often difficult to separate the rhetoric from reality. Paulus believes such an institute would increase both trust and understanding of the health care system.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

You can also learn about all our free newsletter options.

Comments (6)

  1. Submitted by Michael Friedman on 01/28/2011 - 11:42 am.

    Having the state’s health insurance companies and major medical providers present ideas for cutting medical costs is as laughable as looking to the major national banks for ideas on how to reduce bad mortgage lending decisions.

    Any individual, nonprofit or business which pays health insurance premiums the past 20 years knows that Minnesota’s medical insurance industry has been a royal failure in holding down costs. Why would anyone seriously listen to them now?

  2. Submitted by Bernice Vetsch on 01/28/2011 - 04:37 pm.

    Not to mention that the hundreds of millions of dollars to be “saved” are just target numbers to be confirmed by research.

    The report compares Minnesota’s services for the elderly and disabled and low-income as being richer than those of other states. How much, therefore, would be CUT from the decent services we now provide in order to equal the lowest level of service in any other state?

    The report also does not mention the cost of adding the HMOs as middlemen between the state and Medicaid patients. I’d guess the extra expense and bureaucracy would be substantial.

    Just Say No, Minnesota!

  3. Submitted by Joe Musich on 01/29/2011 - 09:19 pm.

    So if they are non-profits that are not competing, what is the reason the citizens of the gopher state need seven health insurance providers ? There’s one spokesperson for all seven ? And as to be alligned with other states what the rush to the bottom. The game is rigged. Lets’ end the charade of competitiion. Seven people around the hole in an ice shack doesn’t bring more fish.

  4. Submitted by Grace Kelly on 01/31/2011 - 02:27 pm.

    Save money by taking the profit and “earnings” out of health care.

  5. Submitted by antony cliffton on 03/04/2011 - 05:03 pm.

    The year end CEO salary survey the Strib posted early this year says it all. The top 7 of 10 or so salaries were at the ‘nonprofit’ health care mega-corps. As usual Marty is a pure tone rising up above the noise.

  6. Submitted by Andrea Schaerf on 07/15/2011 - 06:52 pm.

    Allowing the seven largest health plans to collude aT a Medicaid Institute would eliminate choice among plans. The medicare plans are all very much the same. Competition should allow for different choices and even enhanced serves to attract patients.

Leave a Reply