The Minnesota Council of HMOs, representing the state’s 10 health maintenance organizations with a combined enrollment of 1.3 Minnesotans, recently announced a proposal to provide health care coverage for all Minnesotans by mid-1997. The proposal builds on the existing health care system that has served more than 90 percent of Minnesota residents for years, but also addresses the need to reform the present system.
Our proposal would require all state residents to have health coverage by that date, and would subsidize premium costs to make this coverage affordable for those who can’t afford it today; the low income people among state’s 370,000 uninsured, as well as low-income people who are already covered, and financially stressed small businesses. About 80 percent of the uninsured Minnesotans who would benefit from the program are workers employed mostly by small businesses across the state. These businesses currently cannot afford to offer health coverage to their employees.
Our proposal calls for significant reform of the HMO and insurance industries, including making coverage available to all individuals and groups (regardless of health status). These reforms would also include imposing limitations on the ability of health plans to vary rates from group to group in the small group market with community rating achieved by 1997, eliminating gender as a rating category in the individual coverage market by 1993, and community rating and guaranteed acceptance for senior citizens applying for Medicare supplemental coverage.
To help curb rising health care costs, we recommend initiating a concerted effort to streamline insurers’ administrative procedures, developing a process for technology assessment and seeking community-wide input on health care spending priorities.
We also recommend a major improvement in the way care protocols are used to help raise the overall quality of health care for all Minnesotans. To better coordinate expensive data collection efforts, we propose to establish a commission to identify common priorities for health care data collection and analysis to support policy decisions.
In order to pay the premium subsidies for the low income, which is needed to make universal coverage a reality, the HMO Council’s proposal asks most Minnesota residents to pay slightly higher health premiums – about 2.5% more in the first year and half a percent more each year for 3 additional years.
A recent survey by A. Foster Higgins & Co. showed that the annual health care premium for a Minnesota employee average $2,578 in 1990, or 23 percent less than the national average of $3,161. The figure for Minnesota HMO members averaged even less, at 31 percent below the national average. Another recent study by Milliman and Robertson found that medical costs in the Twin Cities are lowest of any of the 15 major metropolitan areas surveyed in the country and cited the strong role played by HMOs in this area. The goal of the HMO Council’s recommendation is to apply this experience in a program that ensures coverage for all Minnesotans.
This proposal calls for needed subsidies to be collected through the mechanism of a 6 percent surcharge on inpatient hospital services. That is, an extra 6 percent would be added to each inpatient hospital bill, and that amount would be paid by insurers, HMOs and other payers. The members of the HMO Council have pledged to keep the hospitals from having to pay that surcharge as an additional cost burden. HMOs would increase payments to the hospitals to cover the added cost. Since everyone will have coverage under our proposal, the surcharge will be paid by insurance plans, not by individual patients at the time of service.
Using hospitals as the “collection point” for the surcharge equitably distributes the added costs of universal health coverage among all Minnesotans, and all payers, but does not affect the hospitals’ finances or penalize people when they use inpatient hospital services. After long deliberations — and after carefully reviewing the work done by the Health Care Access Commission in assessing alternative funding sources — we have concluded that this is the fairest way to extend health coverage to all residents of the state.
Minnesota has always been considered a pioneer in health care delivery and financing. The work of the Access Commission and the Legislature last year proved that we have chosen to take the lead once again in working to solve a problem which is becoming a national crisis. The HMO Council has put forth this proposal in the hopes of working with all concerned citizens to reform the financing and delivery of health care in Minnesota. We have confidence that the result will be universal access to health care, a goal which will benefit the state by improving the health and productivity of all of us.
Jan Malcolm is the Vice President in charge of Policy & Development for Group Health, Inc.
