Minnesota health CEOs taking a whack at Medicaid
A coalition of health CEOs released a plan to reshape spending in state’s huge Medicaid program.
By WARREN WOLFE, StarTribune
January 26, 2011Concerned that the Legislature and governor might get it wrong, CEOs from seven major health plans and providers have drawn up their own plan to streamline Minnesota’s massive Medicaid program — and carve $1.8 billion from the projected $6.2 billion deficit.
The plan is sure to draw political fire. It suggests up to $170 million in cuts to state-funded services that help keep the elderly and disabled out of institutions, for example, and captures $280 million in higher taxes on tobacco and alcohol.
The proposal would also keep $800 million in federal subsidies by continuing Medicaid expansion, raise $400 million by taxing healthcare providers, push people with disabilities into managed care and establish an “institute” to design further cuts. Warren Wolfe’s report continued:
Some critics said Wednesday they wonder if the health plans are trying to enhance their profits by moving more people into managed care.
Together, the state’s 12 HMOs earned $103.1 million in net income in 2009 from the three Minnesota health care programs. Historically, Medicaid has been profitable for HMOs, with those earnings typically offset by losses from the MinnesotaCare and General Assistance Medical Care.
State government business is often more profitable than earnings from private insurance. In 2009, the average HMO profit margin for state health plans was 4.1 percent, compared with 1.6 percent for commercial business, according to a StarTribune analysis.
The next day the StarTribune published this letter to the editor by PNHP leader Dr. Lisa Nilles:
If HMOs want in, demand transparency
Not surprisingly, Minnesota’s health plans suggest that the state shift the administration of its public health programs for those with disabilities into a program administered by insurance companies (“Taking a whack at Medicaid,” Jan. 27).
Without evidence, they claim this will save the state up to $300 million annually. Shockingly, we let them get away with it.
Minnesotans hand over $3 billion of taxpayer money each year to Minnesota HMOs to manage most of our public health care programs and demand no auditing in return.
Historically, adding a middleman to “manage” health care delivery has added costs, not lowered them.
DR. LISA NILLES, MINNEAPOLIS
The writer is acting director of the Minnesota Universal Health Care Coalition.
Today the StarTribune’s editors took up the topic again. Their editorial, subtitled “Cost-cutting report didn’t disclose plans’ business interests,” explains and asks:
While the group offered up clear-eyed, if painful, prescriptions in a report last week – namely, benefit cuts and tax increases on tobacco and alcohol – it undermined its hard work by not addressing these important questions:
ā¢ How much would the health plans profit from their proposed shift of more Medicaid patients into insurer-run managed-care programs?
ā¢ Could the health plans themselves trim operational or administrative costs to provide savings to the state?
Comment by Dr. Lisa Nilles:
In 2005-2006, the Minnesota single-payer community supported legislation to remove the HMOs from the administration of our public programs. We offered testimony, supported by Kip Sullivan’s extensive research, that privatization of our public health care programs almost certainly increased costs, without any corresponding increase in quality of care or access to care. The legislation didn’t move.
Now, 5 years later, with a $6 billion state deficit, and a willing whistleblower, the issue of the lack of accountability and transparency of the HMOs has moved into our mainstream media. David Feinwachs, who for 30 years was legal counsel for the Minnesota Hospital Association, did his own research into this issue, and began making videos about what he found (or rather, couldn’t find). After the first video, he was terminated from his position, apparently because of the influence of the insurance industry on the hospital association. (Dave Feinwach’s videos can be accessed at muhcc.org.)
Today’s StarTribune editorial, the fruit of Dave Feinwach’s courage as well as consistent advocacy by many voices, helps everyone see the folly of privatization of public health programs.