Minnesota Health Care Security Plan
The Health Care Debate
The debate surrounding health care reform has been ongoing at both the national and state levels for many years. The current health care crisis in our country is not new, but as with any complex problem, varying perspectives and competing interests have lead to in-depth examination of the problem and a wide range of proposed solutions. While this discussion has been absolutely crucial to the clear definition of the problem—the problem has continued to grow as the debate goes on. The significant problem that was identified so many years ago has now become an immediate crisis. Senior citizens are going without necessary medication. Children are dying from ailments that could have been treated had they only had access to routine preventative care. Thousands of Minnesotans are suffering unnecessarily from medical problems and financial catastrophes as a result of our dysfunctional health care system.
This problem reaches well beyond the tragedy of individual hardship, however. Our entire state is faced with an economic crisis as a result of the unwillingness of government to tackle this problem head on.
Our state economy can no longer carry the burden of soaring health care costs. Minnesota cannot afford to maintain the status quo. Without immediate, significant change to our health care system, increasing numbers of Minnesota businesses will be forced to downsize and eventually close. All Minnesotans will be faced with an increased cost of living, lower quality of life, rising debts, increased state unemployment, climbing numbers of personal and corporate bankruptcies, and a state economy that is unable to compete in the national or international marketplace.
Now is the time for action. Now is the time to recognize the validity of each perspective and take action based on common goals. Across the board, participants in the health care discussion have identified the following characteristics of successful health care reform: access, quality, affordability, and choice. As with any plan that addresses the needs of multiple groups, cooperation is an implicit component of success. None of the other principles can be attained without the cooperation of all stakeholders, and adherence to the five core principles. Access. Quality. Affordability. Choice. Cooperation.
The Health Care Security Plan
Informed by a core set of principles around which all Minnesotans can unite, the Health Care Security Plan is a comprehensive approach to health care delivery in Minnesota. Any effective reform plan must address the entire continuum of coverage issues, including emergency care, supplementary care, employee programs, and self-insured options. The HCSP will do just this, ensuring that Minnesota’s businesses, corporations, families, and individuals have continual access to affordable health care programs that work. It will frame and build a health care system that expands access, maintains quality, ensures affordability, respects personal choice, and encourages cooperation.
By establishing a Policy Framework for Real Change and implementing Programs for Initiating Real Change based on that framework, the HCSP will tackle the immediate threat to Minnesota’s economy presented by the enormous burden of health care costs. Minnesota businesses are at a competitive disadvantage resulting from rapid increases in health coverage costs. Companies are being forced to cut health benefits, cut jobs, or face threats from firms based in countries with more coherent health care policies. Minnesota’s businesses are suffering and, as a result, all Minnesotans are suffering. By forcing real reform within our health care system, the Health Care Security Plan will improve Minnesota’s business climate, attract jobs to our state, and make life better for everyone.
Our Only Option: Real Change
The problem is too big to scurry around the edges, or hide ourselves from the escalating cost, the arms race of capital expenditures, the soaring insurance rates, and damage to our economy. There are no simple solutions. We can not litigate our way to decreased costs. We can not afford to subsidize our way to affordability.
Only implementing effective, lasting reform within our health care system will improve Minnesota’s economy and provide all of our businesses, corporations, families, and individuals with access to quality affordable health care.
Policy Framework for Real Change
In order to facilitate the effective implementation of the HCSP’s Programs for Real Change and channel resources toward the achievement of the common goals of access, quality, affordability, choice, and cooperation, a solid policy framework must be established.
Specifically, the Policy Framework for Real Change will:
- Support and facilitate the establishment of universal and affordable health care access in Minnesota by 2010.
- Ensure the universal health care established in Minnesota by 2010 is developed in a manner that leads to increased affordability, access, and comprehensive quality into the future.
The first policy initiative of the Health Care Security Plan is the introduction of a Patients-First Act. This will mandate that all health care insurers who wish to do business with public dollars meet specific efficiency requirements and remain explicitly focused on their ultimate purpose: patient care. These requirements will be phased in over the first term (four years) of the Lourey Administration and will include insurers working with Minnesota's Medical Assistance (MA), General Assistance Medical Care (GAMC), and MinnesotaCare (MNCare) programs. This is a critical step toward increased accountability within our health care system.
At present, the costs associated with providing and/or acquiring health care coverage are outrageous. This does not have to be the case. Our health care system currently lags behind other industrialized nations in most health care measures, including cost-effectiveness, quality, and access. This state and nation have one of the most expensive health care systems in the world; no other industrialized country has higher aggregate expenditures, per-capita costs, or proportion of economic output devoted to health care.
Expenses associated with health care do not have to be so excessive. Much of the money that currently flows into our health care system is spent unnecessarily on administrative and other non-direct care areas. Significant overhead costs result from the use of different claims documents by insurers, causing claims processing to be more time-consuming than necessary and more likely to result in errors that lead to wasted resources. Capital expenditures such as the purchase of new buildings are often undertaken without clear need and many executives within the health care industry receive exorbitant salaries.
All of these expenses can be reduced through the establishment of clear state guidelines for spending. While no health care insurer will be obligated to follow spending guidelines, those insurers who wish to do business with public dollars will be required to meet specific efficiency requirements.
Specifically, the Patients-First Act will require that all health care insurers who do business with public dollars:
- Spend at least 95% of all health care dollars on direct patient care.
- Spend less than 5% of all health care dollars on administrative and other non-direct care expenditures.
- Obtain approval from the Department of Health for significant capital expenditures.
- Adopt uniform claims processing documents.
- Agree to executive compensation limits based on industry standards.
The Patients-First Act is an imperative step toward a health care system that achieves access, quality, affordability, choice, and cooperation. This act will ensure that Minnesota’s health care reforms lead to more efficient, competitive, patient-focused and cost-effective health care.
Health Care Affordability Act
The second policy initiative of the Health Care Security Plan is the introduction of a Health Care Affordability Act. This will mandate that no family, individual, business, or corporation be burdened with excessive health care costs. In addition, this act will require that the health care system in Minnesota remain cost-effective and economically feasible for the State.
The current business climate is characterized by prohibitively costly health care benefit packages. Escalating costs in current health programs have left businesses and corporations with few choices—they must decide between eliminating jobs, providing less inclusive benefits, or diminishing their profit margins. None of these choices allow for healthy workers, healthy businesses, or a healthy state economy. The State of Minnesota must not stand idly by as the insurance market fails to provide affordable health care options to our businesses. In order for our state’s economy to thrive, businesses must remain competitive and profitable—and in order to do this they must be provided with real choices in health care packages. Minnesota’s businesses must be allowed to choose a health care program that establishes reliable limits to potential health care expenditures.
Just as Minnesota’s businesses need the financial security of access to health benefits packages without out-of-control cost increases, individuals and families in Minnesota need the security of stable, continuous health care they can afford. Unmet health care costs—for uninsured, underinsured, and even fully insured Minnesotans—are the single largest cause of financial crises for individuals and businesses, accounting for more than half of all bankruptcies. In February 2005, the Minnesota Department of Health, Department of Human Services, and University of Minnesota School of Public Health reported that Minnesota’s rate of uninsured jumped from 5.4% in 2001 and greatly increased to 6.7% in 2004. This represents a 24% increase in uninsured patients, providing further evidence that our state needs to act now to solve the health care crisis. A 2003 survey of Minnesotans showed that in the past 12 months 23% of Minnesotans did not seek needed medical care due to costs, and 57% of them reported their condition as "Somewhat or Very Serious."
Affordable health care options can and must be made available now—before the taxpayers and businesses of Minnesota are forced to carry an even greater financial burden. We have the ability to offer all of Minnesota’s corporations, businesses, families, and individuals the security of affordable health care—and in doing so we will not only provide our state’s economy with increased stability but fuel growth.
Specifically, the Health Care Affordability Act will:
- Clearly define “affordability” for individuals, households, businesses, and corporations. In the case of individuals and families, “affordability” will be determined as a percentage of individual or family income. In the case of businesses and corporations, “affordability” will be based on a percentage of the company’s payroll indexed by the business size and type.
- Entitle citizens and businesses to health care programs that do not exceed their level of “affordability” based on a percentage of income or payroll as described above.
- Establish clear fiscal targets—costs that do not exceed defined levels of affordability—for Minnesota’s health care system moving into the future.
Defining standards of affordability, the Health Care Affordability Act is a crucial element of the legal foundation from which we will build a health care system that achieves access, quality, affordability, choice, and cooperation.
Constitutional Amendment to Establish Health Care as a Basic Right
The third policy initiative of the Health Care Security Plan is a Constitutional Amendment to Establish Health Care as a Basic Right. This will guarantee every citizen of Minnesota the right to health care.
By definition, the State Constitution is intended to protect the rights of Minnesotans. Amendments to the constitution remain true to this purpose in that they allow for the expansion of who is included in the group being protected. Amendments also allow for the identification of essential rights that may not have been relevant at the time the constitution was written. Before it became clear that early education is essential to economic success, we may not have considered it a right. In Minnesota today, however, education is a basic right—it is essential for a reasonable quality of life and the pursuit of happiness.
Just as every citizen of Minnesota has a constitutional right to Education, every Minnesotan must have a constitutional right to health care. Before it became clear that preventative medicine is essential to good health, and before medical procedures and prescription drugs became so sophisticated and specialized, access to basic, comprehensive, quality health care was not defined as a specific right. Today it is clear, however, that health care is a basic right—it is essential for a reasonable quality of life and the pursuit of happiness.
We live in one of the most prosperous states in the most powerful country in the world, and yet we are not meeting the basic health cares needs of all our citizens. According to the Minnesota Department of Health, 343,000 Minnesotans are currently without health care insurance and many more are underinsured. This ongoing failure of our health care system to meet the needs of Minnesotans will not be resolved until we officially acknowledge that everyone deserves an opportunity to improve their health. Therefore, a Constitutional Amendment to Establish Health Care as a Basic Right in the State of Minnesota is an essential component of the legal framework upon which a system that achieves access, quality, affordability, choice, and cooperation must be built.
Health Care Security Council
The fourth and final policy initiative of the Health Care Security Plan is an executive order authorizing the formation of a Health Care Security Council. The members of this council will serve as policy advisors to the Governor in all matters relating to the Health Care Security Plan.
Specifically, the Health Care Security Council will:
- Make recommendations on effective strategies to support and facilitate the establishment of universal and affordable health care access by 2010.
- Provide on-going evaluation of the progress of HCSP programs and file biannual reports to the Governor.
- Guide the implementation process to ensure programs are developed in a manner that leads to increased affordability, access, and comprehensive quality.
- Ensure that the many stakeholders invested in Minnesota’s health care system each have a voice in this cooperative health care reform.
The Health Care Security Council is critical to ensuring that Minnesota’s health care reform results in access to the highest possible quality of care for every individual or business that chooses to participate.
Programs for Initiating Real Change
Facilitated and supported by the Policy Framework for Real Change, the HCSP’s Programs for Initiating Real Change are designed to achieve the five common principles for health care reform. These programs build on current successes in health care reform—both in Minnesota and across the nation—combining best practices in cost containment and accountability, and striking new ground in ensuring that Minnesota takes the lead in providing affordable health care options for business growth. Specifically, the Programs for Initiating Real Change will:
- Establish universal and affordable health care access in Minnesota by 2010.
- Ensure the continued growth of this health care into the future with increased comprehensive, quality coverage, cost-effectiveness, and accessibility.
The expansion of MinnesotaCare to new subscribers directly relates to its expansion of access to affordable quality coverage. By reducing the number of uninsured and underinsured Minnesotans, expansion of the program decreases cost shifting within the health care industry and therefore increases affordability for everyone. In addition, this reduces State expenditures for safety-net care.
Increasing the number of individuals in a coverage group augments cost-effectiveness. The larger the group, the more extensively risk can be spread out, resulting in a more balanced pool in which costs can be managed more easiliy. The more members a group has, the more able it is to negotiate lower rates for services and products. Increased membership allows for more bargaining parity between health care purchasers and providers.
Cost-tier benefits programs that have proven successful both financially and in terms of access to quality coverage. These programs promote new levels of competition and incentives within the health care market. The natural evolution of insurance markets encourages economies of scale and risk mitigation through the pooling of individuals.
Making MinnesotaCare available to more people will allow it to offer coverage comparable to other programs, thus making it a competitive choice for individuals, businesses, and constituency pools.
The first step toward real health care reform is providing affordable options by reducing costs and expanding eligibility requirements.
Many promising health care reforms have originated at the county and local levels. In addition to learning key lessons from these initiatives, any state-wide reform must honor the ability of these groups to improve coverage options for otherwise difficult-to-reach populations. Local initiatives and county-based purchasing have extended health care access and helped to meet the specific needs of unique constituencies.
The government should not and cannot mandate any business or individual to participate in a state-run program. Businesses and individuals who are happy with their health care coverage should not be forced to change that coverage. Because the cooperation of all vested stakeholders is vital to the success of any health care reform, no Minnesota health care program can be effective without honoring the right to choice.
The existing safety-net, include Minnesota's Medical Assistance (MA), General Assistance Medical Care (GAMC), and MinnesotaCare (MNCare) programs must be reconstructed, repaired and reinforced with intentionality. Expanding the net of coverage too quickly will strain program budgets, expanding it too slowly will strain the state economy by leaving too many people without coverage.
Strategic Expansion of MinnesotaCare
A strategic, staggered expansion of MinnesotaCare will provide health care security to Minnesota.
First, individual eligibility expansion will allow the program to maintain its fiscal solvency while providing health care access to a greater number of people in need of affordable options. This eligibility expansion will be augmented by the creation of Minnesota BusinessCare, a program presenting Minnesota businesses with the opportunity to provide their employees access to coverage through MinnesotaCare.
The increasing number of individuals included in MinnesotaCare will enable quality improvements in the program. Initially, the MinnesotaCare benefits package will be expanded to ensure a basic level of routine, preventative, emergency, mental health and prescription coverage. As the MinnesotaCare pool grows larger, however, the program will be able to offer the highest quality coverage possible, making it comparable to other programs. Once MinnesotaCare reaches this level of coverage, DOER plan subscribers can be included in the MinnesotaCare pool without any decrease in quality or affordability.
Through MinnesotaCare Individual Eligibility Expansion, initiation of Minnesota BusinessCare, DOER Eligibility Expansion, and the Eventual MinnesotaCare Inclusion of DOER Subscribers, our state will be able to offer high quality coverage at affordable rates to all of its residents. Access to health care—not just in terms of affordability but also in terms of physical access—will increase across the state through the Support of Unique Constituency Pools. No individual or business in Minnesota will be forced to participate in this innovative state-run program, but every one of them will have the option to do so if they so choose. Access, quality, affordability, and choice can all be obtained through this cooperative health care reform.
MinnesotaCare Individual Eligibility Expansion
The first program initiative of the Health Care Security Plan is a MinnesotaCare Individual Eligibility Expansion. This expansion will build on the success of MinnesotaCare to date. MinnesotaCare has provided cost-effective quality care for many Minnesotans. It has been an affordable health care option for our state, generating budget surpluses while providing access to thousands of residents who would otherwise be uninsured. By expanding individual eligibility, the number of uninsured and underinsured individuals in Minnesota will be reduced. In addition, the ability of MinnesotaCare to provide access to cost-effective quality coverage will improve as a result of increased participation in the program.
The second program initiative of the Health Care Security Plan is the creation and initiation of Minnesota BusinessCare. This program will present employers with the option to offer their employees access to MinnesotaCare coverage, reducing the cost of granting health care benefits to employees and therefore making Minnesota businesses and corporations more competitive in both the national and international marketplace. Healthy businesses need healthy employees, and employers want to provide affordable health care to their employees. With the initiation of this program, Minnesota businesses will have the option to offer health coverage through the private market or through participation in BusinessCare. Minnesota BusinessCare will provide companies with the security of contained payroll costs and the stability of affordable health care options whether they are start-up family businesses or multi-national corporations competing in the global market.
DOER Health Plan Expansion
The third program initiative of the Health Care Security Plan is a DOER Health Plan Expansion. The Department of Employee Resources (DOER) Program, otherwise known as the Minnesota Advantage Health Plan, is a cost-tiered program currently serving thousands of state employees.
The State of Minnesota and its employees have saved millions of dollars through this ground-breaking program, and the HCSP will expand eligibility to offer all state, county, municipal and school district employees with the option of coverage through the DOER plan. While no one will be required to participate in the DOER plan, this expansion will increase health care security for public servants and the public agencies and jurisdictions that employ them.
MinnesotaCare Inclusion of DOER Subscribers
The fourth program initiative of the Health Care Security Plan is the Eventual MinnesotaCare Inclusion of DOER Subscribers. Once the quality and affordability of MinnesotaCare has reached a level comparable to that of the DOER Health Plan, DOER subscribers will be merged into the MinnesotaCare pool. This will enable subscribers from both groups to reap the benefits associated with a significantly larger subscriber pool without compromising the quality of their coverage.
Prescription Drug Purchasing Alliance
The fifth and final program initiative of the Health Care Security Plan is the establishment of a Prescription Drug Purchasing Alliance. This will provide the State of Minnesota with a greater ability to negotiate prescription drug prices through cooperative bulk purchasing. By authorizing the formation of a Prescription Drug Purchasing Alliance, the Health Care Security Plan will enable Minnesota to join with both interstate and intrastate organizations for the purchase of prescription drugs at prices negotiated in either the United States or Canada. This public/private intrastate alliance will negotiate for all state and local government programs and will be open to any private entities within Minnesota that wish to join.
Real Health Care Reform Must Begin Now
This state and nation have delayed real reform for far too long. Our state can no longer afford to accept mediocre quality, unmanageable prices, and inadequate access in our health care system. The policies and programs outlined in this Health Care Security Plan are based on key concepts, best practices, and the common principles around which multiple stakeholders can unite. Without dictating what choices Minnesota businesses and citizens have in terms of health care, this Health Care Security Plan will ensure that all Minnesotans have a choice.