A story broken by KSTP-TV investigative reporter Jay Kolls reveals that health maintenance organizations (HMOs) in Minnesota collectively receive US$3 billion annually to administer the state’s public healthcare plans (Medicaid, MinnesotaCare, and General Assistance Medical Care) aren’t audited and we simply don’t know what they’re doing with the money they receive. Senator John Marty (DFL-District 54) tells Kolls, “... This idea that we don’t know where the money’s going and we have no way of finding it out under the current system—it’s a racket.” Marty says he will push to force open HMO books in his capacity on the Minnesota Senate’s Health and Human Services committee. “You just don’t leave the cash register drawer open and say ‘take what you want’ and that’s what we’re doing here,” says Marty.
Dave Finewachs, the former lead attorney for the Minnesota Hospital Association, told Kolls that he wants the HMOs to answer five simple questions:
- What did you do with the public money?
- Who did you pay it to?
- What did you buy?
- How much did you pay for what you bought?
- What did you keep for yourself?
Finewachs maintains that Minnesota HMOs make their largest profit from the state’s public healthcare plans. “I can tell you this: Anytime somebody suggests an audit and somebody doesn’t want to be audited, that looks suspicious.”
Kolls also cites healthcare providers—like the Minnesota Nurses Association—who also want to see the state’s HMOs audited.
Kolls notes that Minnesota HMOs are represented by the Minnesota Council of Health Plans who told him, “HMOs account for every taxpayer dollar they spend and to scrutinize their books any further would give away competitive trade secrets.”
Kolls’s story aired in mid-December 2010.
On 19 January 2011, Kolls was back with a report on how these same HMOs and health insurance companies—Allina, Blue Cross, Fairview, HealthPartners, Medica, Park Nicollet, and U Care—are circulating a plan to remedy a large portion of Minnesota’s US$6.2 billion budget deficit by drastically cutting medical care to the elderly and disabled to the tune of US$170 million. Kolls obtained a “draft executive summary” of the plan, “Advancing Minnesota’s Health System” (.pdf; 4.3MB). Nurses, union representatives, and attorneys for those likely to be affected by the plan, if approved by the state legislature, were unanimous in their outrage in rejecting the plan. The insurers, in a statement (.pdf; 12KB), told Kolls the plan was preliminary, not final and that “if the ideas could be taken as a package—they could improve access, affordability and quality of health care for all Minnesotans, including those now served by publicly funded programs.”
The Minnesota Nurses Association has been doing a stellar job of aggregating information about the issue.
Minnesota’s health insurers are clearly feeling their oats, likely giddy in expectation with the first Republican state legislature in 38 years.
Today, Warren Wolfe, writing for the Star Tribune, picked up on Kolls’s story, adding shocking data (while ignoring the US$3 billion question):
“Together, the state’s 12 HMOs earned US$103.1 million in net income in 2009 from the three Minnesota [public] healthcare 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 Star Tribune analysis.”
Health insurers in Minnesota are, by law, nonprofit entities.
Wolfe quotes Ken Paulus, Allina’s chief executive, attempting to justify the plan by saying they were trying to avoid “potentially disastrous, broad-ax cuts” to their businesses. ... This is not just damage control. This is an opportunity to get past a short-term budget crisis and tackle fundamental problems in how health care is structured and paid for, starting with state programs.”
Wolfe also notes that critics of the plan “wonder if the health plans are trying to enhance their profits by moving more people into managed care.” Valid criticism, one has to believe; not one of the top executives of the Minnesota health insurance cartel issued nary a breath of a hint that they might be willing to take a pay cut.
In this age of the Great Reset, does Minnesota need to reexamine its public healthcare spending? Absolutely. But just as absolutely this cannot happen until the state examines its US$3 billion HMO budget issue including answers from each of the insurers to Finewachs’s five questions.
Update: Thursday, 27 January 2011 5:32PM CST: Minnesota Public Radio’s Lorna Benson has just aired a fairly extensive piece on the insurers’ proposal (again, unfortunately (conveniently?), ignoring the US$3 billion question). Patrick Geraghty, president and chief executive of Blue Cross Blue Shield of Minnesota, tells Benson, “... It’s important to know that Minnesota spends 49 percent more on its Medicaid program than the national average. Minnesota stands out as a state that is benefit rich. So the question we all need to ask ourselves is are we getting outcomes that are relative to the benefit we’re offering?”
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