MPR: Health Care Under the Microscope

Health Care Under the Microscope
by Michael Khoo
January 20, 2000

Minnesota Attorney General Mike Hatch says he will soon launch an investigation into rising health-care premiums in Minnesota. Hatch made his announcement as top DFL lawmakers unveiled a package of health-care proposals for the 2000 legislative session.

DURING THE PAST DECADE of economic expansion, inflation has been held to record lows in most industries. A conspicuous exception has been health care. DFL State Senator John Hottinger of Mankato says he's noticed the discrepancy.

Hottinger: While we have been putting more money in Minnesotans' pockets with tax reductions, those pockets have been picked by the increasing costs of health care, the increasing costs of health insurance, and surely the increasing costs of what my father the doctor always called "medicine:" prescription drugs.

The Minnesota Department of Health estimates health-care premiums have increased between 13 and 28 percent from 1999 to 2000. Attorney General Mike Hatch says he's concerned about the escalating costs and will launch an audit of a major health plan within the next six weeks. Hatch says he wants to determine where the extra dollars are going. He says the health plans may be use accounting tricks to hide the amount they spend on administering the plans.

Hatch: You look under some of the financial statements and you'll see the administrative costs in one area and then you'll see something called "other professional expense" and you'll see it described as being janitorial fees. Just about any type of fee that there is to run a business, and it's not broken out. And it's about 20 percent of the premium dollar.

Hatch declined to reveal specifics of the probe, saying only that results would be available when the investigation concludes. Representatives of the health-plan industry say, however, the attorney general will discover nothing out of the ordinary. Mike Scandrett is the executive director of the Minnesota Council of Health Plans. He says administrative costs in Minnesota are below the national average, and that other factors are driving the premium hikes.

Scandrett: People are getting more health-care services than before. And they're better services, they're more expensive, they're newer, they're high-tech, and they're more effective. But it results in higher health-care costs. And we're concerned about that because that's a much more difficult cost increase to deal with than if we could just say it's a lot of waste and inefficiency and high administrative costs.

To the extent health care costs are driven by emerging medications and treatments, DFL lawmakers want to make sure more Minnesotans have access to them. Their proposals include increasing access to the senior prescription drug program, leveraging federal dollars through the so-called "Kid Care" program, and exempting out-of-pocket expenses from the medical-care provider tax. State Senator Don Samuelson also called for higher wages for long-term health care workers.

Samuelson: I don't think that we've done enough for them in terms of money in their pocket. They're some of the lowest-paid people in our society today. And I'm of high hopes that we can get an additional COLA passed to actually put the dollars in their pocket. And I have high hopes that we'll get that done and that the governor in the end will support it.

Obtaining the governor's approval may be easier said then done. Cost figures for the total package weren't available, but just a partial list of price tags totalled more than $60 million. And Governor Ventura has already made it clear he doesn't support extra spending until the 2001 budget session.

Republican representative Fran Bradley of Rochester chairs the House Health and Human Services Policy Committee. He says the DFL proposals may just be wishful thinking.

Bradley: We are a biennial budget system. I think we also have to face the reality that the governor has said this is not a budget year. And let's not create some false expectations. I mean, we can play political games with trying to do this. But I think we've got to be real, cause the governor is not liable to approve any supplementary budget.

Bradley says he'd like to use tobacco-settlement money to replace the provider tax. That, too, however, may just be wishful thinking. The governor rejected such a proposal last year.

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