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Health costs grew by double digits in 2002
by Tom Scheck, Minnesota Public Radio
July 28, 2003

The Minnesota Health Department says health care costs in the state increased 16 percent in 2002 for people enrolled in private health insurance plans. It's the largest increase since the Health Department started collecting the data in the mid-'90s. The report also says employee premiums increased 10 percent, the fourth straight year of double digit increases. Business leaders say the increases are causing them headaches and are encouraging the Legislature to make changes to the system.

St. Paul, Minn. — The Health Department's Julie Sonier says there are a lot of factors behind the double-digit increases. Medical technology and prescription drugs are getting more expensive. Meanwhile, hospitals and physicians are charging more to treat patients because there's a health care worker shortage. Sonier says she doesn't expect the double-digit trends to end soon.

"There is cause for concern, to the degree that it places cost pressure on employers as well as employees who pitch in to cover the cost of their health insurance," says Sonier. There is concern that, at some point, the costs may grow to the point where people can no longer afford health insurance coverage."

Sonier says health care costs have been increasing rapidly since the late 1990s. Julie Brunner, executive director of the Minnesota Council of Health Plans, says many businesses decided at that time to enroll their employees in plans that offered a wider array of benefits.

Brunner says those changes encouraged consumers to use more health care services. Now, she says, HMOs and businesses are having a hard time controlling costs under the newer plans.

"Managed care isn't really managed, because plans provide almost every service that people want," says Brunner. "We have many state mandates in terms of services that have to be provided, and some of the controls that were in place early on in the managed care years really have been reduced."

I don't think, other than talk, the governor of Minnesota is going to do one rat's ass about the health care conditions in the state of Minnesota. - Ray Waldron, executive director of the Minnesota AFL-CIO.

Business leaders say they can't afford to keep up with the rising rates, and are pushing some of the costs onto their employees.

Gov. Pawlenty said in an interview last week that he wants the Legislature to examine the problem when lawmakers return in February.

"That's a ... somewhat silent crisis. And as a leader I can't just look at that and say we should look the other way. We've got to tackle health care reform in the coming year or two or three," Pawlenty says.

Carolyn Jones with the Minnesota Chamber of Commerce says her organization will encourage the Legislature to make dramatic changes to the system. She says her group wants to reduce several state mandates on HMOs, and permit additional competition.

State law currently requires non-profit companies to operate HMOs. Jones says allowing for-profit HMOs to compete should be an option.

"It's been almost 10 years since we've really had broad-based reform, and we need to look at the entire system as a whole. We've done a lot of tinkering around the edges in the last several years, and I think it's time we look at systematic reform of the health care system," says Jones.

But others aren't as optimistic that the Legislature and the governor will be effective in changing the state's health care system.

"I don't think, other than talk, the governor of Minnesota is going to do one rat's ass about the health care conditions in the state of Minnesota," says Ray Waldron, executive director of the Minnesota AFL-CIO.

Waldron says his union of about 400,000 members is growing more concerned that businesses are pushing the additional health care costs onto their employees. Waldron says he considers the shift a pay cut.

"Business is absolutely becoming foolish on their demands of the worker. The profit margin is staying the same and they're taking it out on the worker's hide -- and that's not playing well," says Waldron.

Waldron says he believes that many workers won't be able to afford the rising cost of health care if businesses keep shifting costs onto workers. He says that will only add to the 41 million people nationwide who don't have private health insurance.

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