Minnesota once led the nation in innovative health care reform; here’s how we can do it again | Opinion

January 6, 2021 6:03 am

India Ampah holds her son, Keon Lockhart, 12 months old, as pediatrician Amanda Porro M.D. administers a measles vaccination during a visit to the hospital. Photo by Joe Raedle/Getty Images.

In the late 1990’s Minnesota was a national leader in health care reform. Minnesota’s health care innovations, such as integrated health care systems and investments in programs to provide affordable health insurance coverage, drew the attention of both the federal government and other state governments, as well as of health care reformers. Many of these innovations, along with programs to cover the uninsured, contributed to lower health care prices and higher quality care. That is why I chose to complete my graduate degree in health care economics in Minnesota — so I could study innovations, such as employer purchasing coalitions, learn the “Minnesota Way” of solving health care problems, and work with top health economists and health care executives. 

University of Minnesota-trained public health professionals became known as the “Minnesota Mafia” in recognition of their influence on health care reform across the country. The University of Minnesota’s School of Public Health was churning out graduate students who went out to every state to try to replicate the Minnesota Way. They were the movers and shakers — everyone wanted to know what was happening in Minnesota and adopt it. 

Other states are now leading on health care reform. If Minnesota wishes to reclaim its role, we will need to innovate again on health care, and particularly to address the problem that health care and quality health insurance are no longer affordable for working families, and that progress toward solutions has stagnated. 

The Minnesota Legislature and Gov.Tim Walz should take up this challenge and create health care proposals that reflect the values of the people of Minnesota. Surveys suggest that most Minnesotans believe everyone should have access to high quality health care. Unfortunately, there is disagreement among elected officials on the fundamental question of whether we should be our brothers’ and sisters’ keepers — i.e. should we subsidize health care for those unable to pay. Resolution of this fundamental question is critical, since a failure to do so is a default judgement in opposition to subsidies. Many Minnesotans would support health care subsidies because they view access to health care as an essential human right, while others view health care as a commodity, available based on ability to pay the market price. 

If bipartisan agreement can be reached on subsidies, the next hurdle is determining how to pay for expanding health care access. There are many revenue options available, but a significant lack of political will to implement them. In general, Republicans voice concern with government intervention, and Democrats have concerns about market-based approaches. A reasonable compromise likely needs to involve a combination — government regulation and financing of private health care coverage and delivery, a mix of public and private health care. 

Successful reform needs to be incremental. A total overhaul will not be successful, either politically or financially. The costs involved in public assumption of all health care financing are mind-boggling, and the voting public — even voters in highly progressive states and in the Democratic Presidential primaries — has rejected massive reform every time it has been proposed.

One other crucial problem with major reform is that every dollar of health care expenditure is a dollar of income for workers in the health sector. In Minnesota, health care is the largest employer and contributes $36 billion to our state’s economy.  Any reform must consider effects on employment. Health care in America is also very complex and fragmented, making major reform difficult to achieve. 

This all suggests that the most feasible starting point for incremental reform is building off the Affordable Care Act (ACA).  Many health economists think the best place to start is by offering a public option. A public option can be as simple as extending MinnesotaCare coverage to those who wish to purchase it — such as those without employer sponsored insurance or those who cannot afford it, those who wish to retire before they are eligible for Medicare, entrepreneurs and their dependents, farmers, and small businesses and their owners and employees. 

MinnesotaCare is a health insurance product that is partially publicly financed but is privately delivered by health insurers and providers. It is currently offered to only some Minnesotans. Allowing others to purchase this product at full price for those with high income or with a federal subsidy through the ACA for those who qualify, would take advantage of an existing successful program that is widely accepted by health care systems and users. In Minnesota’s highly concentrated insurance market, it would offer more competition, and it already has extensive coverage and a large provider network in all areas of the state. It also gives the state an ability to experiment with reimbursement models that could drive efficiency, reduce the growth of health care costs, and improve population health. 

Another central need in health care reform is common sense pricing. Our health care prices are the highest in the world by far, and unrelated to efficacy of services — a function of high salaries for CEOs and high-level executives of health care organizations including health insurers, hospitals and pharmaceutical companies; highly paid doctors in certain specialties; costs associated with technology and the medical arms race; the historic policy of paying fee-for-service, or reimbursing based on whatever providers charge — which is not necessarily based on cost or amount of labor; and lack of competition among providers. Prices are not transparent, and quality is difficult to measure. It all sets up a classic market failure: A lack of information prevents intelligent consumption and purchasing. 

To reform prices we need to nudge health insurers to change how they contract with hospitals and providers. Providers need to accept more risk for their services — through risk contracts where they are held accountable for total costs of care and service quality, or through global budgeting where providers are paid a lump sum to care for a pool of patients. By changing how we pay for services we can better align incentives to improve health outcomes and limit unnecessary care. Fee-for-service is no longer working when fees do not reflect costs and when services may not be needed. We should also pass legislation on price transparency and provide access to the All Payer Claims Database — a database that captures medical claim information detailing provider reimbursement amounts for health care services from various health plan payers. 

Our state has little power to regulate drug prices, although this is an area that needs significant reform. The Legislature should investigate whether Minnesota could follow the lead of California by establishing a pharmaceutical carve-out plan using volume-based purchasing to get discounts on drugs for those participating in the plan. The plan could allow private employers, public employees and individuals to join. Minnesota may not have the purchasing power of California, given our smaller population, but the state could try to partner with California and other states. This may take more than one legislative session to implement, but the work should start soon. 

Other areas that need attention include increased access to mental health services and beds; addressing shortages of providers in areas of specialty and in geographic areas; improving wages and benefits for direct care professionals (such as personal care attendants and nursing home workers); increasing access to telehealth and reforming how we pay for these services; investing in preventive health; addressing the social determinants of health and health disparities; and investment in public health to prepare for the next pandemic. 

It has become a cliché to say that we face a major health care crisis — but we face a major health care crisis, both in Minnesota and nationally. Costs threaten to overwhelm both the national economy and family budgets. Ongoing trends are pricing larger and larger numbers of Americans out of the health care system, and even the twin bulwarks of American health care — employer sponsored insurance and Medicare — are fraying, with those systems increasingly failing to keep prices in a range that working-class and middle-class Americans can afford. Employer sponsored programs are gradually either disappearing or offering poor-quality insurance that fails to protect enrollees when they need it. The longer we wait, the worse the crisis becomes. Minnesota and its political leaders need to step forward and once again make our state a national model.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Jennifer Schultz
Jennifer Schultz

Jennifer Schultz is a health economist and former DFL state legislator representing Duluth. She was the 2022 DFL nominee for Congress in the 8th District.