‘Could Reduce Access To Health Care And Increase Costs’: Minnesota Leaders Express Concerns Over Public Option Health Insurance System

ST. PAUL, Minn. – As some politicians continue to rush forward with legislation to create a new state government-designed public option health insurance system, Minnesota health care, labor and business leaders are expressing serious concerns about the potential unaffordable costs and negative consequences.

Mayo Clinic, Minnesota Council of Health Plans, Health Plan Partnership of Minnesota, Health Leaders Association Minnesota, Minnesota Hospital Association, Essentia Health, Medical Alley, Minnesota Chamber of Commerce, Minnesota Business Partnership, National Federation of Independent Business, Cigna, MNGI, Minnesota Association of Health Underwriters, MN Ambulatory Surgery Center Association, Big I Minnesota, Summit Orthopedics, Integrity Health Network, CentraCare, Greater Mankato Growth, Twin Cities Orthopedics, Minneapolis Regional Chamber, Northland Plastic Surgery, Kaleidoscope, Nura Pain Clinics, Rheumatology Association of Minnesota and the Dakotas, Retina Consultants of Minnesota, Southdale Anesthesiologists, St. Cloud Area Chamber, Minnesota Grocers Association:

Lawmakers currently have no way of knowing the full scope of consequences this proposal could have for Minnesota patients, consumers, health care providers, employers, and taxpayers. One of the few things made clear in the state’s report is that just a small percentage of Minnesota’s uninsured population would be covered by the public option and enacting it would have a minimal impact on expanding coverage.

At the same time, a public option could negatively impact a wide range of Minnesotans’ existing health coverage choices. Most clearly, the reliance on low payment rates to hospitals and clinics in order to achieve a marketable premium will result in cost shifting onto remaining commercial policyholders in the self and fully insured markets. Government-level provider payment rates could impact patients’ ability to access vital health services close to home and in a timely manner, worsening the access problem for those in rural or underserved communities. (April 29, 2024)

International Union of Operating Engineers Local 49:

… [T]his could strike a potentially fatal long-term blow to the privately funded health plan Local 49 created and has managed jointly with our employers for decades. A plan I would remind legislators that our members fought hard for, and frequently list as the top reason they want to be part of our union …  A one-size-fits-all state program will not work for us at all. Eventually, when expanded, the MinnesotaCare option would also put financial pressure on our employers to move away for our world-class health plan and toward the cheaper, lower-quality MinnesotaCare plan. That harms our members, and it is not what they want. (April 18, 2024)

Minnesota Chamber of Commerce:

Under a public option, with a growing number of patients walking through their doors paying less than what it costs to deliver care, how will [hospitals] continue to do all the things that they do today? Will doctors and hospitals be forced to pull back on the services they currently offer? Will they make up the lost revenue by charging those with private insurance even more? (April 17, 2024)

National Federation of Independent Business:

There is no guarantee a public option will fill the void [of uninsured Minnesotans] – if it’s even approved by the federal government – left by the end of reinsurance for high-cost medical claims. Other states that have tried a public option have struggled to attract customers and provider participation … In the meantime, a public option means health insurance will get more expensive for everyone else – including those who get coverage from work and buy it on their own. (April 18, 2024)

Medical Alley:

In order to pay for a public option, healthcare costs will inevitably have to increase across the ecosystem … As legislators analyze the recommendations from Minnesota Department of Commerce and Minnesota Department of Human Services for next steps based on the Milliman study on a potential state public option, we emphasize that the recommendation report says the study “does not capture the full fiscal impact to the state or the health care system more broadly.” These words should serve as a sign of caution about the impact of a public option throughout our health ecosystem. (April 17, 2024)

Minnesota Business Partnership:

While we share the goal of affordable and accessible health care, this proposal is not the way to improve the state’s health care system. The public option will increase cost-shifting onto commercial policyholders in both the self and fully insured markets to compensate for lower government reimbursement rates. Consequently, higher health care expenses passed onto private insurers will inevitably result in increased rates for those enrolled in employer-sponsored health insurance programs. The public option could also reduce access to health care and increase costs as the limitations of cost shifting are reached.

There are many questions left unanswered about how the public option will impact Minnesotans. We currently have no way of knowing the full scope of consequences this could have on Minnesota patients, providers, employers, and taxpayers. (April 18, 2024)

Health Plan Partnership of Minnesota:

The public option study did not estimate the risk to hospitals and key health care infrastructure caused by low reimbursements. Access to care is at risk. Data collected from MHA members show 67% of hospitals and health systems had negative operating margins. Lower reimbursement rates will exacerbate the problems. Lower reimbursement rates may further deteriorate the health care workforce. (April 18, 2024)

A new poll finds that a majority of Minnesota likely voters do not support creating a new state government public option. The poll finds that most Minnesota voters would prefer to improve upon the state’s current health insurance system over creating a state public option. It also found that most would not be willing to pay any more in taxes (72%) or health care costs (76%) to fund the creation of a state public option – including a majority of Democratic voters, 57% of whom would not be willing to pay more in taxes and 65% of whom would not be willing to pay more in health care costs.

At the same time, a new report by Lanhee J. Chen, Ph.D., Tom Church, and Daniel Heil sheds additional light on the potential negative consequences a public option could have for Minnesotans, warning that “any significant shift in exchange enrollment to a MinnesotaCare public option would result in significant cuts to providers … This could reduce payments to Minnesotan hospitals by $2.3 billion over 10 years, with large risks for critical access hospitals and hospitals in rural areas.” The report also shows that the public option has failed to deliver on its promises in the states where it has been tried.