New Analysis: Minnesota ‘Public Option’ Would Reduce Access To Affordable, High-Quality Health Care
New State Government-Controlled Health Insurance System Would Have Negative Consequences For Minnesota Patients & Consumers, New Analysis Finds
ST. PAUL, Minn. – A new analysis conducted by economists at FTI Consulting, an independent global advisory firm, finds that S.F. 2995/H.F. 2930, which creates a new state government-controlled health insurance system known as the “public option” or “state government option,” would harm Minnesotans’ access to affordable, high-quality health care.
The analysis, supported by Minnesota’s Health Care Future, warns that a Minnesota public option could have devastating consequences for Minnesotans’ ability to access the care they need:
- The state government option could “reduce total revenues for all (122) hospitals in the state,” leading to “an estimated total annual loss of nearly $203 million” that could threaten hospitals’ ability to ensure access to high-quality care for patients.
- Because a public option would significantly reduce reimbursement rates to health care providers to well below commercial rates, Minnesota hospitals could lose over $2.3 billion in revenue as a result of the public option over the next decade – limiting their ability to provide high-quality care to the communities they serve.
- The state public option could have especially harmful consequences for underserved communities. Eleven critical access hospitals could be expected to operate at “high-risk” and one-third of rural hospitals could operate at a “higher-risk” due to the revenue losses.
Today, Minnesota is “a leader among states regarding health coverage, with an uninsured rate of 4.7 percent as recent as 2021, which is already substantially lower than the national average.” The study estimates that the state public option would reduce the uninsured rate by only 0.5 percent while threatening to “disrupt providers’ payer mix” with a large-scale switch from private to public plans that could disrupt Minnesotans’ access to health care options.
With nearly 80 percent of Minnesotans satisfied with their current health coverage, rushing this bill into law could threaten the coverage choices and access to quality care on which Minnesotans rely. This bill would also do little to reduce the uninsured rate that is already among the lowest in the nation.
Minnesota lawmakers should carefully study the consequences of creating the so-called “public option” and instead work together to build on and improve what is already working to expand access to health coverage and care for every Minnesotan.
Key Findings of FTI Consulting’s Analysis:
- Minnesota is a leader among states regarding health coverage, with an uninsured rate of 4.7 percent as recent as 2021, which is already substantially lower than the national average. Economists at FTI Consulting estimate that the state public option would reduce the uninsured rate by only 0.5 percentage points, to 4.2 percent.
- While having just a small effect on the overall uninsured rate, the state public option could threaten to disrupt providers’ payer mix, with approximately 62 percent out of the 80,000 individuals choosing to enroll switching from private to public plans, which could disrupt Minnesotans’ access to health coverage and care options.
- The state public option would reduce total revenues for all hospitals in the state, even with the addition of newly insured consumers.
- All 122 hospitals in Minnesota for which we could obtain cost report data experienced reduced revenues under the state public option, producing an estimated total annual loss of nearly $203 million.
- The state public option could cause significant financial distress for Minnesota hospitals, as reimbursements would be significantly lower than commercial rates. Over 10 years, Minnesota hospitals could lose over $2.3 billion in revenue as a result of the state public option.
- The state public option could have significant implications for access to care across the state with all of the critical access hospitals (CAH) in Minnesota experiencing additional losses under the Public Option with 11 operating at high risk.
- Access to care for rural Minnesotans could be particularly threatened, with one third of hospitals in rural areas potentially operating at a higher risk of closing due to the state public option.
Read the full FTI Consulting study here.
Learn more about Minnesota’s Health Care Future here.
Minnesota’s Health Care Future is a coalition of Minnesota’s leading doctors, nurses, clinicians, community hospitals, health insurance providers and biopharmaceutical companies. We believe every Minnesota resident deserves access to affordable, high-quality health coverage and care, and we advocate for proven solutions that build on what’s working and fix what’s broken in health care.