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Health Care Minnesota's Great Economic Threat





world class health for Minnesotans at a world competitive cost per person - a system that delivers best health and best care at the best price for every Minnesotan.
Imagine staying in your job because it matches your talents and lifestyle and not just because it offers health care insurance. Imagine taking care of a health condition when it's a small problem - before it becomes a really big - and really expensive - problem. Imagine a true health care system, not a sick care system.
We were at a meeting the other night with about 150 people. We asked them "How many of you got a wage or salary increase last year?" Nearly every hand in the room went up. Then we asked, "How many of you are actually taking more money home?" Very few hands went up. Where is that hard-earned money going? It's going toward rising health care premiums, deductibles, co-pays, and other medical expenses.

What is true for those folks is also true for Minnesota's businesses, farmers, community organizations and government. If Minnesota doesn't reduce health care costs, they will keep eating away at the state's quality of life. Employers can no longer afford their health care promises. Employees feel trapped by benefits that they cannot afford to leave behind. More and more people are being left to fend for themselves. Families live in fear of being one major illness away from financial ruin. Health care costs are the greatest threat to Minnesota's future prosperity, security, and economic competitiveness.

While health costs are making our economy sick, the health care system is not making people well. As a nation, we pay 50 percent more than any other country for health care and get below average health outcomes.

A population that is healthy at a world-class level is a powerful competitive advantage - an engine for success. A healthy population is a requirement for a healthy economy and a vibrant community. Today's productive employees who shoulder heavy health care costs are at a competitive disadvantage that threatens Minnesota's future. Unhealthy kids struggle to learn. Unhealthy workers and farmers struggle to produce.
It's Time to Act
To fix the health care system, Minnesotans must accept their responsibility to be healthy, get care when they need it, and help others get access to health care services. For its part, government has the responsibility to ensure that the health care system provides high quality services that are affordable and available to all Minnesotans. And, businesses - whether they be care providers, insurers, or employers - must assume their responsibilities as well and be open to systemic change in the way health care is delivered and financed. It's time to rewrite the rules of the game to get the results Minnesotans want. Anything less jeopardizes the great quality of life we have come to expect in Minnesota.
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Health Care Minnesota's Great Economic Threat


THE FACTS

Overhead Costs

  • More than 20 percent of health care costs go to overhead and administration.
  • The administrative complexity is staggering: Hundreds of different forms, coding systems and computer programs required by each individual provider, insurer and health care agency. This inefficiency does little or nothing to make people healther.

Quality of Care

  • Up to 30 percent of health care spending does not improve people's health, because it is ineffective or unncessary.
  • A recent report noted that 20 percent of medical tests were repeated because the results weren't available to the attending physician.
  • Multiple studies have reported that people get Best Care - care consistent with the best evidence of what works - less than half the time. The Minnesota Citizens Forum on Health Care Costs pointed to Minnesota data showing that for some diseases, Best Care is delivered no more than 20 percent of the time.
  • Most patients and even their doctors do not know which physicians, clinics, or hospitals deliver Best Care.

Chronic Diseases

  • 70-80 percent of health care spending goes to treat diabetes, heart disease, cancer, asthma and other chronic diseases (see chart below).
  • The lack of Best Care for these conditions leads to complications for patients, additional treatments and interventions, and therefore higher costs.
  • In addition, not enough resources are devoted to preventing these diseases from occurring in the first place. It makes no sense to spend billions on treatments after the fact and so little on prevention.

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Health Care Minnesota's Great Economic Threat


Economic Threat

  • Approximately 40 - 50 percent of all personal bankruptcies are caused by families' inability to pay soaring medical bills.
  • State and local governments are the largest purchasers of health care services in Minnesota, buying about 25 percent of the total - or roughly $8 billion per year. Without intervention those costs will continue to grow at double digit rates.
  • Health care is in competition with every other public service for scarce tax dollars. Rising health care costs suck money away from improving our schools, fixing our roads, and repairing our environment.

Uninsured

  • At any point in time, about 8 percent of Minnesotans (400,000 people) don't have health insurance. Because people move in and out of the insured pool, an even greater number are without coverage at some point during the year.
  • Approximately 60 percent of uninsured are eligible for an existing government insurance program but don't know it or don't act on it. 30-40 percent of those without health insurance could afford insurance but choose otherwise.
  • Many healthy young people see no need to buy insurance.
  • Some working families and individuals are not eligible for government assistance and perceive premiums for coverage as unaffordable.
  • Those without coverage end up using our emergency rooms as their only source of care. This is not optimal for their long-term health and creates a tremendous cost to society's pocketbook.

Long Term Care

  • Chronic, disabling diseases represent the fastest growing costs in health care and in the provision of long-term supportive services (nursing homes, assisted living, etc).
  • Minnesota has depended more than most states on government-financed, government-regulated nursing homes as the model for long term care.
  • Older Minnesotans value their independence first and foremost - in making choices about where they live and how they are cared for.
  • Few Minnesotans have either insurance for long term care and supportive services or a health care directive (living will). Without both, they risk losing their independence and control over the choices about their care.

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Health Care Minnesota's Great Economic Threat


What Matters Most

  • Four factors influence the health of people - personal behavior, genetics, environment, and treatment. Of these, the most powerful is personal behavior - it accounts for 50 percent of the variance in our health.
  • Treatment (access to care and the quality of that care) accounts for only 8 percent of the variance in our health.
  • Nevertheless, we spend 88 percent of our collective resources on treatment but only 4 percent on changing personal behavior.

Opposing Views

  • The health care debate, like so many others, has divided Minnesotans.
  • One side claims the best solution is universal, single payer health care run by the government. In this scenario, the state would assume responsibility for paying for everyone's health care. The government would have to raise taxes to pay the bill.
  • Another side believes the market can solve the problem through competition. They think each Minnesotan should be a free agent buying his/her own care with his/her own money - usually from a combination of wages and employer contributions to a health savings account.
  • Many Minnesotans don't trust a government monopoly to fix this problem. Conversely, they don't believe that market forces alone will appropriately address their needs or assure that everyone gets needed care. They fear that corporate interests will take priority over the needs of individuals.

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WHAT MINNESOTANS WANT

Minnesotans do not want to be forced to choose one of the two extremes. Instead, Minnesotans want a health care system that:

  • Gets costs under control
  • Delivers better quality care
  • Provides affordable access for everyone

They also want a health care system that is built on principles that:

  • Reinforce personal responsibility
  • Emphasize prevention
  • Provide consumers with useful information about quality and cost
  • Recognize government's important role in assuring the overall fairness, efficiency, and effectiveness of the system
  • Leverage marketplace competition to get better value

Minnesotans recognize that health care must change if it is to be sustainable and affordable. They also know that everyone - patients, providers, insurers, businesses, and government - must be working together (not finger-pointing) if we are to move forward. Minnesota's historical strengths in public health as well as in health care delivery, management, research, and medical technology are valuable foundations on which Minnesota must build.

Much valuable work has already been done to engage citizens all over the state on their expectations for a better health care system thanks to the efforts of the Minnesota Citizens Forum on Health Care Costs in 2004. This group and others have already indentified practical solutions to the state's health care crisis (including the Minnesota Medical Association's Proposal for Health Care Reform in 2005 and the Citizens League's report on Medical Facility Expansion in 2006).

It's time to build on these exciting but, thus far, largely ignored reform proposals. We know what needs to be done to move our state forward. It's time to act. We don't need another diagnosis; what we need is a treatment plan and the leadership to get it done. It's time for bold, courageous, competent, and collaborative leadership.

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WHAT NEEDS TO BE DONE
You bet there is! We can begin now to reduce health care costs, improve quality and provide insurance coverage for all Minnesotans. In order to deliver the health care system Minnesota wants, the Hutchinson/Reed Administration will:

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Cut the cost of administration and bureaucracy in half by 2010.

  • Mandate common administrative processes, forms, codes, and information technology.
  • Require electronic medical records and capability for data interchange with strong security to protect patient privacy.
  • Review state regulations and procedures and change or eliminate those that do not advance or protect the public's health.

We estimate that this can save the state and local governments as much as $800 million per year.


Improve the quality of care and reduce its cost - particularly the burden of chronic disease - by 2010.

  • Establish aggressive targets for the percentage of patients who will receive Best Care. These goals would include:

95 percent of children and 90 percent of adults receive appropriate preventive care, including immunizations, lead screenings, cancer screenings, etc. - up from approximately 75 percent today.

90 percent of patients with five serious chronic diseases (asthma, depression, diabetes, heart disease, and tobacco addiction) receive Best Care to reduce complications caused by their disease.

Eliminate the occurrence of the 27 "Never Events" (serious medical mistakes reported to the Department of Health; there were 106 reported last year) and eliminate harmful medication errors.

Eliminate demographic disparities in the delivery of chronic and preventive care.

  • Pay providers for producing positive health outcomes, not just performing procedures. Pay for what works and stop paying for what does not work or is of poor quality.

We estimate that by reducing the amount of unnecessary or ineffective care by 50 percent, our plan can save state and local governments approximately $900 million per year. Unnecessary and ineffective care accounts for 30% of the nearly $6.5 billion that state and local governments spend on non-administrative health care costs.
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Assure that every Minnesotan gets affordable, quality basic health care when they need it.

  • Require basic health care insurance coverage for all residents. Expect all Minnesotans to have the minimum basic coverage and make it possible for them to buy more extensive coverage if they choose.

Basic coverage would include preventive, primary, mental health, and catastrophic care as well as a prescription drug benefit.

Health care coverage would be available from a variety of sources, including private insurers, self-insured employers, Minnesota Care, Medicaid, Medicare, and others in the competitive marketplace.

Those who are financially able would be responsible for paying their insurance premiums. Those with less income would receive financial assistance through sliding-premium scales (such as under Minnesota Care) or refundable tax credits.

Insurance plans would include personal financial incentives for healthy behavior such as premium discounts for not smoking, exercising regularly, and maintaining a healthy Body Mass Index (BMI).

  • Review and modernize mandated benefit packages (including prescription drugs) based on evidence of their proven contribution to health outcomes.
  • Promote the creation of competitive insurance products - especially for small businesses and organizations and for those living in greater Minnesota - using larger pools to reduce premiums and prescription drug costs.

We estimate that this will cost state and local governments a net of approximately $550 million per year; the cost for adding coverage - estimated by the Department of Health at $660 million - will be offset by savings in uncompensated care.

The Medical Arms Race

Technology has been an important part of improving health care. Innovation in areas such as implantable medical devices and diagnostic tools has literally re-shaped the landscape of medicine. It has also contributed to the explosion in health care costs. Minnesota needs leaders who will bring this issue front and center, convene the appropriate stakeholders, and craft solutions that rein in the use of medical technology whose costs far outweigh their benefits - all without compromising the entrepreneurial spirit we need to continue making advances.

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Make it rewarding for consumers to take greater responsibility for their health and control of decisions about their care.

  • Provide insurance premium discounts for those individuals who do not smoke, maintain a healthy Body Mass Index (BMI), and/or regularly exercise.
  • Provide a financial incentive to those patients who comply with Best Care practices for preventive and chronic disease care (e.g., getting immunized, following prescribed diabetes treatment, etc.); this could include eliminating co-pays for these patients.
  • Offer all Minnesotans the option to choose insurance plans that combine a consumer- controlled health spending account with insurance for catastrophic coverage.
  • Encourage consumers to purchase long-term care insurance so that - in the event of a chronically disabling condition - they are able to preserve their independence and choose the care that best fits their needs; challenge and work with the long-term care insurance industry to improve its product offerings.

We estimate that there will be no net costs to state and local government due to savings from better health outcomes.

Make detailed information on health care quality and cost readily available to everyone.

  • Offer all Minnesotans the option to choose insurance plans that combine a consumer- controlled health spending account with insurance for catastrophic coverage.
  • Encourage consumers to purchase long-term care insurance so that - in the event of a chronically disabling condition - they are able to preserve their independence and choose the care that best fits their needs; challenge and work with the long-term care insurance industry to improve its product offerings.
  • Promote the use of the Internet, public libraries and other commonly-used sources as ways for consumers to access this information.

We estimate that there will be no net costs to state and local government due to savings from better health outcomes.

Implement the public health measures most beneficial to improving our health.

  • Implement a state-wide indoor workplace smoking ban.
  • Make tobacco excise taxes more commensurate with the actual cost of medical care for smoking-related diseases. Any increase in this tax would be offset by a corresponding reduction in the 2 percent health care provider tax.
  • Reinvigorate anti-smoking and anti-drunken driving initiatives.
  • Launch aggressive public health efforts aimed at curbing the obesity epidemic and increasing the number of Minnesotans with a written health care advance directive.

We estimate that this will not cause any net cost increase to state and local governments.

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The Big Payoff

Doing all of these things will allow Minnesota to improve health care quality, reduce costs, extend access to everyone AND use the savings (as much as $1.15 billion per year for state and local governments) to invest in the other three keys to Minnesota's long-term prosperity, security and economic competitiveness - education, transportation and the environment. If businesses, farmers, and organizations throughout the state pursued these same actions, they would reduce the economic burden of health care by 25 percent or about $7 billion. Doing so will greatly improve our competitive position in the global economy.

How We'll Work Together

Serious work on health care must deal aggressively with all three issues - cost, quality and coverage. To get it done, everyone must face facts honestly and courageously. Minnesota can fully harness the altruism, ingenuity, and creativity of the state's health care professionals, institutions, and companies and engage ordinary citizens as full team members in setting the standards and expectations for results.

The keys to successful implementation of such a significant reform effort are focus and collaboration. We will ask provider groups across the full spectrum of the health care system (e.g., community clinics, emergency medical services and first responders, public and private mental health agencies, hospitals, physicians, etc.) to play their part in reaching Minnesota's health care reform goals. We will also bring consumers, insurers, local governments, colleges and universities, business groups and others into the debate to find solutions needed to reform health care. And, we will proactively reach out to legislators from all parties who want to work together on this agenda. Everyone involved in health care must identify and commit to the contributions they will make to move this effort forward.

For our part, we will bring the authority and influence of our respective offices to move these reforms forward.

The Governor (Peter Hutchinson) will:

  • Put health care at the top of the state's agenda and keep it there
  • Appoint the best people - without regard to party affiliation - to head the Departments of Health, Human Services, Employee Relations, Commerce, etc.
  • Propose a budget and necessary policy changes to make these reforms happen
  • Work with legislators - regardless of party affiliation - to move these proposals through the Legislature
  • Travel the state speaking to Minnesotans about the merits of this plan and how they can help move health care reform from talk to action
  • Challenge the President and Congress to have the courage to correct the flaws in the Medicare and Medicaid programs that are hurting our citizens, penalizing our state, and bankrupting our country

The Lt. Governor (Dr. Maureen Reed) will:

  • Lead the Administration's health-care reform efforts (she will not be appointed to be the Commissioner of the Departments of Health or Human Services)
  • Convene the appropriate governmental, business, consumer, and health care industry leaders to collaboratively design the details of the reform
  • Regularly report to the public on the progress being made on both the implementation of the reforms and the overall goals of cost control, health improvement, and greater access

The rest of Team Minnesota will also work to move these reforms forward >
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The Attorney General (John James) will:

  • Lead the necessary state law and rule changes to make these reforms happen
  • Support the state's efforts to obtain the necessary waivers from the federal government to implement changes to the Medicaid program
  • Review relevant state contracts with insurers and health care providers and identify the changes needed to advance these reforms

The State Auditor (Lucy Gerold) will:

  • Engage with local governments (townships, cities, counties, and school districts) and their elected officials to make them active partners in the design and implementation of these reforms
  • Identify and share strategies for local governments to reduce their health care costs and report on their performance

The Secretary of State (Joel Spoonheim) will:

  • Create opportunities for all citizens to suggest and review changes that will result in a better health care system
  • Engage non-government organizations and groups to bring their voices, insights, and creativity into the debate

Finally, there will be accountability for results. The Hutchinson/Reed Administration will set benchmarks for each of these goals, report on their performance, and be held accountable for progress at the end of our first term. We'll get the job done before our second term ends in 2014.

Together, Minnesotans will make this happen and reclaim the spirit of being the "State That Works." Everyone will get more value for our health care and tax dollars, and we will have the resources needed to invest in the other things - education, transportation, and environment - that make our state great.