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Do the right thing: Minnesota's HealthRight program.

By the spring of 1992 a clear consensus had emerged among politicians, policy makers, and pundits in Washington, D.C. The nation's health care system was dying. Escalating costs, combined with diminishing access for the poor and underinsured, were strangling the system.

Individual states have been forced to bear the dire consequences of federal inaction. A few states--Massachusetts, Oregon, Vermont, New York, and Minnesota--have decided they can no longer wait for the federal government to act and have started down the road of health reform on their own. Massachusetts, Oregon, and Minnesota have taken the biggest steps toward systematic reform. Their efforts merit attention since they are likely to serve as both a stimulus and a template for other states and the federal government.

In April 1988 Massachusetts enacted a plan to provide universal access to all state residents through a "play or pay" scheme. Small businesses were mandated by law to provide health insurance to their employees, but the plan collapsed in the face of economic recession. The business community asked for and received a delay in all mandated reforms until 1995.

Oregon took a bold step toward reform two years later with its plan to increase access for the poor and uninsured through a combination of mandates on small businesses to provide insurance and a scheme to increase Medicaid eligibility by rationing services explicitly for those in Oregon's Medicaid program. The decision to increase access for the poor through limits in benefits coverage elicited a storm of criticism over the morality of rationing health care for the poor. The controversy delayed the requisite federal waivers for implementing Oregon's health reform plan.

The most recent effort to effect health care reform is occurring in Minnesota. On 21 April 1992 the governor signed into law a health care reform plan called HealthRight. This complex legislation (185 pages, single-spaced!), adopted with broad public and bipartisan support, represents a novel approach to the twin problems of skyrocketing costs and inadequate access.

Unlike Massachusetts, the Minnesota plan does not mandate coverage or require small business to foot the bill for health insurance. Unlike Oregon, HealthRight does not explicitly ration care for the poor to expand access. Instead the Minnesota plan seeks to increase access by implementing a number of structural and institutional reforms to contain costs.

What Does HealthRight Do?

HealthRight does not entitle any Minnesotan to health care. The legislation seeks to expand access to health care by making health insurance more affordable. Those who are uninsured--roughly 370,000, or 8.6 percent of the population, will be able to buy health insurance at subsidized prices. Money for subsidies is obtained from new taxes on health care providers, including doctors, dentists, drug wholesalers, hospitals (2% added to their bills, with Medicaid and Medicare revenues exempted), HMOs, and not-for-profit health services corporations such as Blue Cross (1% on premiums). In addition, there is a five-cent increase in the cigarette tax.

The amount of subsidy available is linked to personal income. A family of three earning $10,000 a year will pay roughly $12 a month and receive a state subsidy of $300 a month toward the purchase of insurance. A family of three earning roughly $30,000 a year can buy into the plan by paying approximately $300 a month without any subsidy.

The benefits covered under the subsidized insurance plan are very limited. Those who purchase statesubsidized insurance are covered for all outpatient physician and hospital services, hearing aids, immunizations, well child checkups, and ambulance services. Preventive dental care, eyeglasses, and prescriptions are available with small copayments. There is very limited coverage for mental health, chemical dependency, and in-patient hospital care ($10,000 cap per year). In weighing the needs of those now uninsured against the importance of cost containment, benefits are strongly and intentionally skewed toward preventive and maintenance services. Those who have only HealthRight insurance but incur catastrophic costs must still "spend down" to the poverty level to qualify for Medicaid.

HealthRight also expands access to the uninsured and underinsured by requiring private insurers to offer cheaper health insurance plans to small businesses and individual purchasers. This is done by eliminating or restricting insurance rating practices based on gender, age, geography, and preexisting disease conditions in favor of community rating practices. Pooling larger groups should enable companies to get lower premium rates. The HealthRight plan prohibits failure to renew policies for the sick or disabled and requires group policies to be open to all employees. The state also creates a buying pool for employers and access to a reinsurance association for large claims to give small business more clout in negotiating premium rates and benefits coverage.

Greater access for the underinsured and uninsured is also encouraged by a number of other reforms aimed at containing costs. A newly created state commission has the authority to collect information on prices and large capital investments in a standardized manner. A health care analysis unit has been created to collect blinded data on every patient in the state in order to promulgate outcome-based practice guidelines that can be used both to modify inefficient provider behavior and to serve as practice standards for use in defending against charges of malpractice. The state health commissioner has the power to limit overall spending on health care to 10 percent annually based upon the targets, findings, and strategies recommended by these bodies. The state will offer its own managed care plan for those on Medicaid and other state programs.

HealthRight further expands access by making Medicare assignment mandatory and eliminating balanced billing. All hospitals, doctors, dentists, and HMOs must accept Medicaid and HealthRight patients if they wish to participate in workman's compensation or the state's high-risk reinsurance pool, or to sell their services to state employees.

Minnesota is the first state to try to expand insurance coverage using a variety of substantive economic and structural reforms. HealthRight does not ration existing benefits. The plan does not impose mandates on business. Nor does it provide every state resident with a right to health care. HealthRight tries to redress or eliminate financial barriers to access in the existing system by driving down costs for both the uninsured and the underinsured.

Is HealthRight Right?

The most innovative element of HealthRight is the use of what amounts to health excise taxes in combination with a variety of other cost-containment measures to generate revenue that will lower the cost of insurance. Many providers are extremely unhappy with the imposition of health excise taxes, arguing that they represent an unfair burden on providers and the sick. But ultimately, at least part of the cost of provider taxes will be passed along to third-party payers, representing a transfer of resources form the insured to the uninsured. Taxing providers and insurers rather than using mandates on small business, as proposed in Massachusetts and Oregon, serves as a powerful incentive to providers to become more efficient and to restrain increases in prices and costs.

The insurance, structural, and regulatory reforms imposed in the legislation are aimed at lowering the cost of private insurance for those who obtain it through their employment. The collection of information on the prices and outcomes associated with care, with a fixed limit on overall annual price increases, should allow for the more prudent purchase of services in the years to come while restraining escalating overall costs.

If HealthRight is economically sound, is it ethically sound? This is more difficult to assess, since there are many values against which the legislation can be evaluated. Minnesota claims to want to help the uninsured and underinsured obtain greater access to health care, so it seems fair to assess the morality of HealthRight on the basis of whether it can meet this critical goal and whether the benefits and burdens of increasing access are distributed fairly.

HealthRight does provide access to many more people but--as currently designed and funded--does not provide universal access to needed health care to all Minnesotans. It makes the purchase of insurance more attractive to individuals and families by lowering cost. But some families and small businesses may still choose not to buy insurance even if the price is significantly reduced. Those who are self-employed or who lack insurance may still choose to take their chances and go without insurance. Small business may not find the price of insurance low enough to be attractive or affordable.

There is a further problem in lowering the cost of insurance to broaden access to care. Access depends upon the availability of competent providers and the quality of care they can provide. While HealthRight takes some tentative steps toward assuring the availability of providers and improving the quality of care, it does not guarantee either.

Finally, HealthRight tolerates significant differences in the insurance coverage that is available to Minnesotans, depending upon how they receive it. Those who buy the newly created, subsidized insurance will have benefits that are far less comprehensive than are available to those on Medicaid or Medicare, or to those who are enrolled in state-regulated private insurance plans or private managed-care plans. The uninsured poor will find it easier to insure against the costs of preventive and maintenance health care services, but they will have limited access to acute and chronic institutional services.

The most persuasive moral argument in favor of the approach Minnesota has taken is that the reforms do not ask sacrifices of the poorest of the poor to increase access for others. HealthRight requires those who have coverage to fund greater access for those who lack it. The plan also relies on the exercise of individual responsibility rather than mandating the purchase of insurance. Most importantly, Minnesota is premising its reforms on the belief that all participants in the health care system ought to bear some of the burden of using existing resources to generate funds to significantly lower the cost of insurance for the uninsured and underinsured. Voltaire said, "The best is the enemy of the good." Minnesota is trying hard to do good. Time will tell whether the state has gotten it right.
COPYRIGHT 1992 Hastings Center
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Caplan, Arthur L.; Ogren, Paul A.
Publication:The Hastings Center Report
Date:Sep 1, 1992
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