Health costs surge for Minnesota employers, employees

Health care spending for Minnesota businesses and their workers jumped 9.6% last year — nearly triple the national growth rate — as employers reported that old cost-cutting solutions have begun to run their course.

Minnesota was an early user of strategies such as moving workers to high-deductible health plans and enticing them to pick cheaper generic prescription drugs.

But there is only so much waste they can eliminate from the state's overall health care bill, said Deb Krause of the Minnesota Health Action Group, a business coalition, which reported the results Monday from its annual survey of employers regarding workplace benefits.

"We've already realized cost savings from these strategies and now we're seeing costs climb again because the heart of the problem — the cost of care itself — has not changed," Krause said.

This year's survey of 108 companies, which employ 269,850 people, showed a continued transition toward high-deductible health plans, which reward patients for making use of efficient and preventive forms of health care but require them to pay greater copays and deductibles for all other medical services.

For the first time, the number of businesses offering these plans exceeded those offering classic preferred provider plans, which charge higher premiums but impose lower copays and deductibles.

Cost-sharing by workers increased last year; they now pay roughly 27% of their health care expenses and their employers pay the rest, according to the survey results.

Employees paid for 24% of their medical expenses through workplace health plans a year earlier.

The survey also showed growing concern over the mental health of employees; 30% of employers reported it as a top focus area.

Diabetes was a top focus area for 32% of employers.

Many employers had responded with campaigns to reduce the stigma of mental illness, but hadn't done as much to address inequities in their benefits, such as adding mental health specialists to their networks, Krause said.

"They're focused more on the culture things" to make it easier for workers to ask for help, she said.

Increased competition in Minnesota's insurance marketplace hasn't had a major impact yet on health care costs, despite national carriers such as Aetna and UnitedHealthcare offering new plan options in the state.

While nearly a third of employers sought new health insurance plans for 2019 through open bidding, only 12% actually switched plans in the end.

Almost nine in 10 employers said increased competition has done little to reduce cost, increase access to physicians and other providers or improve the quality of medical care.

Krause said employers need substantially lower costs to switch plans and doctor networks on their workers, and that new competitors haven't been cheap enough to lure them away.

Jeremy Olson • 612-673-7744