HMOs still hold too much sway in Minnesota health insurance

I have watched for many years as Minnesota's nonprofit health plans continue to victimize the citizens of this state by overbilling the taxpayers for their self-reported, unaudited and inflated cost claims. I have been amazed by the complete lack of any oversight by our state agencies and frustrated by the apparent lack of interest that the overwhelming majority of legislators has displayed in the health care crisis that now threatens to destroy any reasonable expectation of access to quality care at an affordable price.

I must say that the events and statements of the past week ("Self-insured to get sharp sting," Oct. 1), concerning the obscene premium increases and the complacency of Minnesota officials, have demonstrated that there may be no limit to what they think they can get away with.

Consider the assertion of Commerce Commissioner Mike Rothman that "things could have been worse." Really? How? Rothman described a period "when all health insurers in the state seemed prepared to abandon that segment of the market."

Let's take a look at that concept. Market segmentation is, in fact, the real problem. We allow the health plans to choose those segments that give them incredible profits and are funded by taxpayers, then we allow them to walk away from, limit and/or price-gouge the segments they don't like. Why? The whole theory of insurance is based on the pooling and spreading of risk. Our "nonprofit" health plans make billions of dollars in profits over time operating the state's Medical Assistance (Medicaid) and MinnesotaCare programs (all funded by taxpayers). They claim they are losing hundreds of millions in the individual market. We don't really know if this is true — we just take their word for it.

Rather than allowing them to engage in market segmentation, we could simply say that doing business in Minnesota is a package deal (contract bundling). We could require that these "nonprofit" corporations must absorb the losses associated with the individual market as a contractual condition of being allowed to run and profit enormously from Medicaid and other very lucrative government programs. The state can and should use its contractual leverage to achieve a result that benefits all of its citizens rather than permitting the HMOs to do whatever they please.

As always, the trade association for the HMOs acts as if the HMOs' role in this system is some sort of hereditary right. Oddly enough, our Minnesota Department of Commerce seems to encourage this point of view with a steady stream of justifications for the total lack of any regulatory intervention; justifications that are illogical and incorrect.

While I am strident in my criticism of our Democratic administration that permits this travesty to occur, I would be remiss if I failed also to criticize the statement issued last week by our Republican "leaders," with its non sequitur, nonsolution to these problems. They recommend making the tax credits offered through the MNsure exchange directly available to the consumers adversely affected by market segmentation. This would sabotage the Minnesota exchange (which is what our Republican "leadership" wants), but it overlooks the fact that most of the people harmed by these latest health-plan crimes don't qualify for tax-credit subsidies and, even if they did, there is no place for them to buy an affordable or useful insurance product. Neither political party is willing to address the real issue. The real issue is that the continued use of health plan managers in the administration and the operation of the Affordable Care Act is the reason costs are increasing and that the lack of any regulatory oversight simply guarantees that these increases will perpetuate and escalate.

Minnesota has required a bundled-contract (you can't pick and choose market segments or programs) approach with providers such as hospitals, doctors and other licensed health care providers for many years. We made it part of Minnesota law. It is found in Minnesota Statute 256B.0644. Health insurers claim that it applies to them as well. But it does not. Hospitals, doctors and other health providers each have only one type of license. Our nonprofit health plans have the option of two. They can be licensed as HMOs and/or insurance companies. Minnesota Statute 256B.0644 applies only to their HMO license. That's how and why health insurers can escape the bundled-contract requirement. They just use an insurance license rather than their HMO license. And that is why all the health plans use an insurance license when they sell products on the exchange. We let them do this. Now you know how it works. The only remaining mystery is why we allow it to continue.

David Feinwachs is a lawyer who teaches health law at the University of Minnesota and was for 30 years general counsel for the Minnesota Hospital Association.