Health plans will return extra profits to the state

In part of the continuing change to Minnesota's business with health insurance plans, the state announced Tuesday that for major health plans agreed to a 1 percent cap on their profits on state business.

The one-cap means that the plans -- BlueCross BlueShield, HealthPartners, Medica, and UCare -- will return any profit above 1 percent to the state next April.

The change in Minnesota's $3 billion annual health care payments could mean a pay off for the state at a time when its budget is facing a $5 billion deficit. In announcing the deal, the governor's office did not include any estimate of how much money would be returned but noted that one of the plans -- UCare -- had already announced it would give $30 million back to the state this year.

Human Services commissioner Cindy Jesson said she didn't have any exact figures for how much the agreement would mean to the state's bottom line. But she said had the agreement been in place last year it would have meant a give back of about $85 million.

For weeks, the Dayton administration had urged plans to voluntarily give back to the state. Jesson said that approach had not resulted in a pay off so the administration switched its approach to ask plans to agree to the contract amendment and the one-time cap.

After some quick, intense, neogitations over the last four days, which included a meeting between Jesson, Gov. Mark Dayton and the insurance companies' executives Monday, the plans all agreed to the one time cap.

Earlier this month, Dayton revamped the state's health care strategy by ordering new competition for businesses that want to cover half a million Minnesotans.

"This announcement comes following health plans, on Friday, reporting collective profits of 3.8% made on its 2010 contracts for taxpayer-funded public health programs. Profits had increased substantially from 2.6% in 2009 to the 3.8% profit reported for 2010," the governor's office said Tuesday.

"HealthPartners has a long history of partnership with the state. We have made significant contributions through our efforts in care delivery, the General Assistance Medical Care program, as well as participation in the Coordinated Care Delivery system and our commitments to issues such as mental health and disparities. We believe this one-time contract amendment is appropriate given the state's current financial situation," HealthPartners said in a statement.

The plans may have some self-interest in the agreement. With the state facing a deficit -- and possible deficits in the years to come -- lawmakers and the governor have looked at trimming back its health care spending to close the budget gap.

TakeAction Minnesota, a Democratic-leaning coalition of groups, applauded the agreement but said it did not go far enough.

"The new agreement stops short of addressing the years of overpayments into the state's health plans, including the significant HMO profits reported for 2010. Years of overpayments have allowed the health plans to amass $2.5 billion in reserve funds. Today's agreement leaves those funds untouched," the organization said in a statement.