Insured Minnesotans' health care cost $581 more per person last year

Rising drug costs drove a $581 per capita increase in total medical spending for Minnesotans with private insurance last year — a trend that put a strain on household incomes and is likely to push premiums higher.

That 7% increase in 2022 followed a 12% increase in 2021, according to Thursday's annual report by MN Community Measurement. Total spending includes payments by insurers and out-of-pocket by patients.

Both numbers reflect a bounce back from 2020, when spending declined. That year, the pandemic compelled people to delay surgeries and avoid routine care at doctor' offices. But the numbers also reflect a worsening long-term trend, because spending increased more on average over the arc of the pandemic than in prior years.

Yearly spending per privately insured patient in Minnesota rose from $5,904 in 2014 to $8,832 last year, the report showed.

Some increase is inevitable, but the trajectory suggests that clinicians aren't preventing chronic diseases such as diabetes and then managing them cost effectively once they occur, said Julie Sonier, president of MN Community Measurement, a nonprofit that seeks to improve health care by publishing clinical data.

"There is a ton of room for improvement in both of these areas," she said. "We shouldn't just sit back and say, 'Well, you know, health care costs grow 5 to 6 percent a year.' I mean, they do, but that's faster than the economy historically grows."

Pharmaceutical drug costs increased 17% in 2022, when a new class of weight-loss drugs emerged.

Blue Cross and Blue Shield of Minnesota saw a 63% increase in spending on this class of drugs in the 12-month period ending in September. Hennepin Healthcare pulled coverage of those drugs for weight-loss purposes from its worker health plans for 2024 after spending millions more than expected on them in 2023.

The data showed increases in emergency room visits and outpatient surgeries, but declines in primary care visits and hospital admissions.

Hospitals have been reporting problems discharging patients from inpatient beds, because there are no openings for them in nursing homes or rehab centers. Sonier said the decline in admissions is probably a result of this discharge problem and the shortage of nurses and other caregivers that has reduced hospital capacity.

"What if somebody went to the emergency department and there was no bed in the hospital to which they could be admitted?" she said.

The report exposed how different clinics have widely varying prices for the same procedures. Private insurers paid some medical groups $348 for common chest X-rays in 2022 while they paid others $49.

It also showed variations in spending by the clinics at which patients received primary care. Yearly spending per patient topped out at $14,832 for those who received primary care from the Mayo Clinic in Rochester, compared to $7,332 for patients of Bloomington-based HealthPartners.

Mayo has historically been the most expensive in this annual comparison, but its leaders have said it is deceptive because of the way the study assigns patients to clinics. Those assigned to Mayo include people who are receiving primary care in Rochester while also receiving specialized treatments and tests for complex and rare diseases.

Mayo isn't alone on the high-cost spectrum. More than 20 other medical groups had per-patient costs that MN Community Measurement listed as above the norm.

Sonier said providers seem to be ordering fewer unnecessary procedures than in past years, so much of the variation is in how much they are charging for the necessary ones. The study holds primary care clinics responsible for the cost of care they provide to their patients, but also the cost of care provided by specialists.

"The idea is that primary care is serving as kind of a quarterback and coordinating care for people," she said.

Effective diabetes management, for example, can delay the need for expensive insulin injections or disabling conditions that require surgeries or costly therapies.