I’ve been involved in health and human services for nearly 40 years and understand how important health care is in our daily lives. That’s why it’s imperative that health policy discussions are based in fact and that they reflect the nuances embedded throughout the system.


Health care financing and regulation systems are complex, there’s no doubt about it. This often leads to inaccurate information and misguided comparisons. The Jan. 7 commentary “There are hospitals, and then there are HMOs” suffers from both problems.

The writer wants you to believe that HMO reserves and hospital margins are the same thing. In fact, these two very different financial terms are sometimes confused. Margin is the money left at the end of the year when all bills are paid — private business calls this a profit. Reserves are set aside, like the state of Minnesota’s rainy day fund, to cover unexpected expenses or any losses at the end of the year. Reserve funds come from many sources, including income from investments and property sales. Adequate HMO reserves ensure that our care is paid for in today’s unpredictable health care environment.

When looking at HMO financial statements, it is easy to miss that, contrary to what the commentary claimed, HMO reserves are not cash on hand. In fact, more than half of what appears on paper to be HMO reserves is actually money the state has yet to pay the HMOs. Many policy wonks are familiar with the education funding shift that helped the state balance its budget in the past. Well, there is an HMO shift that totals more than $1.3 billion.

It’s also important to note that HMOs are required by law to maintain strong financial reserves. The amount required is linked directly to the cost of providing care and enrollment — as enrollment grows and the cost of care increases, so must the amount in reserves. HMO medical care spending on state public program members alone has increased more than 200 percent since 2003.

The commentary also attempts to discuss HMO regulation. The author incorrectly asserts that the Minnesota Department of Commerce regulates HMOs. By law, HMO regulation is through the Minnesota Department of Health (MDH). In addition, HMOs also must follow the rules and contract requirements set forth by the Minnesota Department of Human Services (DHS), Medicare, Medicaid and throughout state law.

Finally, the commentary claims that the state has no information on how tax dollars are spent for Minnesotans with health care coverage through state public programs. The fact is the state receives detailed information, including costs, each month on care these members receive. Common sense says this level of detail can’t be public because individuals could be identified.


Julie Brunner is executive director of the Minnesota Council of Health Plans.