Hard times stalling health spending

  • Article by: PAUL WALSH and WARREN WOLFE , Star Tribune staff writers
  • Updated: June 8, 2011 - 8:50 PM

Minnesotans have been holding back on paying for care during the recession, says a new state analysis of the financial situation.

Health care spending in Minnesota grew at the slowest pace in more than a decade in 2009, as patients coping with the recession lost insurance or cut back on doctor visits, state health officials said Wednesday.

Total outlays rose 3.8 percent to $36.4 billion -- about half the increase in previous years.

And spending in 2010 probably rose only 1.1 percent, according to the annual report by the Minnesota Department of Health. In fact, it may be 2013 before spending resumes its former growth rate, the report said.

"There is evidence that Minnesotans reduced their use of elective and even routine care [during the recession], a trend that mirrors national patterns in 2009," said Stefan Gildemeister, assistant director of the department's Health Economics Program. He cited several factors, including loss of private insurance coverage, rising out-of-pocket burdens and losses in household income.

Outlays in public programs such as Medicaid and Medicare grew much faster than private out-of-pocket spending -- 7.4 percent vs. 1.4 percent -- as the recession pushed more people onto the public safety net.

"That's the pattern we typically see when the economy is weaker, when more people lose jobs or lose insurance and depend on public programs," Gildemeister said. "When the economy improves, that will be reversed."

Spending below U.S. average

Minnesota continued to spend less on health care per person than the nation as a whole ($6,913 vs. $7,590).

Also, according to the report, health care spending in Minnesota accounted for 14.1 percent of the overall economy. Nationally, that figure was 16.5 percent.

Looking ahead, the report estimated that spending will grow at an average annual rate of 7.6 percent from 2009 to 2019 as the economy gains momentum and Minnesotans return to previous levels of coverage and health care utilization.

"Health care spending makes up an ever-increasing share of our economic resources in Minnesota, and we have to find a way to restrain that cost growth," Dr. Edward Ehlinger, Minnesota's health commissioner, said in a statement.

"One important way to do that is to ... make fundamental, long-lasting changes that help prevent Minnesotans from being pulled into the health care system in the first place."

Officials hope that health care reform efforts, passed by the Legislature in 2007 and by Congress in 2010, will keep costs from rising that fast, "but we're just not going to know for several years," Gildemeister said.

To read the report, go to www.startribune.com/a470.

pwalsh@startribune.com • 612-673-4482. wolfe@startribune.com • 612-673-7253

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