Minnesota's health care spending brakes sharply

  • Article by: JEREMY OLSON , Star Tribune
  • Updated: December 12, 2013 - 9:36 PM

Between 2010 and 2011, it grew a comparatively slight 2 percent.

Spending on doctors, drugs and other medical care in Minnesota grew a tiny 2 percent from 2010 to 2011, capping a three-year period that marked the slowest growth since the state started keeping track in the mid-1990s.

The slowdown was so dramatic that it leaves the state in a position to pay back $50 million spent on money-saving health care reforms it created in 2008 — reforms that appear to have helped contain medical outlays.

Minnesotans, along with their public and private insurers, spent $38.2 billion on health care in 2011 — well below the spending projection of $40.5 billion, according to an annual report released Thursday by the state Department of Health.

“This … confirms Minnesota’s reputation for leadership and innovation in the health care sector,” said Dr. Ed Ehlinger, state health commissioner.

Minnesota was ahead of the curve nationally in 2008 when it invested in a variety of reforms, including the creation of “health care homes” to guide patients to the safest and most cost-effective medical providers and grants that allowed communities to expand access to fitness programs and healthy food.

State officials cautioned Thursday that the reforms can’t take full credit for putting the brakes on spending. Minnesota was still emerging from the recession in 2011, when jobless and uninsured residents were probably deferring dental checkups, doctors’ visits and other medical services because they couldn’t afford them.

The state nonetheless estimated that the reforms were responsible for $99 million to $414 million in savings when comparing actual health care spending in 2011 to projected spending.

Either way, the savings exceeded a key amount: $50 million. That was what the state borrowed from its Health Care Access Fund — which normally pays for the MinnesotaCare health plan for the state’s working poor — to help pay for its wave of reforms. The state is statutorily required to repay that money whenever the Health Department’s annual spending report shows $50 million in savings that are attributable to the reforms.

Third-healthiest state

A second cause for celebration Thursday was a separate report, by UnitedHealth Foundation, showing that Minnesota is the nation’s third-healthiest state. Minnesota finished third last year as well, and has typically ranked in the top five or six states.

The widely watched ranking found that Minnesota particularly stood out for its low rates of deaths that were premature or related to heart problems, and the low number of days Minnesotans spend in poor health.

The high ranking was achieved even as Minnesota spent less per person on health care ($7,145) than the rest of the nation ($8,175), according to the 2011 spending report. The state saw a decline in spending on prescription drugs, as health plans steered Minnesotans to generic alternatives and fewer high-priced new medications hit the market.

Spending on dental care grew more slowly than on other services such as hospitals stays or physician visits. That likely is a sign of the impact of the recession, because fewer people have comprehensive dental coverage and many defer checkups and other dental care first when money is tight, said Stefan Gildemeister, state health economist.

How much the reforms helped keep spending down will show in the figures that the state eventually releases for 2012 and 2013, when the economy was on the upswing, he said. “If [an acceleration in spending] doesn’t occur in, say, 2013, then I think we learned something important.”

Other reports with more recent data, though, suggest that spending did accelerate after 2011. The Minnesota Council of Health Plans reported this past March that health insurers in the state spent 5 percent more on health care in 2012 than in 2011.

Gildemeister said it’s important to remember that although the rate slowed, the spending trend is still up; Minnesota’s health care spending has doubled since 2000.

“We’re celebrating only that it’s 2 percent [growth],” he said, “and not 6 percent.”

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