When I read the Jan. 4 commentary “Can you heal me now?” my first reaction was that it was about time someone went after the abuses and excesses of Minnesota’s nonprofit health care system. I was surprised that the article mentioned our nonprofit HMOs in only the first sentence or two, while the majority of the piece indicted our nonprofit hospitals.

I worked on behalf of hospitals for almost 30 years, so I am familiar with the statistics quoted as well as the criticisms that were made against them, many of them well-founded. Everything from price-gouging (hospitals call it “cost-shifting”) to lack of charity care (which hospitals replaced with the ambiguous term “community benefit”) — hospitals are guilty of these things and then some. For example, currently, hospitals in Minnesota support the repeal of most of the medical record privacy protections that patients in this state have enjoyed for decades. Their support is driven by business interests rather than patient protection.

Many so-called “hospital leaders” appear to be greedy and uncompassionate. I do not defend these people, nor do they represent the values of people who work in hospitals. Hospitals are not simply corporations; they are also the people who provide care. They are the nurses, doctors, pharmacists, technicians, maintenance workers, food preparers and myriad other people who dedicate themselves to healing. And, yes, they “can heal you now.” These people I defend. I always have. I always will. But I am unable to defend our nonprofit HMOs. I fear that they will continue madly accumulating wealth, while people still struggle for access to health care. (Low premiums coupled with high deductibles mean lack of access.)

Hospital excesses may be measured in the millions of dollars, but nonprofit HMO excesses are measured in the billions. The most visible indicator of this excess is the money HMOs hoard in reserves. Since 2003, our nonprofit HMOs have increased their reserves by more than 100 percent. Most of this money comes from HMO participation in public health care programs like Medicaid. In these programs, the HMOs don’t provide insurance; they just act as disbursement agents. Remember that these HMO reserves are pure cash and don’t count other HMO assets such as investments in the stock market, real estate or subsidiary companies. That’s a much bigger cost to the system than hospitals.

One of the authors of the opinion piece is an investigator for the Minnesota Department of Commerce. While the Commerce Department doesn’t regulate hospitals, it does (in principle) regulate HMOs. Despite its required oversight of HMOs, the Commerce Department, in 2012, wrote a letter to state Sen. Sean Nienow, R-Cambridge, explaining that it doesn’t audit HMO management of public programs. Thus, I find it curious that a Commerce Department investigator would be so quick to blame hospitals, while appearing to ignore the obvious and overwhelming HMO improprieties. Isn’t the Commerce Department even a little curious about the HMOs they’re supposed to be regulating?

It’s important to remember that our nonprofit HMOs claim that everything they do with tax dollars in our publicly funded programs is a trade secret. Until last year, our state government went along with that claim. Hospitals, on the other hand, are required to file detailed cost reports for Medicare and to provide extensive financial information to the Minnesota Department of Health. There is some transparency for hospitals — there is none for HMOs.

Last year, we passed a law that said this HMO secrecy would end. The HMOs were given a one-year exemption from this new transparency requirement to work with our Department of Human Services to explain why secrecy is necessary or desirable. A report was supposed to have been given to the Legislature in December. That didn’t happen. Now the state has hired the Blue Cross Professor of Health Insurance at the University of Minnesota to evaluate the HMO claim that revealing HMO use of tax money will increase prices. This should be an interesting legislative session.


David Feinwachs was the general counsel for the Minnesota Hospital Association for nearly 30 years. He teaches health care law at the University of Minnesota.