Editorial: Push to harness state Medicaid costs

(Note: For additional background, see report titled, "Minnesota's Healthcare Imperative")

Star Tribune

A group of leading Minnesota insurers and providers deserve credit for voluntarily tackling one of the state's most daunting budget challenges: reining in the runaway cost of state medical programs for the elderly, the disabled and the poor.

While the group offered up clear-eyed, if painful, prescriptions in a report last week -- namely, benefit cuts and tax increases on tobacco and alcohol -- it undermined its hard work by not addressing these important questions:

•How much would the health plans profit from their proposed shift of more Medicaid patients into insurer-run managed-care programs?

•Could the health plans themselves trim operational or administrative costs to provide savings to the state?

Before Gov. Mark Dayton and the Legislature act on any of this report's recommendations -- before policymakers turn to cutting benefits for our most vulnerable population -- every option must be explored. Nonprofit insurers are fair game for more scrutiny.

Lawmakers should also join the push by Rep. Jim Abeler, R-Anoka, to determine whether competitive bidding by insurers for this business could help drive down costs.

Insurers said this week that they are open to that idea.

The insurers' self-interested recommendation to put more disabled Medicaid patients into managed care should bring to a head a long-simmering debate at the Capitol over whether the plans provide enough information on how they spend program funds.

The Minnesota Medical Association and legislators such as Sen. John Marty, DFL-Roseville, have argued for more disclosure.

Insurers understandably point to the reams of information they must provide. A quick analysis by an editorial writer found 1,094 required annual reports or information disclosures.

Considering that the state has outsourced management of some Medicaid patients for nearly 20 years, it's shocking that there has been no deep, comprehensive analysis of whether something that was supposed to be a pilot program works in terms of cost and quality.

It's even more unsettling considering how much money is now spent on managed-care programs.

According to the report, 61 percent of Minnesota's Medicaid enrollees were in managed care as of June 2009. In 2010, Minnesota plans were paid $3.1 billion in state and federal funds to manage public health programs.

Fee-for-service spending for public patients totaled $4.8 billion.

Administering state government plans is now a bigger part of insurers' portfolios than is commercial business. In 2009, it was also more profitable -- something the report should have disclosed.

An overdue report from the state Department of Human Services may soon answer key questions about health plans' disclosure and spending on public managed care programs.

If that analysis isn't satisfactory, legislators need to consider a much broader audit.