Minnesota's health care system has driven down per-person spending on some of the most prevalent and costly chronic diseases, according to a new report designed to track the state's progress on looming health care challenges.

The state's insurance programs, including Medicaid, MinnesotaCare and state employee insurance, did so well — compared to projections — that they triggered a $50 million bonus payment under a 2015 state law designed to reward them for progress on curbing the growing spending burden caused by chronic health conditions.

The overall health savings, however, are getting erased because more and more people are being diagnosed with diabetes, hypertension and other chronic conditions.

Because of that trend, Minnesota spending on the group with the most chronic conditions — those 60 and older — will jump 65 percent between 2014 and 2023, going from $9.8 billion to $16.1 billion, according to the study released by the Minnesota Health Department on Monday.

"Even if we are more successful at controlling per-person spending, the increase in prevalence that we have been observing is going to ruin us in the long term," said Stefan Gildemeister, state health economist.

The number of Minnesotans with chronic conditions increased for all diseases studied, except for declines in smoking and secondhand smoke exposure. About 35 percent of insured Minnesotans had at least one chronic condition, with more than half of those having multiple conditions. About 80 percent of those over age 60 are affected. "It is not just the population that is aged," said Gildemeister, "but we see within each age group, people are getting sicker and that, combined with health care inflation, made total spending in 2014 grow while per person spending actually fell."

The study, which was based on an analysis of health insurance claims submitted to the state by most of the major health insurers, looked at trends between 2009 and 2014. Although spending grew, it actually was $209 million below the projected trends.

"The $209 million in savings is a heartening sign and shows the incredible work that all of the health care providers and their community partners are doing [for] Minnesotans," said Dr. Rahul Koranne, chief medical officer of the Minnesota Hospital Association.

Lower hospitalization rates

Most of the savings were achieved through lower hospitalization rates for the chronic diseases, even as medication costs went up.

"The hospitals and the clinics and the nursing homes especially in Minnesota are doing an exemplary job in coordinating the care of the patients we serve," said Koranne. "We need to ask the question why are the prices of these generic drugs and other drugs going up astronomically?"

Even as per-person spending fell for diabetes and hypertension, two of the diseases studied, prescription drug costs for both diseases increased, offsetting some of the savings.

For diabetes, per-person medical costs dropped 14 percent, but pharmaceutical costs increased 37 percent between 2009 and 2014. For hypertension, medical costs went down 6 percent and drug costs increased 11 percent.

"This data is super important … and we need to leverage [it] to look at the role of prices and more about price transparency and more on spending by provider and provider type," said Lynn Blewett, professor of public health at the University of Minnesota.

"The real value will come when we can show the value of specific interventions both on the prevention side and on the prices of health care, especially prescription drugs."

Under the law passed by the Legislature in 2015, the Health Department will conduct the analysis annually. For this first report, the state's public insurance programs need to have shown that they spent $50 million less than projected for chronic conditions. According to the analysis, Medicaid, MinnesotaCare and state employee health insurance came in below projections by a range of $53 million to $68 million.

Those results will trigger the transfer of $50 million from the state's general fund into the Health Care Access Fund, which helps pay for MinnesotaCare, the state's insurance program for the working poor.

The report does not answer many of the "why" questions behind the spending trends, but Gildemeister said the findings will become more valuable as future reports are completed.

"It is too early to celebrate success," he said. "We will have to come back and look at it again."

Glenn Howatt • 612-673-7192