Opinion editor’s note: Star Tribune Opinion publishes articles combining national and local Commentary Every day, online and in print. (Click to contribute here.) This article is a response to the June 4th Star Tribune Opinion. solicit submissions Read the full answer to the question “Where does Minnesota go from here?” here.
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The 2023 Minnesota legislature may be remembered as the year Minnesota began to question its 50-year-old approach to healthcare cost containment. This will depend on the outcome of several Congress-ordered reports and Congress’ reaction to them.
The report should examine what role administrative costs play in driving up health care costs in Minnesota. For the past 50 years, Congress has been oblivious to the role administrative costs have played in healthcare inflation. Starting with the HMO Act of 1973, legislation was enacted that was supposed to reduce health care costs, but it also pushed up administrative costs (and thus prices) and encouraged mergers within the insurance and hospital sectors. pushed up medical costs.
A new approach awaits. According to the latest federal data, Minnesota has one of the highest per capita health care costs in the nation, largely thanks to unproven cost-containment policies.
Over the past half-century, Congress, backed by six committees, has adopted policies based on a misdiagnosis of health insurance inflation. Total spending in all sectors of the economy is the product of two numbers such that the product of price and quantity equals total spending. Congress has long assumed that the problem to be addressed is excess quantity, not excess price. But evidence shows Congress backtracked. In other words, the overpriced price of everything (insurance, hospital bills, doctor’s fees, medicines, etc.), rather than “overuse” of health care, is the primary reason for the high cost of health care in the United States. The United States was compared with other countries, and Minnesota was compared with other states.
Yes, some overuse exists, but they should be addressed with carefully calibrated solutions rather than HMO chainsaws, Congress’ weapon of choice against rising healthcare costs for half a century .
The high prices are primarily due to the very high administrative costs of the Byzantine system and the high concentration of the entire healthcare system in the hands of a relatively small number of insurance companies and hospital and clinic chains. And ironically, both of these issues—the exorbitant administrative costs of consolidating the health care system and the madness of mergers—are precisely the “overspend” that Congress has adopted to curb allegations of “overuse” of insurance purchases. Solution” made it even worse. Corporate influence and control over physicians. It turned out that the congressional prescription was worse than the disease.
In the last Congress, Congress enacted legislation requiring the following reporting on Minnesota’s administrative costs:
- In a report to be submitted on March 1, 2025, the Ministry of Health recommends “a set of viable strategies to deal with the volume and growth of government spending.”
- A “regular report” from the new Center for Adequate Healthcare Costs within the Ministry of Health lists its research on, among other things, “unproductive administrative spending.”
- The Department of Health and Human Services (DHS) plans to file on January 15, 2026, on how much money Minnesota could save by bypassing HMOs currently participating in Minnesota’s Medicaid and Minnesota Care programs. report (the report should show that nearly all of the savings are from Minnesota, which reduces administrative costs incurred by HMOs).
- A Ministry of Health study on how much universal coverage under the Single Payer Scheme will cost is scheduled for January 15, 2026 (the Single Payer Scheme is primarily based on money spent by insurance companies, etc.). reduce healthcare costs by reducing administrative costs) to combat advertising, restricted patient choice of physicians, physician second-order decisions, and attempts by the insurance industry to curb the “overuse” of healthcare services. (e.g., funds spent by doctors and hospitals on
Congress approved the fifth Commerce and Human Services Department report on “different models” of “public options” to be submitted on February 1, 2024. Although the law requiring this study does not explicitly require the report to analyze a “model” that does not include insurance companies (i.e. the version in which DHS bypasses HMOs and pays doctors and hospitals directly). , the implication exists. A public option to bypass insurance companies would reduce administrative costs enough to reduce premiums by about 15%.
The legislature that enacted these laws should be commended. Whether or not to write an unbiased report grounded in research rather than the collective thinking that has dominated Minnesota policymaking for half a century, an obsession with alleged overuse of health services, is in charge of the report making. It depends on government agencies.
Kip Sullivan is a member of the Minnesota Health Care for All Advisory Board.
