MBP Letter: House File 1233, HHS Omnibus Budget bill

TO:  Members, Minnesota House
FR:   Beth McMullen, Health Policy Director
RE:   House File 1233, HHS Omnibus Budget bill

The Minnesota Business Partnership has some concerns with this bill. While we understand the difficulty of addressing program reductions within Health and Human Services (HHS), we also note the spending trend in this budget area is unsustainable in the long term. HHS spending is expected to continue to grow at a faster rate than the economy and projected state revenues.

Medical Assistance Surcharge on Hospitals

We have concerns with the surcharge on hospitals that would net an additional $100 million for the state. While we appreciate the idea of maximizing federal dollars, the impact of this surcharge on hospitals is uneven and may further the cost-shift to private payers. With so many moving parts to the implementation of the federal Accountable Care Act (ACA), we are concerned with the assumption that any increase in covered patients attributable to Medical Assistance expansion will help hospitals recoup any losses from this surcharge.

Cap HMO reserves

We are also concerned with the provision that would take approximately $47 million from private, nonprofit health plan revenues. A health plan company’s reserves are part of sound business practices and are governed by Minnesota statute to maintain solvency for the company and the individuals it serves. It is unclear how the state will distinguish reserves attributable to public programs versus private customers. It is also unclear how this will affect actuarial soundness of these plans. With the vast number of changes that will imminently be imposed on the market due to the federal ACA, we have concerns about the overall impact of this cap on HMO reserves.

Insurance mandates

We have concerns about the imposition of a new mandated benefit, related to autism coverage, on private consumers. As the cost of health care and health insurance continues to rise, employers already struggle to maintain coverage for employees. This mandate is particularly expensive because the state is responsible for its costs as the mandate lies outside the essential benefits set, resulting in eight-figure costs to taxpayers.  The mandate has not been shown to be cost effective and will increase health care costs. That is the wrong policy for Minnesota to pursue.

Basic Health Plan

We recognize potential in the state’s transition from MinnesotaCare to a Basic Health Plan (BHP) as permitted by the ACA. This transition would draw down hundreds of millions of dollars in federal funding. The state should, however, strive to cover MinnesotaCare populations entirely with this funding. It should be more than sufficient to provide equal care to current public program enrollees without additional revenue increases. The state should provide a full accounting of federal funding and transparency relating to its use and distribution over existing and continuing public program structures. The state should not use the creation of a BHP to expand benefits or increase costs to consumers and taxpayers.

This is not meant to be a comprehensive list of our position on the numerous proposals contained in this bill, but rather highlights of some of our main concerns.