Do the Right Thing: Minnesota's Health Right Program

Abstract

By the spring of 1992 a clear consensus had emerged among politicians, policy makers, and pundits in Washington, D.C. The nation's health care system was dying. Escalating costs, combined with diminishing access for the poor and underinsured, were strangling the system. Individual states have been forced to bear the dire consequences of federal inaction. A few states--Massachusetts, Oregon, Vermont, New York, and Minnesota--have decided they can no longer wait for the federal government to act and have started down the road of health reform on their own. Massachusetts, Oregon, and Minnesota have taken the biggest steps toward systematic reform. Their efforts merit attention since they are likely to serve as both a stimulus and a template for other states and the federal government. In April 1988 Massachusetts enacted a plan to provide universal access to all state residents through a play or scheme. Small businesses were mandated by law to provide health insurance to their employees, but the plan collapsed in the face of economic recession. The business community asked for and received a delay in all mandated reforms until 1995. Oregon took a bold step toward reform two years later with its plan to increase access for the poor and uninsured through a combination of mandates on small businesses to provide insurance and a scheme to increase Medicaid eligibility by rationing services explicitly for those in Oregon's Medicaid program. The decision to increase access for the poor through limits in benefits coverage elicited a storm of criticism over the morality of rationing health care for the poor. The controversy delayed the requisite federal waivers for implementing Oregon's health reform plan. The most recent effort to effect health care reform is occurring in Minnesota. On 21 April 1992 the governor signed into law a health care reform plan called HealthRight. This complex legislation (185 pages, single-spaced!), adopted with broad public and bipartisan support, represents a novel approach to the twin problems of skyrocketing costs and inadequate access. Unlike Massachusetts, the Minnesota plan does not mandate coverage or require small business to foot the bill for health insurance. Unlike Oregon, HealthRight does not explicitly ration care for the poor to expand access. Instead the Minnesota plan seeks to increase access by implementing a number of structural and institutional reforms to contain costs. What Does HealthRight Do? HealthRight does not entitle any Minnesotan to health care. The legislation seeks to expand access to health care by making health insurance more affordable. Those who are uninsured--roughly 370,000, or 8.6 percent of the population, will be able to buy health insurance at subsidized prices. Money for subsidies is obtained from new taxes on health care providers, including doctors, dentists, drug wholesalers, hospitals (2% added to their bills, with Medicaid and Medicare revenues exempted), HMOs, and not-for-profit health services corporations such as Blue Cross (1% on premiums). In addition, there is a five-cent increase in the cigarette tax. The amount of subsidy available is linked to personal income. A family of three earning $10,000 a year will pay roughly $12 a month and receive a state subsidy of $300 a month toward the purchase of insurance. A family of three earning roughly $30,000 a year can buy into the plan by paying approximately $300 a month without any subsidy. The benefits covered under the subsidized insurance plan are very limited. Those who purchase statesubsidized insurance are covered for all outpatient physician and hospital services, hearing aids, immunizations, well child checkups, and ambulance services. Preventive dental care, eyeglasses, and prescriptions are available with small copayments. There is very limited coverage for mental health, chemical dependency, and in-patient hospital care ($10,000 cap per year). …