Consolidation of health plans and providers is harming Minnesota's healthcare system rather than healing it as promised in state reform laws, a community activist group charges.
Higher-than-average healthcare costs are one consequence of consolidation, Minnesota COACT contends in a report released last week. Limited competition also is threatening quality and stifling political debate, said Kip Sullivan, its research director.
"Minnesotans have been bamboozled,"he said. "When they learn that the system is not what they've been told, I think we'll see democracy work."
COACT, which stands for Citizens Organized Acting Together, supports a system in which six state boards would contract directly with providers for healthcare services for all residents.
Its criticism of the Minnesota system may be of interest elsewhere. Many providers and payers say that someday only a few integrated systems will operate in their communities.
Hospital systems, health plans and the Minnesota Health Department disagree with COACT's conclusions. "Big is not necessarily bad," said a spokesman for Blue Cross and Blue Shield of Minnesota. As proof that vigorous competition survives in Minnesota, he pointed to the Blues' rate cuts for small-business policies and its stable rates for supplemental Medicare policies.
Minnesota healthcare reform laws helped fuel rapid consolidation among health plans and hospitals. In a striking example, the Twin Cities' largest provider merged in 1993 with the state's second-largest HMO to form Allina Health System (Dec. 13, 1993, p. 3).
Since the 1992 enactment of MinnesotaCare, four health plans have gobbled up a growing percentage of the insured market, COACT said. The plans-Allina, the Blues, Health Partners and PreferredOne-covered 79.9% of insured Minnesotans in 1994, up from 64% in 1992, it said.
Their market power is so extreme that hospitals and physicians refuse to publicly criticize health plan companies, COACT said.
Market power also lets plans overcharge consumers, COACT said.
It cites as evidence three class-action suits filed in 1994 and 1995 over plans' billing practices. In June, Blue Cross agreed to reimburse its subscribers a total of $3.9 million and to no longer base copayments on providers' retail charges instead of the discounted fees the insurer pays. Similar suits against HealthPartners' MedCenters Health Plan and Allina's Medica are pending.
Big plans, COACT charges, also use their influence to bludgeon smaller rivals. For example, COACT quotes an anonymous therapist who alleged that Blue Cross began a claims audit to discredit a clinic competing for a contract. Blues spokesman Karl Oestreich declined to comment on the allegation because he hadn't read the report.
The thrust of COACT's report is that the market control of a few plans leads to high costs and sliding quality.
It points to a HCFA study showing that Minnesota's per-capita healthcare spending was 5.2% higher than the U.S. average in 1991. Other studies that show low premiums in the Twin Cities reflect only the costs of large employers, COACT said.
Meanwhile, reports of plans vetoing patient-provider decisions are more frequent. So are complaints that provider workloads are rising, it said.
Another product of plans' market power is their significant political power, COACT said. Plans possess undue influence over the health department and other government agencies, in part because each hires the others' former officials.
Health department officials labeled the last charge "unfair innuendo" and said the HCFA study was too old to provide a valid picture of the Minnesota market today. Department figures show that Minnesota's healthcare costs rose a little slower than the national average in 1993 (July 24, p. 70).
Tools to measure quality are under development, but in the meantime, the department logged fewer complaints about HMOs in 1994 than previously. In addition, the officials said COACT's figures for market concentration may be too high. They couldn't offer alternatives because the health department doesn't track self-insured plans.
Regardless, it is too soon to evaluate competition levels, said Nanette Schroeder, a health department division director. The Minnesota market will change as more reform laws are implemented, she said. It also will be reshaped by an employer group's move to contract directly with providers (June 3, p. 28).