Providers cannot provide when they are not paid enough, and will not provide if over-regulated.
SF 2995 adds new costs, new regulations, and reduced provider payments, Together, these add up to the biggest risk of all, loss of access to quality health care. Mayo Clinic has already sounded the alarm by saying if this and other bills pass, they will quit investing in their Rochester medical destination project.
In a previous Alpha News article, we shared details about the 2023 DFL health care reform bill and one of its primary features, the public option health plan. The public option, however, is only a portion of the bill. There are other bill features that are just as troublesome.
At this writing, SF 2995, the bill that would create a number of health care reforms, is in a conference committee. The conferees, with an equal number of representatives and senators, is made up of eight DFL members and two GOP members. Its only task is to reconcile differences between the State House and Senate versions of the bill and then send it to their respective bodies for a vote up or down.
The conference bill must be completed and delivered to the House and Senate before adjournment on May 21.
Health care becomes far more state-regulated
The Senate bill (SF 2995) establishes both a Health Care Affordability Commission and a Health Care Affordability Advisory Council. One board is appointed by the governor and the other by the board. These two entities will have the effect of regulating health care by rules and threats, with potential fines.
The two new state agencies will each have a significant list of duties and responsibilities. These include regulations on how providers must be administratively more efficient and others designed to reduce spending on “low value” care. Efficiency in administration has long been a common goal of private-system medical Managed Care Organizations and the norm for decades — apparently not effective enough to control spending (the market dynamics of this is a different story).
Health reformers often state that 30 percent of health spending is wasted or unessential. It is not clear that good evidence exists for this claim, but it seems likely not every doctor visit has merit or every surgery is imperative. The state agencies will also struggle with the reality that the bulk of health spending occurs in the last several months or weeks of life — reducing life-giving care options is one way to reduce spending.
The question is whether Minnesotans want a state board to decide this for them, or prefer to make the decision themselves in concert with their physicians in the private health care marketplace. What is low value to a bureaucrat might not square with what an individual believes to be of great value.
The new state agencies also will issue orders to medical practices and facilities instructing them how to perform up to state-set standards, and within the state’s global spending targets. The medical providers will hear from the state about these apparent failures and after a time of public shaming, if they fail to adopt the agency guidelines, the provider will be subject to up to a $500,000 fine.
Proving that a hospital, medical or surgical practice is complying with state mandates, and complying with the state’s new data reporting requirements, will cost the provider more in administrative expenses.
It seems likely that some or many physicians and facilities will give up, sell out, or shut their doors — especially as the public option plan also reduces their fees and incomes.
The legislative authors of SF 2995 believe these new government agencies and their functionaries, once enacted, will reduce the costly administrative expenses of private health insurance companies. Unlike those private companies, however, the main compliance and reporting expenses under the new bill will be paid by the providers who must do what they can to avoid public shaming and hefty fines. The administrative expense for each claim will cost providers more even as the state will claim its expenses are less.
One of the principle challenges of government-run health systems, such as in Canada and the United Kingdom, is their reliance on global spending budgets. Government bureaucrats determine ahead of time how much money will be available in the entire system to spend on health care. In Canada, the money often runs out before the year ends, and some patients are forced to wait for care or travel to the USA to get it.
The boards under the new Minnesota law will set global “target” budgets each year. It is not quite clear what will happen if, as is likely, patients and providers blow through those monies, possibly leaving some patients without access to care or a form of rationing care, with Minnesota state agencies deciding the guidelines.
Planning begins in July 2023
The bill, should it be signed by Gov. Tim Walz, allows him to move quickly to set up the new boards and commissions. They would be expected to start work as early as July 2023, and report to the legislature by January 2025.
The millions spent to plan, then set up and operate this new planning structure will begin to flow in the new budget year — July 1, 2023. At the same time the state spends money establishing, designing, and executing the new duties of the agencies, everyone in the state that has anything to do with its decisions — hospitals, clinics, medical facilities, pharma, doctors, medical device companies, and all medical professionals — will ramp up their spending to monitor the state’s plans, and as much as possible, fight for a place at the table. The money spent by all these entities might otherwise be spent on innovation, expansion, capacity, or holding down medical costs.
The DFL bill hopes to fully launch the new system by January of 2027. Once it is launched, it is doubtful much will be able to be changed, at least for several years.
As long as the legislature has not taken their final vote on SF 2995, there is hope of stopping or delaying it. Once Gov. Walz has signed it, the time to stop and/or alter it will be during the public hearings, and then, when the public reports are delivered to the legislature (2025) and during the 2025-2026 legislative sessions.
Minnesotans face the very real prospect of pretending their government-run health care is adequate, while waiting in lines for routine and optional care. They will learn where to travel outside the state to get the care they want and need.