ST. PAUL, Minn., April 1 /PRNewswire/ -- Spending by Minnesota’s health plans on patient care increased just 6 percent in 2003, compared to a 15 percent jump the prior year. According to reports filed today with state regulators, health plans spent $6 billion in 2003 on payments to hospitals, clinics and others who provide medical care.
(Photo: http://www.newscom.com/cgi-bin/prnh/20040401/CGTH023 )
Revenues for Minnesota’s health plans were up 6 percent, with the average premium increase dropping to 9 percent in 2003, in comparison to 12 to 16 percent jumps in previous years.
“The double-digit increases in medical spending and premiums stopped,” said Julie Brunner, executive director of the Minnesota Council of Health Plans, a trade group representing Minnesota’s nonprofit health plan companies. “We’re still spending more and more on health care, but the rate of growth is slowing and that’s good news for employers and consumers.”
Two of the reasons for the slow down, Brunner said, are the education and cost sharing efforts of employers, and the investment health plans are making in one-on-one patient education and support to help patients manage chronic diseases. In 2003, plans spent more than $62 million on health improvement initiatives, a fast growing category of administrative expenses.
Yet revenues were not enough to cover expenses for all Minnesota’s health plans in 2003. One company, Sioux Valley Health Plan, dipped into its state- mandated reserves to cover expenses that exceeded revenues.
Other trends in the annual filings include: -- 48 percent of Minnesotans are enrolled in managed care health plans -- MinnesotaCare enrollment dropped 6 percent -- more than 8,700 people -- Administrative costs averaged 8 percent of premium revenue Margins tight, required reserves increase
Minnesota’s eight nonprofit health care companies collected a total of $6.7 billion in revenue in 2003. The industry as a whole posted an operating margin of 1.6 percent of revenue, or $104.7 million. In addition, investment income added an additional $49 million, making the total contribution reserves $150 million.
Any operating gain posted by a nonprofit health plan must be placed in reserve. State law addressing HMO solvency requires that health plans maintain a reserve of between one and three months of operating expenses. This reserve protects consumers if the company experiences a financial shortfall. As spending on care increases, so must the dollars in these reserves. Currently, health plans hold an average of 2.3 months of operating expenses in reserve.
“Unlike our for-profit investor-owned counterparts in other states that pay shareholder dividends, any money nonprofit health plans have left over at the end of the year stays in Minnesota to lower premium increases, fund programs to improve the health of Minnesotans and protect consumers,” Brunner said.
Enrollment up overall
Overall enrollment remained steady at 2.4 million. Enrollment in government-supported products was mixed: Prepaid Medical Assistance enrollment was up 3 percent, while MinnesotaCare enrollment decreased by 6 percent, or more than 8,700 people. This decrease was expected, Brunner said, because in October 2003 new laws tightened MinnesotaCare eligibility guidelines.
State statute requires Minnesota’s health plans to submit reports on their financial status. The reports are independently audited to comply with generally accepted accounting principles, standards of the Financial Accounting Standards Board, and definitions and standards promulgated by the National Association of Insurance Commissioners and the State of Minnesota.
Established in 1985, the Minnesota Council of Health Plans is a trade association of eight licensed nonprofit health plans. Council members have pioneered a style of health care that has improved quality and consumer satisfaction and expanded access to health care for all Minnesotans. The Council and its members are leaders in health care reform, practice guidelines development, technology assessment and data collection and analysis.
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20040401/CGTH023AP Archive: http://photoarchive.ap.org/PRN Photo Desk, photodesk@prnewswire.comMinnesota Council of Health Plans
CONTACT: Eileen M. Smith of Minnesota Council of Health Plans,+1-651-645-0099 ext. 11, or cell, +1-612-840-4554; or for information about anindividual health plan’s numbers, Monika Strom, +1-651-662-6889, or KarlOestreich, +1-651-662-1502, both of Blue Plus, Eagan, MN, or Bonnie Hays ofMetropolitan Health Plan, Minneapolis, MN, +1-612-337-7160, or Cathy Nevanenof First Plan of Minnesota, Duluth, MN, +1-218-529-9957, or Marcus Merz ofPreferredOne, Golden Valley, MN, +1-763-847-3201, or Chris Reese ofHealthPartners, Bloomington, MN, +1-952-883-5304, or Ruth Krystopolski ofSioux Valley Hospitals and Health System, Sioux Falls, SD, +1-605-328-6801, orLarry Bussey of Medica, Minnetonka, MN, +1-952-992-8013, or Debbie Weiner ofUCare Minnesota, Minneapolis, MN, +1-612-676-3562
