|
St. Paul, Minn. — Medical care expenses and utilization
continued to rise in 1997, driving up health plan premiums
and leading to financial losses for many of Minnesota's nonprofit
health plans, according to a Minnesota Council of Health Plans
summary of health plan financial reports filed today with
the Minnesota Department of Health.
"Premiums reflect the costs of health care services,"
said Nancy Feldman, CEO of UCare Minnesota and chair of the
council. "Strong competition in Minnesota's health plan
market held down premiums over the last few years. Premiums
are now rising as a direct result of increasing health care
costs. We expect this trend to continue in 1998."
Medical expenses rose faster than premium revenues, leading
to net financial losses of $1.9 million by Minnesota's nonprofit
health plans in 1997. Medical expenses rose 11.2 percent,
while premium revenue increased by only 9.8 percent.
However, health plan operating losses of approximately $54
million were offset by significant investment returns on reserve
funds. State law requires nonprofit HMO plans to have 1-2
months of financial reserves. Minnesota health plans averaged
1.6 months of reserves in 1997.
Enrollment in Minnesota health plans increased for the ninth
consecutive year to approximately 2.4 million, compared to
nearly 2.3 million in 1996, an increase of about 5.9 percent.
The largest rate of growth was in small health plan enrollment,
which grew at a rate of 9.7 percent (includes Altru Health
Plan, First Plan of Minnesota, Central Minnesota Group Health
Plan, Mayo Health Plan, Metropolitan Health Plan, PreferredOne
Community Health Plan and UCare Minnesota).
Despite rising health care costs and significant enrollment
growth, industry-wide administrative expenses (as a percent
of revenue) decreased 7.7 percent in 1997, from 9.4 percent
in 1996 to 8.7 percent in 1997.
"The operating losses mean health care purchasers received
more health care services than they paid for in premiums in
1997," said Michael Scandrett, executive director, Minnesota
Council of Health Plans. "Even as underlying costs increased,
Minnesota health plans kept their prices low and further reduced
administrative costs."
A survey of health care finance experts and CEOs, conducted
by the Minnesota Council of Health Plans in March, helps explain
the numbers in the financial reports. Experts say health care
cost increases are a result of:
- changing demographics, such as an aging population;
- new pharmaceuticals and increased use of existing pharmaceuticals;
- increased doctor's visits, both specialists and primary
care;
- new treatments and technologies; and
- federal and state mandates.
Other significant factors affecting health plan premiums
are taxes and the cost of mandated benefits. Minnesota health
plans paid $49.5 million in state health care-related taxes
and assessments in 1997. While this amount was lower than
1996 taxes due to legislative tax relief last session, the
percentage of buyers' premiums that goes to pay state health
care taxes has increased 315 percent in the last 11 years.
The council estimates that up to 25 percent of the costs of
premiums paid by buyers of taxable health plans (primarily
small and medium-sized employers, rural Minnesotans and Minnesotans
with individual insurance policies) is due to state taxes
and state-mandated coverage requirements. Federal law exempts
self-insured organizations (such as large employers and large
group purchasers) from state taxes and mandates.
# # #
Established in 1985, the Minnesota Council of Health Plans
is a trade association of 10 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.
EDITOR'S NOTE: Tables listing individual health plan data
and industry-wide data are available by calling the Minnesota
Council of Health Plans.
FOR INFORMATION ABOUT INDIVIDUAL PLAN NUMBERS, CONTACT:
Sarah Stoesz
Vice President of Media Relations
Medica Health Plans, offered through Allina Health System
Minnetonka, MN 612/992-3348
Timothy Sayler
Altru Health Plan
Grand Forks, ND 701/780-1603
Karl Oestreich
Media Relations Manager
Blue Plus
Eagan, MN 612/456-1502
Larry Logeman
Marketing/Sales Manager
Central Minnesota Group Health Plan
St. Cloud, MN 320/203-2317
Tony Solem, CEO
First Plan of Minnesota
Two Harbors, MN 800/635-4159
Sara McFee
Manager, Corporate Communications
HealthPartners
Bloomington, MN 612/883-5301
Chris Gade
Team Leader for Regional Communications
Mayo Clinic
Rochester, MN 507/284-8274
Nancy Perron
Director of Marketing and Consumer Services
Metropolitan Health Plan
Minneapolis, MN 612/347-6194
Phil Griffin
Vice President, Public Policy
PreferredOne Community Health Plan
Minneapolis, MN 612/372-3310
Ghita Worcester
Vice President of Public Affairs & Development
UCare Minnesota
Minneapolis, MN 612/603-5381
|
