Minnesota Tries a Medical Solution : The program aims to help low-income workers who lack coverage. Subscribers, providers and cigarette smokers will pay the tab.

ST. PAUL, Minn. —  At a time of nationwide frustration over a highly expensive health care system that leaves many Americans without coverage, the state of Minnesota has adopted a comprehensive health care law that could become a model for other states.

The measure, known as HealthRight, features a state-subsidized insurance program aimed at the growing number of low-income working people who lack coverage.

It also attempts to cut some of the flab out of a bloated health care bureaucracy.

“We spend more than any other nation in the world on health care, yet we’re one of the few developed nations in the world that doesn’t provide health care to everybody,” said state Sen. Linda Berglin of Minneapolis, a chief author of the bill.

The legislation, which was passed over opposition from Minnesota’s health care industry, was signed into law a week ago by Republican Gov. Arne Carlson.

Some detractors say it doesn’t go far enough; others warn that it represents a first, ominous step toward socialized medicine.

HealthRight is expected to cost $250 million a year on top of the enrollees’ share of about $49 million. Who will pay for it? Smokers, who will pay an extra nickel a pack for cigarettes, and hospitals and doctors, who will be taxed 2% on gross revenue.

HealthRight flies in the face of the American conventional wisdom that says the marketplace, not government, should dictate how services are delivered.

“An epiphany took place on the prairie, and the epiphany was the recognition that cost containment and increasing access to health care are not incompatible goals,” said Arthur Caplan, director of the Center for Biomedical Ethics at the University of Minnesota.

COVERAGE: HealthRight is not intended for the poorest Minnesotans, those eligible for Medicaid. Nor is it a catastrophic-care law. Rather, it is an attempt to promote preventive care and early treatment. In-patient hospital services, to be phased in in July, 1993, will be limited to a $10,000 annual benefit for each adult.

“Ideally, we would have people going to the doctor twice as often and going to the hospital half as often,” said state Rep. Paul Ogren, another chief sponsor.

Under the current, market-driven system, the nation’s emergency rooms have become the main providers of uncompensated care, at huge taxpayer expense, said Ellen Benavides, director of health policy for Hennepin County Bureau of Health in Minneapolis. Emergency rooms attract low-income workers and others who don’t have clinic coverage and cannot take time off from their jobs to see a doctor.

“If you’re choosing between feeding and clothing yourself, buying food and paying rent and health care, well, health care is very low on the list, unless you are in very dire circumstances,” Benavides said. “Then you end up in the emergency room.”

Signing up for HealthRight will ensure access to doctors, outpatient services, prescription drugs, eyeglasses and dental care. Many available services will carry co-payments.

HealthRight could help people such as Camille Gage, who has a small mailing list and mailing service business in Minneapolis. She has lived without medical coverage for more than 10 years. Her net income is about $1,000 a month.

She puts off medical visits, then worries. “Something little goes wrong and you’re in a complete panic,” said Gage, 35. “I wait to go until I don’t feel good.”

When she discovered a breast lump, Gage paid $150 for a mammogram, which was negative. When she was 28, Gage required a hysterectomy. At the time she was earning even less than she does now, and was qualified for federal benefits.

Even clinics with sliding-scale fees can be out of Gage’s reach, but she expects HealthRight to cover her for about $29 a month. “I would pay that in a minute,” she said.

Most likely, so would many other Americans who are without coverage or are worried about losing it.

“Many other states say the federal government should do something, but since Congress is somewhere between paralyzed and comatose on health care reform, it’s obviously back to the states,” Caplan said.

CONTEXT: Almost every state is tackling the problem, but few have succeeded so far. Portions of a plan recently passed by Oregon await federal approval. California is considering a ballot initiative on whether to require employers to provide coverage. Hawaii has a long-standing program under which employers must provide insurance plans for employees.

The Minnesota plan is the most far reaching and combines many of the most talked about elements, said Joy Wilson, who follows health care issues for the National Conference of State Legislatures in Washington, D.C. “A lot of people will be watching,” Wilson said. “It’s a voluntary program, and lots of people are looking for an alternative to employer-mandated programs.”

Perhaps as important as the insurance program are certain other provisions that impose controls on the medical industry.

Insurers no longer may use gender-rating to charge women higher rates than men, or bar people with pre-existing medical conditions from employer groups. Conflict of interest provisions prohibit doctors from referring patients to use of medical equipment and procedures in which they have financial interest. Small employers may tap into the purchasing power of the state’s large, public insurance pools, and thereby save money.

The law also standardizes insurance billing forms and procedures, and establishes a commission charged with finding ways to limit inflation in the cost of medical services.

CRITICISM: The plan’s detractors include the most visible industry groups. “This was a hastily prepared bill that was quickly pushed through both houses of the Legislature,” said Paul Sanders, chief executive officer of the Minnesota Medical Assn. “The funding source is neither appropriate nor adequate.”

Patti Anderson of the Minnesota Hospital Assn. also criticized the 2% tax on providers of medical care. “We’ve always maintained that health care access is a societal problem that should be funded by a broad-based tax, like the income tax or sales tax,” she said.

Gov. Carlson had said he would veto the bill if it required a general tax increase.

The provider tax imposes an important discipline on the system, said Caplan. “Instead of paying for access by adding in more dollars, this says use the dollars more efficiently. It puts the problem of payment on the providers. That’s a huge reform.”

To counter the extensive and well-financed lobbying of the medical interests, HealthRight supporters called attention to their political clout. In terms of contributions to legislators, the Minnesota Medical Assn. was the third-biggest political action committee in the state.

Caplan, describing the industry’s inability to stop the bill, said that “without having something else to put on the table, it made (lobbyists) almost seem irrelevant.”

Legislators “felt they had to get something through,” the MMA’s Sanders said. “We could not convince enough legislators that it would be wiser to wait and do it right next year.” If this were not an election year things might have been different, he said.

Legislators also were inundated with complaints about medical care and its costs, said D. J. Leary, co-editor of a statewide political newsletter. Also, the measure was a high-profile issue with voters, in part because Carlson vetoed a similar effort that was passed last year.

How Minnesota Plan Will Work

Starting in October, coverage will be phased in for eligible groups, beginning with children. Households will pay $8 to $382 a month on a sliding scale depending on income and family size.

Sample sliding scale of premiums (in ’94 dollars)

No. of people in household Monthly income Premium 1 $495 $8 2 $883 $19 3 $1,606 $56 4 $3,128 $253 5 and up $2,198 $62

* The state estimates about 40% of the state’s uninsured residents will enroll by 1997. The expected cost of $250 million would be offset at least partially by expected savings through new efficiencies.

* Eligibility is limited to those who earn no more than 275% of federal poverty guidelines. For a family of four, that would be about $38,000 annually.

* By state estimates, a family of four earning about $24,000 a year would pay $75 a month when hospital benefits are phased in.

* Other provisions are designed to prevent companies and individuals from dumping their existing plans in favor of HealthRight. To qualify, enrollees must be uninsured for at least four months and lack employer-provided health insurance for 18 months. Source: Minnesota State Senate