MN health plans agree to cap future profits at 1 percent

Minnesota’s four non-profit health plans have agreed with Gov. Mark Dayton’s administration to cap their 2011 profits on state managed care contracts at 1 percent and give any excess to the state.

The four plans are BlueCross & BlueShield of Minnesota, HealthPartners, Medica and UCare. The health plans reported last week a combined 3.8 percent profit on their 2010 contracts with publicly-funded health care programs. The amount of 2011 money that exceeds 1 percent will be returned to the state’s general fund and Health Care Access Fund in April 2012.

“I applaud UCare, HealthPartners, Medica, and BlueCross BlueShield for their civic responsibility in recognizing the state’s dire financial condition, and helping to reduce our rising health care costs,” Dayton said. “I thank them and Human Services Commissioner Lucinda Jesson for their outstanding leadership in working together to reach this agreement.”

The arrangement drew criticism from the left and right ends of the political spectrum.

The St. Paul-based progressive group TakeAction Minnesota said the agreement doesn’t address the $2.5 billion in reserves that the health plans have squirreled away.

“On the heels of new figures released by Minnesota’s health plans last Friday — numbers which demonstrate substantial growth in health plan reserves — Governor Dayton has shown his commitment to the stewardship of taxpayer funds during the state’s massive budget crisis. But the new agreement stops short of addressing the years of overpayments into the state’s health plans, including the significant HMO profits reported for 2010. Years of overpayments have allowed the health plans to amass $2.5 billion in reserve funds. Today’s agreement leaves those funds untouched,” according to a news release.

A Republican legislator gave the 1-percent cap a golf clap.

“I don’t think it gets very far,” said Rep. Jim Abeler, chair of the House Health and Human Services Finance Committee. “It doesn’t get at the cost drivers and it doesn’t get at ensuring transparency.”