Minnesota Model Health Plan Irks Doctors, Pleases Patients

Health care reform has arrived for Laura and Jay LaFavor, who live 25 miles from the nearest gas station in the northern Minnesota town of Hovland.

For a premium of $32 a month, they now have family health insurance. They can go to the doctor for the first time in years, and it’s free. For $3 they can get a prescription filled. For $25, a pair of glasses.

Their insurance plan? It’s called MinnesotaCare, the continental United States’ most comprehensive state-subsidized health plan now in operation.

When it created the plan last year, the Minnesota Legislature targeted the 10% of the state’s population too poor to pay for private health insurance but not poor enough to qualify for state medical assistance.

While it remains controversial, especially among physicians, the plan has become a model for health reformers since enrollment opened last October.

“I think it’s a cautious but realistic plan,” said Kala Ladenheim, senior research associate for the Intergovernmental Health Policy Project at George Washington University. “ . . . It hasn’t promised more than it can deliver and was one that they were able to offer right away.”

THE PLAN. MinnesotaCare is paid for by a 5-cent per pack cigarette tax and a 2% revenue tax on health care providers. Enrollees also pay monthly premiums, based on their income. Families with incomes up to 275% of federal poverty guidelines are eligible. For a family of two, that’s $25,920. For a family of four, it is $39,360, and for six or more, $52,800. Premiums can range from $20 to more than $250 a month.

MinnesotaCare covers doctor visits, limited dental and vision care, immunizations, diagnostic tests and X-rays, most prescription drugs, certain mental health and home care, plus outpatient surgery, emergency room services, and up to 10 hours of alcohol or chemical dependency treatment a year.

There are limits. It does not cover nursing home or catastrophic care. Hospitalization coverage will begin in July, but is limited to $10,000 a year for adults. The emphasis is on getting people to the doctor regularly.

Participants may choose from more than 25,000 providers, who must accept MinnesotaCare patients if they already take patients from public programs, such as state medical assistance and Public Employee Health Plans. More than 80% of the state’s licensed physicians participate in such plans.

Doctors are reimbursed by the Department of Human Services using the same billing procedures as state medical assistance.

So far, more than 45,000 Minnesotans are enrolled, and the state estimates up to 180,000 people, or one-third of the state’s uninsured, could qualify under the guidelines. If health costs drop, or more revenue sources are found, guidelines could be liberalized to make more uninsured residents eligible.

MinnesotaCare is expected to cost $326 million a year by 1997, offset by enrollees’ premium payments of $50 million. The remainder would be paid by the cigarette tax and provider tax.

THE OBJECTIONS. Doctors, clinics and hospitals call the 2% provider tax “simply unfair,” said Kirk Johnson, general counsel for the American Medical Assn. in Chicago.

The Minnesota Medical Assn. says the program should be designed to cover all of the uninsured and favors a broad-based tax, something Republican Gov. Arne Carlson opposes. “The tax falls heaviest on primary care specialists in small clinics who already run their offices on very thin margins,” said A. Stuart Hanson, MMA president.

The provider tax kicks in gradually. Hospitals and surgical centers had to ante up as of Jan. 1. Other providers, wholesale drug distributors, HMOs and nonprofit health service groups will be taxed later.

Other criticisms: That premiums are too high for middle income families and that the hospitalization benefits are inadequate.

“It’s a large Band-Aid, but it’s not really the solution,” Hanson said.

But families who are enrolling think the program is a big step forward.

“For the past five years, I haven’t been able to get my teeth fixed, or go to the eye doctor,” said Laura LaFavor. “I’m thrilled with the idea of it.”