PNPH letter to Governor Dayton

February 8, 2011

Dear Governor Dayton,

We write to you representing the more than 600 Minnesota physicians of the Minnesota chapter of Physicians for a National Health Program. First, thank you for serving our state as governor. We were thrilled when you were elected! PNHP is a national non-profit research and education organization of physicians and healthcare providers who support a single-payer healthcare system, which we know you also favor. The single-payer option provides the means to efficiently and effectively cover all patients while restraining healthcare costs. However, today we write to you about a different, but related matter.

As physicians, we welcome the Medicaid expansion occurring in Minnesota, and we applaud your executive order bringing 95,000 more patients into the program. However, we are deeply concerned about the decision to disperse these enrollees into plans operated by private managed care insurers. At this time of severe state budget shortfall, prohibiting HMO participation in our public programs would provide a prime opportunity to increase efficiency and cut costs. While the HMOs claim their involvement will save the state money, there is absolutely no evidence to support this claim. Due to the lack of transparency surrounding how HMOs currently spend our public dollars administering state programs, we do not know how much privatization is costing the state. However, it is reasonable to assume that outsourcing Medicaid contracts to private insurers is a major cost driver, and its elimination will lead to savings and longer-term sustainability for the patients who need this coverage. At the federal level, there is clear evidence that allowing private insurers to administer Medicare (ie. the Medicare Advantage program) raises costs about 14% more than standard Medicare.

Just last month, the Star Tribune reported our state's 12 HMOs earned $103.1 million in net income in 2009 from their involvement in the three Minnesota health care programs. The same article stated the public programs provide more profit for HMOs than their commercial business! This information combined with the lower Medicaid reimbursement for providers provides indirect evidence of the waste involved in continuing to utilize this extra layer of bureaucracy. We firmly believe public dollars should be spent to benefit Minnesota patiaents who need healthcare, not to increase corporate profits.

We ask that you please enroll the 95,000 patients newly eligible for Medical Assistance directly through the Department of Human Services rather than through expensive contracts with insurance companies so that Minnesotans’ tax dollars will be spent on healthcare and not administrative waste. We see no benefit for our patients in doing otherwise. As physicians providing the day to day health care of Minnesota’s patients, we assure you the private insurance industry does not help us to diagnose, treat, or prevent illness. We would like to meet with you to discuss this issue further. Thank you in advance for your consideration of our request.

Respectfully,

Ann Settgast, MD (612-387-7914) and Elizabeth Frost, MD (612-724-3995)
Co-chairs of the Minnesota chapter of PNHP

cc: Ed Ehlinger, MD, MPH
Lucinda Jesson, JD