Legislation offers Cost-Effective Health Care to Replace $3 billion State HMO Contracts

Senator John Marty introduced legislation (SF1054) today requiring the state to contract directly with health care providers, rather than HMOs, in delivering health care for low income Minnesotans. Marty’s bill addresses the lack of accountability and excessive earnings of HMOs participating in Minnesota’s public health care programs.

“After months of growing bipartisan concern about the lack of accountability and transparency in state contracts with by HMOs, one company announced it is making a voluntary $30,000,000 contribution to the state treasury,” Senator Marty said.

“It’s one of the largest corporate donations ever in Minnesota, and illustrates just how out-of-control these state contracts have become. It raises obvious questions – Why aren’t the other HMOs giving back their overpayments from the state? More importantly, why is Minnesota continuing with these dysfunctional contracts?”

Marty said that his legislation is the appropriate response. “It’s time to remove the insurance middleman and have the state pay for health care directly. In addition to saving money by reducing administrative costs, it saves money by delivering care more efficiently. The bill provides payment incentives for health care and social service providers to coordinate the care of Medical Assistance patients, particularly those with chronic or complex conditions, many of whom have not been receiving the treatment they need to stay out of the emergency room.”

To see the inefficiency of the current system, one need only look at how inefficiently and ineffectively these contracts deliver health care to the homeless. As Monica Nilsson, director of street outreach St. Stephen’s puts it, “It’s ineffective to ask people who don’t have a phone or a day planner, a bus card or a watch to make an appointment, remember the date, get to a certain clinic and be there on time. Many just go to the hospital; they know what time the emergency room is open.”

Senate file 1054 would reduce hospital and emergency room use by giving low income people a “medical home” where a clinic will provide outreach and care coordination to help them get the care they need up-front instead of getting costly crisis care in the hospital. “The savings from this legislation are huge,” Marty said.

“This legislation would create long-overdue change in our public health care programs. We applaud Senator Marty for an innovative proposal that focuses on improving health, and ends the unchecked profiteering of private HMOs off our public health care system,” said Liz Doyle, policy director for TakeAction Minnesota.


Senator John Marty
John Marty represents Roseville, Lauderdale, Falcon Heights and northern St. Paul.

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