State health care accounting shifts reach $1.2 billion, and counting
State accounting shifts enacted to help solve state budget deficits and pay for other spending priorities add up to $1.2 billion in state health care IOUs. The delays require at least one health plan to obtain a bank loan to pay medical care expenses for its enrollees. Unlike school payment shifts, which have been repaid, there is no plan to repay health care shifts.
Under current law, the state uses accounting shifts to delay payments for health care services. That “float” makes state spending look smaller for a year, but in the end, does the opposite. Literally half of HMO reserves are tied up by these shifts, with some of the money held up for more than a year after care is actually delivered. HMO and insurance company reserves are not, by law, mixed together. The health plans may use only HMO reserves to pay for HMO expenses. As a result, the impact of any new shift is directly on others who buy HMO coverage.
HMOs serve a relatively small portion of the market —roughly 22 percent of total plan enrollment. When the state uses payment shifts on state public program costs, the rest of the HMO enrollees have to pay the bill. As a result, the remaining one-third of the HMO market—employer-sponsored plans, individual policy-holders and some Medicare participants—get to cover the impact of the shift.
Do you pay for the accounting shift?
While nearly 5.2 million Minnesotans have health care coverage, a declining number—just 352,000 residents—are on the hook for the state’s $1.2 billion health care accounting shifts and payment withholds. These residents are HMO enrollees with private coverage—employers who purchase fully insured coverage, individuals who buy coverage on their own and seniors enrolled in Medicare.
The key question facing health care today is how to sustain coverage, make coverage more affordability and improve the quality of care Minnesotans receive. Health care payment shifts do nothing to further any of these state interests.