The cost of covering Minnesota's uninsured people

Children's Hospital in Minneapolis
State officials are weighing up the costs of providing health care to all the uninsured people in Minnesota.
Photo courtesy of Children's Hospital and Clinics of Minnesota

The calculations are quick and dirty numbers. In one scenario, the Health Department looked at the cost of adding 383,000 people to the publicly subsidized MinnesotaCare program.

The department just multiplied the number of uninsured people by an average per person MinnesotaCare cost of $4,277. The total comes to just over $1.6 billion.

But the state wouldn't pay all of that. After the federal government and enrollees paid their portion, the department estimates Minnesota would be on the hook for about $663 million.

The other scenario relies on private insurance coverage. That option would cost the state almost $200 million more per year, in part due to the potential loss of federal matching funds.

We want to know what it could potentially cost if we're going to have the debate about it. That's what it is, and that's all it is.

Scott Leitz directs the Health Department's Office of Health Policy. He says the calculations are rough estimates based on very basic plan ideas.

"We chose these two to be just illustrative of two different approaches to covering the uninsured, without trying to get into how we would actually structure the specifics of those different approaches," says Leitz.

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The estimates don't include several possible factors that could raise or reduce costs. For one, he says uninsured people tend to be younger than people with private insurance. But he says they're also typically a sicker population.

"There's a whole host of factors that are related to whether people are sicker on average or healthier on average when they're uninsured, and as those people come into the insurance pool, how that's going to affect health insurance premiums," says Leitz. "That's certainly something that one would need to model more extensively if one were looking at specific proposals."

It's possible the state could offset some of its insurance costs with money it already pays hospitals to care for uninsured people. But Leitz says there would be other costs to consider, especially if the state mandated coverage. He says enforcing insurance coverage compliance could be very expensive.

The Health Department doesn't take a position in the report. That's because it wasn't asked to weigh in on the merits of the idea.

Gov. Pawlenty's Health Cabinet requested the report. Chairman Cal Ludeman says the cabinet just wanted the information. He says it doesn't imply that the cabinet endorses universal coverage.

"No, no, no," he says. "We want to know what it would be, what it could potentially cost if we're going to have the debate about it. That's what it is, and that's all it is."

Ludeman points out that the debate over universal coverage has been a part of legislative discussion for years. But he says the idea has taken on more momentum lately.

"We don't do this in a vacuum. We're fully aware of proposals in this Legislature," says Ludeman. "We've watched carefully the actions in Massachusetts, have talked to people in Massachusetts both legislatively and those folks trying to implement that universal coverage program. This is just simply an assessment of the situation to understand that whole picture."

Ludeman says his first reaction to the estimates, which range from $663 million to $852 million, is that they sound big.

"Some will say, 'Boy, that's not as big a number as I thought and let's do it,'" says Ludeman. "But a lot of folks would say, 'Wait a minute, this is a new entry in a government or taxpayer sense about where we're going, and that is a lot of money.' And I think as you look at the state budget, this sort of new cost would always be viewed as a lot of money."

Ludeman says Minnesota is in a good position, though, to think about whether it can afford universal coverage. He says the state has one of the lowest percentages of uninsured people in the nation. He says that makes the notion of offering state subsidized coverage at least seem possible.