A close look at information about Minnesota's new health insurance exchange, MNsure, reveals a troubling phenomenon in Winona's corner of the state: health care coverage for individuals in Southeast Minnesota through MNsure will be far more expensive than in other parts of the state. It will not be uncommon for Winonans to pay twice as much for health insurance through MNsure as individuals in the Twin Cities. That disparity is not just the result of urban-rural dynamics: average rates in Southeast Minnesota are far higher than averages for the rest of greater Minnesota, a Winona Post analysis of MNsure data shows.
This is nothing new and it is not because of MNsure, industry officials and health analysts say. For a long time, costs have been higher in Southeast Minnesota, but "before, that data was blended across different plans and different areas," said Jim Chase, president of Minnesota Community Measurement, a non-profit health care analysis group. Health insurance providers have always had different rates across regions, but prior to MNsure, the geographic boundaries varied from company to company, as did benefits. MNsure standardizes both, making "apples to apples" comparisons possible for the first time, explained Geoff Bartsh, vice president for government relations at Medica of Wisconsin. Medica is one of two health insurance providers that will offer coverage for Southeast Minnesota through MNsure.
Exactly why rates are higher here than anywhere else in the state is unclear. It is not because our area is less healthy, said Dr. Peter Sternberg, associate professor of public health at Winona State University. "My honest analysis is that I don't understand what's going on — why it should be. Looking broadly at it, our health is consistent with the rest of the state," he said.
The cost of care — the prices that clinics, hospitals, and other health care providers charge insurance companies for their services — and a relative lack of competition accounts for much of the difference in rates, analysts state. "A good portion of it may be different levels of competition," Chase said. Areas where providers "are bigger and have less competition around them have higher prices," he added. Cost of care is higher in Southeast Minnesota than other parts of the state, he confirmed.
"The fact that care can be more expensive in the Southeastern corner is a factor," agreed Bartsh. Insurers like his company haggle with care providers or partner with them to establish prices for care, what insurance professionals call "provider reimbursement levels."
"Generally, you find the same the thing with the hospitals and large provider systems down there," Bartsh said. "Because that region has been able to establish a good level of reimbursement for themselves and because there is not as much provider competition down there as there is in the metro area, they're able to sustain and hold to those reimbursement levels with some confidence."
Referral costs, specifically, are a driving factor for healthcare costs in Southeast Minnesota, Chase said. Even though the cost of physicals at local doctors' offices may be low, specialists who charge above-average rates drive up the cost of insurance in the area, he explained.
While Sternberg said he could not comment on the cause with certainty, it may be "due to a lack of choice. Maybe everyone has been crowded out because of Mayo," he said.
When asked if health care prices in Southeast Minnesota suffer from a "Mayo effect," Bartsh said, "it's not just one provider." He noted that the Mayo Clinic has positively affected the quality of care across the state.
Other area providers "have a larger influence on pricing in our region" than Winona Health does, noted Winona Health CEO Rachelle Schultz.
There are likely other, smaller factors at play, as well, analysts agreed. Now that thorough readings of information released by MNsure have brought this issue into the public light, more research is in order, they said. Chase said that Minnesota Community Measurement is already planning broader examinations of provider pricing. The increased transparency that standardization has provided is a very positive aspect of MNsure, said Bartsh. "This is the first time this conversation is really happening," he said. Schultz agreed, "This new insurance exchange is an early step toward more transparency, albeit still limited for the consumer."
Many area residents will not be negatively affected by regional price disparities. Average rates for MNsure offerings for local families are expected to be comparable to those in the Twin Cities. Those who qualify for Minnesota Care (incomes from $15,283 to $22,980) will pay the same low rates across the state, and those who qualify for medical assistance (incomes under $15,283) will pay nothing, according to MNsure.
The fact that individual rates are higher in Southeast Minnesota while family rates are more reasonable is curious, Sternberg agreed. He did not think that our region is an outlier for the health of single people.
Fewer choices on MNsure in the southeast
When shopping through MNsure, 85 percent of Minnesotans will have three or more companies to choose from and Twin Cities residents will have among the best rates in the U.S., but not Southeastern Minnesotans. In Winona County and surrounding counties, MNsure users will have two options for providers: Medica of Wisconsin, which will offer four plans plus variations, and Blue Cross Blue Shield, which will offer one plan.
With only one company offering more than one plan in Southeast Minnesota, area residents, regardless of their income, will have somewhat limited options through MNsure when compared to the rest of the state. Across the state, Minnesotans will still be able to purchase insurance outside of MNsure through the normal avenues. MNsure representatives did not respond when asked whether they were disappointed by the shortage of companies offering plans in Southeast Minnesota through the exchange. When asked if MNsure will be a competitive marketplace for Southeast Minnesotans, MNsure representatives pointed out that since consumers can still get plans outside of MNsure, the exchange provides them with an additional option when shopping for insurance.