Don't prioritize for-profit health insurers over Minnesota taxpayers

There’s a ready conclusion to be drawn when “it wasn’t me” or “it wasn’t us” sums up the response given by the health insurance industry and lawmakers when asked about controversial, late-in-the-process changes made to an important piece of legislation.

The logical endpoint is that the revisions must be dubious policy when the usual stakeholders are so unequivocally distancing themselves from this. That line of reasoning applies this Minnesota legislative session to a measure that would govern potential conversions by the state’s nonprofit health insurers into for-profit companies. Revisions made to the measure badly weaken oversight and brazenly prioritize the financial interests of insurers over those of Minnesota taxpayers.

The state’s big nonprofit health insurers, their trade council and key lawmakers took out 10-foot poles, figuratively speaking, when an editorial writer inquired about their potential role in weakening the legislation. The insurers were particularly emphatic: They did not lobby for the changes. Minnesota House leadership directed inquiries to the Senate but said members are open to improvement. Nevertheless, these reprehensible revisions remain tucked into a bigger bill in the session’s waning days. Remedy is required.

A brief bit of Minnesota health history illuminates the need for action. For decades, the state banned for-profit companies from owning health maintenance organizations (HMOs). But in January, lawmakers ended the ban as part of the $326 million “premium relief” package passed to aid consumers faced with steep health insurance costs.

Lawmakers hoped the move would increase competition in the individual insurance market and drive down costs. There are solid arguments for making this landmark change in Minnesota. Nevertheless, it is regrettable that ending the ban failed to get a thorough airing in the rush to pass the premium relief bill. A recent commentary by state Attorney General Lori Swanson highlighted a reason why it’s so critical to get oversight details right: the $7.1 billion in assets and $3.3 billion in reserve funds held by the state’s nonprofit health plans.

These assets were nurtured with substantial help from taxpayers through special tax treatment and lucrative contracts with publicly-funded medical assistance programs. Without strong oversight and legal protections, Swanson warns that there could be “corporate raids” on these assets through for-profit conversions or sale to a for-profit insurer. It’s worth noting that one potential for-profit buyer — UnitedHealthcare — is based in Minnesota. A spokeswoman did not respond when asked if the company had backed the changes to the legislation.

As Swanson points out, there’s troubling precedent for loosely regulated nonprofit insurer conversions that yield big executive payouts or transfer assets to new ownership without recognizing taxpayers’ financial interests. But there’s also precedent for instead placing substantial amounts of these assets into state-based nonprofits, where proceeds are used for public purposes. Minnesotans ought to be demanding this second option. Perhaps it could help fund the state’s premium relief aid.

The legislative measure at one point had robust oversight provisions and taxpayer protections. These were wrongly removed or weakened for reasons that remain unclear. It’s in Minnesota’s best interest to put them back promptly.