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Minnesota Blue Ribbon Commission: Meeting 2enVision Hotel, South St. Paul | October 10, 2019
mn.gov/dhs/hhsbrc
Welcome
Jodi HarpsteadCommissioner
Department of Human Services
Jan MalcolmCommissioner
Department of Health
2
Agenda
Time Topic
9:00 Welcome & introductions of new members
9:20 Minnesota statewide health care overview
10:05 Facilitated discussion
10:40 DHS budget trends
11:30 Facilitated discussion
11:55 Next meeting
Blue Ribbon Commission Members
Jennifer DeCubellisDirector of Human Services and
Public Health
Hennepin County
Rich DraheimSenator (20, R)
Senate
Jennifer DuPuisAssociate Director
Fond du Lac Nation Human Services
Nona FergusonVice President of Economic
Assistance and Aging Services
Wilder
Julia FreemanSenior Organizer
Voices for Racial Justice
Jodi HarpsteadCommissioner & BRC co-chair
MN Department of Human Services
Sheila KiscadenCommissioner
Olmsted County
Matt KleinSenator (52, DFL)
Senate
Debra KrauseVice President
Minnesota Health Action Group
Gayle KvenvoldPresident and CEO
LeadingAge Minnesota
Tina Liebling Representative (26A, DFL)
House of Representatives
Sida Ly-XiongNational Program Manager
Nexus Community Partners
Jan MalcolmCommissioner & BRC co-chair
MN Department of Health
Shauna ReitmeierChief Executive Officer
Northwestern Mental Health Center
Sue SchettleChief Executive Officer
Association of Residential Resources
in Minnesota (ARRM)
Joe SchomackerRepresentative (22A, R)
House of Representatives
Lisa WeedExecutive Vice President
SEIU Healthcare Minnesota
Minnesota Statewide Health Care Overview
PROTECTING, MAINTAINING AND IMPROVING THE HEALTH OF ALL MINNESOTANS
Presentation to Blue Ribbon Commission, October 10, 2019Stefan Gildemeister, State Health Economist
Reflections on the MN Health Care System
Overview
▪ Minnesota in the national context
▪ Health care spending and its impact
▪ Spending drivers
▪ Closing observations on equity & opportunity
2
In the National Comparison, Minnesota Is Very Successful
3
Consistently, Minnesota exhibits:
• High rates of health insurance coverage,
• The lowest rates of mortality amenable to health care, and
• The fewest physically unhealthy days.
Min
neso
ta
0%
5%
10%
15%
20%
Mas
sach
uset
tsIo
wa
Dist
rict o
f…Rh
ode
Isla
ndM
ichi
gan
Was
hing
ton
Ohi
oN
ew…
Kent
ucky
Conn
ectic
utIll
inoi
sPu
erto
Ric
oN
ew Je
rsey
Loui
siana
Colo
rado
Uni
ted
Stat
esU
tah
Sout
h Da
kota
Neb
rask
aM
issou
riAr
izona
Sout
h Ca
rolin
aN
evad
aW
yom
ing
Geo
rgia
Okl
ahom
aTe
xas
Uninsurance Rate by State, 2017
020406080
100120140
Min
neso
taCo
nnec
ticut
Uta
hW
ashi
ngto
nCo
lora
doM
aine
Rhod
e Is
land
Iow
aM
onta
naAl
aska
Arizo
naSo
uth
Dako
taN
ew Y
ork
Kans
asFl
orid
aDe
law
are
Mar
ylan
dM
ichi
gan
Ohi
oN
evad
aSo
uth
Caro
lina
Wes
t Virg
inia
Alab
ama
Arka
nsas
Okl
ahom
a
Rates of Mortality Amenable to Health Care, 2014-2015
0123456
Poor Physical Health Days, 2017
Sources: Uninsurance – Kaiser Family Foundation/U.S. Census Bureau American Community Survey, 2017; Health Care Amenable Mortality – Commonwealth Fund; Poor Physical Health Days – Center for Disease Control and Prevention, Behavioral Risk Factor Surveillance Survey, 2017
But …
▪ There are severe and persistent inequities across MN in the ability to access & achieve health
▪ Health care spending follows a trend that may not be sustainable without shifting policy priorities
▪ There are a range of challenges that raise concern and pose opportunities
4
Health Care Spending and its Impact
Some Notes on Nomenclature
6
Health Care Consumes Significant Resources
7
$36.0 $37.4 $37.9 $38.7 $40.1 $41.5 $44.5 $46.1 $47.4 $50.1
$0$10$20$30$40$50$60
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Spen
ding
(in
Billi
ons)
Source: MDH/Health Economics Program, Minnesota Health Care Spending: 2017 Estimates and Ten-Year Projections, Forthcoming. data remains preliminary.
▪ Health care spending is high in absolute and relative terms
▪ 14.3 percent of the economy
▪ $9,004 per person
▪ It rises persistently
▪ Even when rising moderately, growth outpaces inflation
Projected Health Care Spending in Minnesota
8
$26.2
$98.2
$0
$20
$40
$60
$80
$100
$120
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Spen
ding
(in
Billi
ons)
Historical Projected▪ Minnesota health care spending is expected to double over the next ten years
▪ The average annual rate of growth is expected to rise:
▪ From 3.7 percent over the past decade
▪ To approximately 7.0 percent through 2027
Source: MDH/Health Economics Program, Minnesota Health Care Spending: 2017 Estimates and Ten-Year Projections, Forthcoming, data remains preliminary. Health care spending includes medical and prescription drug spending.
Spending Growth Affects Everyone’s Budgets & Priorities
9
Government, 49.4%
Business, 26.0%
Individual, 24.6%
0%
20%
40%
60%
80%
100%
Health Care Spending Paid by Government, Individuals and Businesses, 2017
Sources: MDH/Health Economics Program; Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey – Insurance Component, 2017; Best's Aggregates and Averages (Property/Casualty), 2018 edition. Local and state government employers’ health care spending included in business spending.
▪ There isn’t a “right” amount of health care spending
▪ Spending is driven by society's preference for access, resource use, and attitudes about oversight
▪ But, health care spending levels & growth:
▪ Are funded by Minnesota residents
▪ Touch government, business & individuals
▪ Trends in spending affect spending on other (policy) priorities
Government Health Care Spending in Minnesota
10
Over 40% of the State Budget is for Health and Human Services spending and it has
been rising as a share
$273
$352
$1,183
$2,006
$2,151
$2,372
$2,789
$3,796
$8,658
$25,308
$38,292
$0 $10,000 $20,000 $30,000 $40,000
Capital projects and grants
Agriculture and Housing
Debt
Jobs, Economics Development, Commerce
State Government and Veterans
Environment
Public Safety
Property Tax aids and credits
Transportation
Education
Health and Human Services
$ in Millions
State Fiscal Years 2020 and 2021 Expenditures
Source: Minnesota Management and Budget; does not include spending for health care services by the state as an employer or health care services through the Department of Corrections.
Employer Costs of Health Care Benefits
2.4% 2.5% 2.5% 2.6% 2.7% 2.8% 2.8% 2.9% 3.0% 3.0% 3.1%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Cost
of C
ompe
nsat
ion
per H
our w
orke
d (%
)
Health Care Share of Employer Compensation
11
• As the underlying cost of health care rises, so does the cost of offering benefits
• How do employers adjust?
• Balance health benefits against other compensation
• Raise employee responsibility/ change health benefits
• Discontinue offering coverage
• All of the above
Source: MDH/Health Economics Program analysis of US Bureau of Labor Statistics Data.
Employer Coverage: Change in the Contribution to Cost
12
Employee Share, 58.5%
Employer Share, 44.4%
Deductible Growth, 92.9%
-20%
0%
20%
40%
60%
80%
100%
120%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cum
ulat
ive
Grow
th
Single Coverage
Employee Share, 66.8%
Employer Share, 38.4%
Deductible Growth, 102.9%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Family Coverage
Source: MDH/Health Economics Program analysis of Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey – Insurance Component data for Minnesota.
13
Change in the Composition of Household Expenditures
• Growth in the underlying cost of care has already reorganized the budgets of Minnesotans:
• The cost of health insurance has risen at three times the rate than other expenses
• Out-of-pocket spending growth adds additional pain
Source: MDH/Health Economics Program analysis of U.S Census Bureau, Consumer Expenditure Survey, Midwest Region.
Health Insurance47.1%
OOP Health Care, 7.1%
Housing, 15.1%
Transportation, 6.3%
Food,13.7%
-10%
0%
10%
20%
30%
40%
50%
2012 2013 2014 2015 2016 2017
Cumulative Growth in Household Expenditures, 2012-2017
How Are Minnesotans Impacted by Rising Costs?
Minnesotans Have Trouble Paying Bills & Skip Needed Care
15Source: MDH Health Economics Program analysis of 2017 Minnesota Health Access SurveysNote: High Deductible Health Plan rates are based only on those enrolled in Group or Individual coverage.* Indicates a significant difference from statewide rate at the 95% level; ^ Indicates a significant difference from the statewide rate at the 90% level.
Age Insurance StatusHigh Deductible
Health Plan (PrivateInsurance)
0-20 21-25 26-34 35-54 55-6465+
GroupCoverage Individual Coverage
Public
Coverage Uninsured
No Yes
0%
10%
20%
30%
40%
50%Pe
^* ^* ^* ^* ^ ^* ^* ^* ^*
15% - No Chronic Condition*^
31% - Chronic Condition*^
21% - Statewide
Percent of Minnesotans who reported forgoing care in the last 12 months (2017)
Age Insurance StatusHigh Deductible
Health Plan (PrivateInsurance)
0-20 21-25 26-34 35-54 55-6465+
GroupCoverage Individual Coverage
Public
Coverage Uninsured
No Yes
0%
2%
4%
6%
8%
10%
12%
Pe
^*^ ^ ^ ^*
4% - No Chronic Condition*^
11% - Chronic Condition*^
7% - Statewide
Percent of Minnesotans who reported having trouble paying for basic bills because of medical bills in thelast 12 months (2017)
Changes in Coverage, 2001 to 2017
16
52.9%
36.5%
6.3%
4.4%
0% 10% 20% 30% 40% 50%
Group
Public
Uninsured
Individual
Distribution of Health Insurance Coverage, 2017 % Point change
-15.2%
15.4%
0.2%
-0.4%
• The percentage of Minnesotans covered by Group coverage has steadily declined• Fewer people connected to
employer offering coverage
• Fewer people who take up coverage
• The percentage covered by Public coverage has steadily increased, but not offset private losses
• There has been some volatility over time
Source: MDH Health Economics Program analysis of 2001 and 2017 Minnesota Health Access Surveys
Impact of Cost on Uninsurance
17
36.1%
10.3%
9.5%
5.6%
3.7%
2.3%
2.2%
1.4%
0.7%
0.2%
28.0%
Too expensive
Will get it soon
Logistical barriers
Don't need health insurance
Never looked into it
Not eligible
Unemployed
Don't want government involved
Don't like benefits
Indian Health Service
Other/Don’t know
Reasons for Not Signing up for Health Insurance (Uninsured)
Source: MDH Health Economics Program analysis of 2017 Minnesota Health Access Surveys
• The most common reason for not getting health insurance coverage was that it was too expensive
• There was also a lot of confusion about the circumstances related to the ACA, and
• There are considerable challenges with health insurance literacy
• Very few people feel they do not need health insurance
Subsidized Coverage Comparison, 2019
18
Notes: AV=Actuarial Value, the percent of health care costs the premiums are estimated to cover. Personal Out-of-Pocket spending is estimated based on the AV for each plan. Employer sponsored coverage based on average single premiums for Minnesota in 2018; premiums were estimated for 2019 using the average growth between 2016 and 2018. Individual Market is based on Benchmark Premiums for a 40-year old in Willmar, Minnesota, which is around the state average. High risk pool coverage is estimated by using 2012 monthly premiums and assessment amounts, and then using the average growth from 2010 through 2012 to estimate costs in 2019. Medical Assistance estimates are based on the cost of medical care for Families and Children and Adults with No Children – they do not include care for the elderly or people with disabilities; the cost for these populations averages $42,323 in 2019 because it includes Long Term Care services, such as home and community based waiver services and skilled nursing facilities.Source: MDH Health Economics Program Analysis of Medical Expenditure Panel Survey – Insurance Component (MEPS-IC), Individual market premiums, and Minnesota Comprehensive Health Association (MCHA, Minnesota’s high risk pool that ended in 2014) Writing Carrier reports, CMS Medicare Reports and Minnesota Department of Human Services 2019 Forecast.
$1,667$4,591
$2,620 $440
$6,365
$1,806
$5,540$1,971 $5,603 $4,877
$11,079
$9,467$1,077
$1,968 $1,968 $339
$4,361
$2,818
$0
$5,000
$10,000
$15,000
$20,000
$25,000
EmployerSponsored
Coverage (AV87%)
Individual/ noAPTC ($52,000
income) 40-yearold (AV 70%)
Individual/ APTC($31,000 Income)40-year old (AV
70%)
MedicalAssistance (AV
100%)
MinnesotaCare(AV 94%)
High Risk PoolCoverage
(projected) (AV80%)
Medicare (AV80%)
Aver
age
Annu
al H
ealth
Car
e Co
st
Payments Made by Individuals and Sponsors of Coverage
Personal Premium Cost Subsidized Premium Cost Personal Out-of-Pocket Spending
$8,284$6,559 $6,559 $5,603 $5,656
$21,806
$14,091
• The degree to which Minnesotans are impacted by high cost is affected by:
• Their coverage
• Whether they have access to subsidies
• Their health care needs
Spending Drivers: Level & Growth
Minnesota Health Care Spending is Concentrated (2014)
20
0.0% 0.0% 0.0% 0.4% 1.1% 2.4% 4.6%8.2%
14.6%
28.6%
100.0%
0%
20%
40%
60%
80%
100%
0 10 20 30 40 50 60 70 80 90 100
Cum
ulat
ive
Perc
enta
ge o
f Tot
al S
pend
ing
Percentage of Insured Minnesota Population Ordered by Health Care Spending
95 98
Top 5% accounts for 55.7% of all spending=17.5 billion
Top 2% accounts for 36.4% of all spending=$14.0
Source: MDH Health Economics Program preliminary analysis of Minnesota All Payer Claims Database
• Why is this important ?• Changing the benefits of
the lowest-cost individuals won’t affect spending
• Many of the high-cost patients are patients w/persistently high need
• Redesigning care for this population will be complex – they are not homogenous – and will require new models
Minnesota Health Care Spending by Type of Service, 2017
Source: MDH/Health Economics Program, Minnesota Health Care Spending: 2017 Estimates and Ten-Year Projections, Forthcoming, data remains preliminary . May not total to 100% due to rounding. 1Includes home health care services; 2Includes services provided by health practitioners who are not physicians or dentists; 3Includes chemical dependency/mental health, durable medical, health plan administrative expenses and revenues in excess of expenses, public health spending, correctional facility health spending, Indian Health Services, not itemized spending, and uncategorized spending.
2.4%
3.4%
10.3%
15.5%
16.4%
18.5%
33.5%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Other Professional Services
Dental Services
Retail Prescription Drugs
Long-Term Care
Other Spending
Physician Services
Hospital Care
Total Spending $50.1 Billion
1
Spending($ billion)
% Growth(from 2012)
$16.8 22.8%
$9.3 20.9%
$8.2 30.2%
$7.8 30.8%
$5.2 30.8%
$1.7 29.3%
$1.2 -3.6%
• Most health care spending is associated with hospital care
• There is a shift from inpatient to outpatient
• Greatest concern:
• Trends in LTC
• Trends in Rx
21
22
Health Care Is Labor Intensive: Jobs & Growth
-10%
0%
10%
20%
30%
40%
50%
60%
Cum
ulat
ive
Chan
ge in
Ave
rage
Qua
rter
ly E
mpl
oym
ent
MN Growth in Employment: Health Care and All Other
Economic Recession Health Care Non-Health Care
Source: MDH/Health Economics Program analysis of DEED data.
Health Care Has Increasingly Become Capital Intensive
23
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Urban $1,429 $549.6 $544.9 $686.6 $429.7 $637.9 $668.5 $609.6 $834.5 $385.6 $658.1 $1,573Rural $268.9 $171.8 $46.9 $104.0 $155.0 $178.1 $137.0 $84.8 $142.0 $259.3 $121.4 $142.3
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Spen
ding
Com
mitm
ents
in $
mill
ion
Capital Expenditure Commitments by MN Providers
Urban Rural
Source: MDH/Health Economics Program analysis of Capital Expenditure Reporting, as required under MN Statutes, Section 62J.17
• U.S. health care is capital intensive:• Most projects are in urban
areas
• Two-thirds of spending commitments were for hospital renovation/ replacement
• Three projects were to upgrade/ build birth centers
• One project establishes a new cancer center
24
Hospital Market Concentration Across MN
Even in the comparatively competitive hospital market of the Twin Cities, there has been an increase in hospital market concentration nearing the 2,500 threshold experts observe enhanced market power
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 8,000 8,500 9,000 9,500
Lakes Corridor
Northeast
Northwest
South Central
Southeast
Southwest
Southwest Central
Twin Cities
West Central
Herfindahl-Hirschman Index for Hospital Net Patient Revenue
MnS
ure
Ratin
g Re
gion
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: MDH/Health Economics Program analysis of Hospital Annual Reports
25
Health Care Built-up Considerable Organizational Resources
Source: MDH/Health Economics Program analysis of National Association of Insurance Commissioners data
• Minnesota’s health insurance industry generated a cumulative $2.8 billion in net income over 13 years
• For Minnesota hospitals, net income for this period (not shown) was $12.9 billion
Primary vs. Specialty Care Spending in Minnesota
86.9%83.0%
87.9%91.8% 90.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
All patients Children under 18years
Adults, age 18 andolder
People w/diabetes People w/asthma
Specialty Care* Share of Commercial Spending, 2014
26
• Despite the evidenceabout the importance ofprimary care, its share oftotal spending isvanishingly small
• Though primary carespending may not be asilver bullet, the focus onspecialty care incentivizeshigher-cost treatment
MDH/Health Economics Program preliminary analysis of the MN APCD, 2019; method adapted from Milbank Memorial Fund and RAND, using the most expansive set of provider specialties in the calculation of primary care spending estimates (PCP-C);*includes spending for durable medical equipment, facility fees, prescription drugs and other "non-primary care" spending.
Drivers of Spending Growth, 2012 to 2014
27Source: MDH, Health Economics Program; Mathematica Policy Research, Cost Drivers Analysis for Privately Insured Health Care Services in Minnesota from 2012 to 2014. Excludes other professional and freestanding outpatient surgical centers.
6.4%2.3%
5.1% 5.6%
13.8%2.3%
5.4%3.4% 1.4%
0.7%
-1.0%-10.0%
<0.0%
-0.6%
3.5%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Statewide (7.7%) Inpatient hospitalacute services (-2.3%)
Hospital outpatientservices (8.5%)
Physician services(6.4%)
Prescription drugs(18.0%)
Price Service Mix Volume
• It is tempting to attribute spending growth with patients
• But: greater health care use plays a minor role in spending growth
• Three-quarter of spending increases are driven by prices
Wasteful Health Care Spending
28
• Waste accounts for a substantial amount of spending (25 percent or greater)
• State of evidence to fully identifying and eliminating waste remains deficient
• Still …
Source: Berwick DM, Hackbarth AD. "Eliminating Waste in US Health Care." JAMA. 2012; 307(14): 1513-1516; Based on midpoint of source estimates from 2011 (34 percent of all spending). See also: Shrank WH, Rogstad TL, and N Parekh (2019), “Waste in the US Health Care System - Estimated Costs and Potential for Savings,” JAMA online. https://jamanetwork.com/journals/jama/fullarticle/2752664
27%
21%
19%
14%
14%
4%
0% 5% 10% 15% 20% 25% 30%
Administrative complexity
Overtreatment
Fraud and abuse
Pricing failures
Failures of care delivery
Failures of care coordination
Closing Observations on Equity & Opportunities
29
30
What Makes Constraining Health Care Spending Difficult
Why the Resilience in the Face of Change?• One person’s health expenditures are
someone else’s income
• Savings are tough to earn/track – other payers, federal government, over the long-term
• Standard market principles don’t function well in health care – system is opaque
• Focus on medical care vs. health/ well-being – short-term vs. systemic/longer term
Considerations for Transformation (an Excerpt):• No silver bullets appealing across the spectrum
of perspectives
• Multiple initiatives aiming at “small targets” may be necessary
• Winners and losers
• Some upfront investments might be necessary
• Economy and other external factors may interfere and produce unintended consequences
• Some initiatives have worked
Source: Adapted from MDH/Health Economics Program (2019) Minnesota Health Care Spending: 2015 and 2016 Estimates and Ten-Year Projections.
Health Care Spending vs. Health
▪ A focus on health care spending may not necessarily align or appear to conflict with other policy goals:▪ Advancing health equity▪ Addressing the increase in many chronic diseases across all
age groups▪ Ensuring access to timely, high quality of care
▪ At the same time, we don’t have robust empirical evidence of relative contribution of the “drivers of health”
31See also the RWJF funding project to improve the understanding of the role sociodemographic factors have in improving health. https://driversofhealth.org/
Potentially Preventable Deaths in Minnesota, 2011 to 2015
32
253 276
466
802
0
100
200
300
400
500
600
700
800
900
Higher Incomeand MajorityWhite Census
Tracts
All Minnesota ConcentratedPoverty
MajorityDiverse,
ConcentratedPoverty
Deat
hs p
er 1
,00K
MN
Res
iden
ts
• Areas of Minnesota with high rates of diversity and poverty had two to three times the risk of health care amenable mortality than other regions
• Economic cost associated with the “additional lives lost” was $114 million per year
Source: Minnesota Department of Health analysis of Minnesota death records and US Census data from 2011 to 2015. Rates are directly standardized using the Minnesota statewide population.
Thank You!
33
Health Economics Program: www.health.state.mn.us/healtheconomics
MN All Payer Claims Data: www.health.state.mn.us/data/apcd/publications.html
Health Care Market Statistics: www.health.state.mn.us/data/economics/chartbook/
The Health Care Spending Dilemma (Video): https://youtu.be/aitOKUtAgrs
Contact: [email protected]/ 651.201.3550
Change in Availability of Hospital-Based Birth Services
34
• Loss of hospital birth services in rural areas is related to increases in pre-term births and hospital births without obstetric services.
• Between 2003 and 2018, nine more Minnesota counties lost hospital-based birth services
Source: MDH/Health Economics Program analysis of Hospital Annual Reports
Average Number of Physically Unhealthy Days, 2017
35
Overall Minnesota has the fewest physically
unhealthy days across the United States – but this
masks substantial disparities by income, education, and health
insurance status.
* Indicates statistically significant differences at the 95% level from the statewide rate. Note: For children, education refers to that of the parent. Source: Minnesota Health Access Surveys, 2017
*4.7
*1.3
*1.5 3.4
*3.8 2.7
*1.7
*5.0
*3.9 2.5
*1.8
*2.0
0
2
4
6
Publ
ic
Grou
p
Indi
vidu
al
Uni
nsur
ed
High
Sch
ool o
r Les
s
Som
e Co
llege
or A
ssoc
iate
s
Colle
ge o
rPo
stgr
ad
<=10
0% F
PG
101-
200%
FPG
201-
300%
FPG
301-
400%
FPG
>400
% F
PG
Insurance Education Income
Days
Statewide Average Number of Physically Unhealthy Days (2.6)
Optimal Diabetes Care by Health Insurance Type, 2017
36Source: MDH Health Economics Program analysis of Quality Reporting System data.
• After years of measurement, reporting and clinical changes, the quality of care for many Minnesotans falls short of our expectations
• Minnesota’s ongoing discussions around the development of a “framework for better health” allows us to think beyond clinical care
Chronic Disease Trends in Minnesota
37
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0-17 18-64 65+ all 0-17 18-64 65+ all 18-64 65+ all 0-17 18-64 all 60-64 65-74 75+ all60+
Diabetes Hypertension Dementia Obesity 60+ Population
Growth in Disease Prevalence, 2009 to 2015• The pressure from chronic
disease for MN is two-fold:
• Demographic change means more people are at an age where they will have some chronic diseases
• The rates of prevalence across all age groups is rising
• Increasing efficiency and effectiveness of clinical care alone will not be enough
MDH (forthcoming), “Treated Chronic Disease Prevalence and Costs in Minnesota,” Issue Brief.
Facilitated Discussion
BREAK
Department of Human Services Budget Trends
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 45
Alex Kotze, CFODavid Greeman, Budget Director
DHS Programs
Alexandra Kotze, CFO
Dave Greeman, Budget Director10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 46
Medical Assistance
• Medical Assistance (MA) is Minnesota’s Medicaid program for people with low income.
• Joint state and federal program: Federal Financial Participation
• Basic care services: Families with Children, Elderly and Disabled, and Adults without Children
• Long-Term Services & Supports (LTSS): Facilities, Waivers, & Home Care
• Managed care and Fee-for-Service delivery systems
• Covers federally-mandated services and many optional services
• Approximately 1.1 million enrollment; total cost of $12.3 billion (all funds) in FY 2019
• Average monthly cost per enrollee $939
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 47
MinnesotaCare
• MinnesotaCare is a health care program for Minnesotans with low incomes
• Minnesota’s Basic Health Plan; federal subsidies equivalent to 95% of tax credits and subsidies in individual market. Covers 87% of expenditures
• Enrollee premiums cover 8% of expenditures
• State funded with Health Care Access Fund. Covers 5% of expenditures
• Total enrollment of 83,000; Total expenditures of $459 million in FY 2019
• Average monthly cost of $460 in FY 2019
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 48
Minnesota Family Investment Program
• The Minnesota Family Investment Program (MFIP) is the state's welfare reform program. It helps families and pregnant women who have low income go to work and move toward financial stability. The program provides employment services and income assistance.
• Funded with federal Temporary Assistance for Needy Families (TANF) block grant and state funds
• Served 30,000 families at a cost of $276 million (70% federal and 30% state) in FY 2019
• Average monthly payment per family is $771
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 49
Other Programs
• General Assistance is a state-funded economic assistance program. Maximum monthly benefit of $203. Average monthly enrollment of 23,000 and total expenditures of $49 million in FY 2019
• Minnesota Supplemental Aid (MSA) provides state-funded cash assistance to help adults who get Supplemental Security Income (SSI) (and some who do not get SSI because their incomes are too high) pay for their basic needs. Average monthly enrollment of 31,800 and monthly benefit of $108 in FY 2019. Total expenditures of $41 million in FY 2019.
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 50
Other Programs
• The Housing Support program pays for room and board for seniors and adults with disabilities who have low incomes. The program aims to reduce and prevent people from living in institutions or becoming homeless. Average of 20,500 recipients per month at an average cost of $681 per month. Total state expenditures of $168 million in FY 2019.
• Chemical Dependency Treatment services are funded in residential and non-residential settings, using state, federal and local funds. Total expenditures of $224 million in FY 2019.
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 51
Other Programs
• Child Care Assistance Programs can help families pay for child care while they look for work, go to work, or attend training or school to prepare for work. These are funded with state and federal dollars. Supported 16,000 families with total expenditures of $269 million in FY 2019.
• NorthStar care provides state, local and federally-funded financial support for children to eligible families in cases of foster care, adoption and kinship care. There were 18,600 children for which assistance was provided in FY 2019 at an average monthly cost of $948 and total expenditures of $212 million.
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 52
Who We Serve
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 53
Who we serve: by the numbers FY 2019
10/10/2019Minnesota Department of Human Services | mn.gov/dhs 54
1,095,907
Medicaid average monthly eligible
83,250
MinnesotaCare average monthly enrollees
14,146
Nursing facilities average monthly recipients
69,577
Home and Community-Based Services (HCBS) waivers and home
care average monthly recipients
85,424
MFIP average monthly persons
16,033
Child care (MFIP/BSF) average monthly families
350,000
Background studies conducted in calendar year
429,000
SNAP recipients (average monthly for FY2017)
MA Enrollment Distribution (FY 2018)
55
Region MA
Participants Percentage of
Population on MA Percentage of Total
MA Population
7-County Metro 600,145 19.2% 53.7%
Central 136,104 18.9% 12.2%
Northeast 71,680 21.9% 6.4%
Northwest 135,893 23.8% 12.2%
Southeast 92,511 18.0% 8.3%
Southwest 81,819 20.3% 7.3%
Minnesota 1,118,152 19.8% 100.0%
Medical Assistance Enrollment
56
64%
65% 65% 65% 65% 65%
14%
18%19% 18% 19% 19%
22%
17%16% 16% 16% 16%
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Average Monthly Enrollment
Older Adults & Peoplewith Disabilities
Adults without Kids
Families with Children
2019 End of Session Forecast
Minnesota Population Trends
57
85%, 4,677,114 79%, 4,869,037 78%, 5,287,534
15%, 805,321 21%, 1,320,170
22%, 1,504,067
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
2015 2040 2070
Pop
ula
tio
n
YearSource: Minnesota State Demographic Center, December 2017
Age 65+
Under 65
Medical Assistance Demographics: Race/Ethnicity
Overall Population Race MA Participants
6.6% African American/Black 13.8%
1.1% American Indian 2.8%
5.1% Asian or Pacific Islander 5.4%
5.5% Hispanic 4.2%
79.5% White 43.1%
2.3% Two or more races 3.2%
0.0% Unknown 27.6%
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 58
OVERALL BUDGET
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 59
2018-2019 biennium – All funds enacted budget
3%
3%
3%
3%
4%
4%
4%
10%
24%
42%
State Government & Veterans
Public Safety & Judiciary
Environment & Agriculture
Economic Development
Higher Education
Property Tax Aides & Credits
Debt Service & Other
Transportation
K-12 Education
Health & Human Services
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Data from MMB 2018 Enacted Budget (November2018)
TOTAL STATE ESTIMATED EXPENDITURES: $84.1B
10/9/2019 Minnesota Department of Human Services | mn.gov/dhs 60
2018-2019 biennium – General Fund enacted budget
1%
1%
1%
3%
3%
5%
7%
8%
30%
41%
Environment & Agriculture
Economic Development
Transportation
Debt Service & Other
State Government & Veterans
Public Safety & Judiciary
Higher Education
Property Tax Aides & Credits
Health & Human Services
K-12 Education
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Data from MMB 2018 Enacted Budget (November, 2018)
TOTAL STATE ESTIMATED EXPENDITURES: $45.9B
10/9/2019 Minnesota Department of Human Services | mn.gov/dhs 61
DHS Expenditures by Activity
3%
3%
4%
5%
7%
77%
Direct Care and Treatment
Policy
Fiduciary activities
Technical activities
Grant programs
Forecasted programs
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
FY2019* SPENDING BY ACTIVITY$18.277B – ALL FUNDS
*Budgeted Minnesota Department of Human Services | mn.gov/dhs 62
Human Services Budget – Spending by Fund
$257,609
$357,017
$514,846
$658,280
$793,596
$6,358,123
$9,337,838
Federal TANF
Other
Health Care Access Fund
Child Support Enf
Special Revenue Funds
General Fund
Federal
$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000
FY2019* SPENDING BY FUND (in thousands)$18.277B – ALL FUNDS
* Budgeted Minnesota Department of Human Services | mn.gov/dhs 63
Total DHS Expenditures Trends—All Funds
$12,938,130
$13,995,444
$15,449,836$16,149,254 $15,884,598
$17,817,008
$18,277,309
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
FY2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
TOTAL EXPENDITURES OVER TIME (IN THOUSANDS)
FY 2019 figure is budgeted Minnesota Department of Human Services | mn.gov/dhs 64
Expenditure Trends over Time, by Fund
$1,559,197 $1,744,329 $1,831,845 $2,178,357 $1,929,244 $1,773,384 $2,571,348
$6,358,442$7,035,875
$8,167,960$8,658,804 $8,350,626
$9,746,622$9,337,838
$5,020,491$5,215,240
$5,450,031$5,344,071 $5,634,534
$6,297,002 $6,368,123
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
FY2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019*
TOTAL DHS EXPENDITURESFEDERAL AND NON-FEDERAL FUNDS (IN THOUSANDS)
General Fund
Total Federal Funds
Total Other Funds
Minnesota Department of Human Services | mn.gov/dhs 65* Budgeted
DHS Grant Expenditures Over Time
$937,888 $910,112 $792,959 $732,392 $782,074 $765,217
$946,984
$315,907 $330,363
$319,786 $365,852
$365,510 $375,892
$401,690
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019*
TOTAL EXPENDITURES BY FISCAL YEAR (IN THOUSANDS)
General Fund
Federal and Other
* Budgeted Minnesota Department of Human Services | mn.gov/dhs 66
DHS Non-Forecast SpendingProjected Grant Expenditures in FY 2019
$6,640
$66,210
$84,706
$98,866
$114,226
$130,638
$152,599
$163,698
$531,091
Refugee Services
Aging and Long-Term Care
Disabilities Grants
Health Care
Employment Services
Child Care
Children and Community
Behavioral Health
Nutrition and Housing
$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000
GRANT EXPENDITURES BY PROGRAM AREATOTAL EXPENDITURES (ALL FUNDS): $1.35 BILLION
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 67
FORECASTED PROGRAMS
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 68
DHS Forecasted Programs Projected Expenditures in FY19
0.65%
1.20%
1.52%
1.61%
3.18%
3.29%
13.03%
20.02%
21.42%
34.06%
Other General Fund
Housing Support
Northstar Care
Chemical Dependency
MFIP Grants and TY Child Care
MinnesotaCare
MA - Adults with No Children
MA - Elderly and Disabled Basic Care
MA - Families with Children
MA - Long Term Care and HCBS Services
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%
PERCENT OF TOTAL FORECASTED PROGRAMS ($14.038B, ALL FUNDS)
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 69
Total Medical Assistance Expenditures by Fund
$0
$2,000,000,000
$4,000,000,000
$6,000,000,000
$8,000,000,000
$10,000,000,000
$12,000,000,000
$14,000,000,000
$16,000,000,000
$18,000,000,000
2015 2016 2017 2018 2019* 2020* 2021* 2022* 2023*
Local Share
State HCAF
State GF
Federal Share
*Projected Minnesota Department of Human Services | mn.gov/dhs 70
Average Federal Match – FY19
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 71
50%
50%
93%
Families & Children
Older Adults & People with Disabilities
Adults without Kids
Federal Match
Medical Assistance Spending in FY19—State Funds Only
177,987
714,779
203,142
Average monthly enrollees
$4.0B
$1.3B
$0.1B
Total expenditures(state) = $5.4 billion
Older Adults& People withDisabilities(incl. LTSS)
Children &families
Adults w/ochildren
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 72
Total Annual Cost for MA ($000’s)
$2,797,274
$4,892,008
$2,343,980
$3,795,952
$2,852,531 $3,734,184
$1,694,520
$2,263,296
$924,087
$1,464,857
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019* FY 2020* FY 2021* FY 2022* FY 2023*
Cost by Eligibility Category—All Funds
LTC Waivers
E&D Basic
Families Basic
Adult Basic
LTC Facilities
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 73
Average Monthly MA Enrollment
57,602
85,538
677,188 714,774
179,329 196,884
193,302
199,020
16,761
14,8930
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019* FY 2020* FY 2021* FY 2022* FY 2023*
Enrollment by Eligibility Category
LTC Waivers
Families Basic
E&D Basic
Adult Basic
LTC Facilities
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 74
MA Average Monthly Cost Per Enrollee
$351 $435
$731 $948
$1,089 $1,607
$4,594
$8,197
$4,047
$4,766
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019* FY 2020* FY 2021* FY 2022* FY 2023*
Cost by Eligibility Category—All Funds
Families Basic
Adults Basic
E&D Basic
LTC Facilities
HCBS Waivers
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 75
MinnesotaCare Expenditure Trends
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2015 2016 2017 2018 2019* 2020* 2021* 2022* 2023*
EXPENDITURES OVER TIME, ALL FUNDS (IN THOUSANDS)
Premium Revenue
Federal Share
State Share
Minnesota Department of Human Services | mn.gov/dhs 76* Projected
MFIP, MFIP/TY Child Care and Northstar Programs Expenditure Trends
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
2015 2016 2017 2018 2019* 2020* 2021* 2022* 2023*
EXPENDITURES OVER TIME, BY PROGRAMALL FUNDS (IN THOUSANDS)
Northstar
MFIP/TY Child Care
MFIP
* Projected Minnesota Department of Human Services | mn.gov/dhs 77
Consolidated Chemical Dependency Treatment Fund Expenditure Trends
$169,583 $159,612$186,287
$211,926
224,384
236,318
272,316
282,091
279,987
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
2015 2016 2017 2018 2019* 2020* 2021* 2022* 2023*
EXPENDITURES OVER TIME, ALL FUNDS (IN THOUSANDS)
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 78
Where is the growth?
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 79
MA LTSS Total Spending ($000’s): Facilities vs HCBS
80
1990, $771 Million
1990, $112 Million
2023, $1.5 Billion
2023, $4.9 Billion
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Tota
l An
nu
al C
ost
($
00
0’s
)
State Fiscal Year
Source: 2019 End of Session Forecast
LTC Facilities
LTC Waivers & Home Care
MA Long-Term Services and Supports (LTSS) Average Monthly Enrollment: Facilities vs HCBS
81
1990, 33,328
1990, 8,452
2023, 14,893
2023, 85,538
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Ave
rage
Mo
nth
ly E
nro
llmen
t
State Fiscal Year
Source: 2019 End of Session Forecast
LTC Facilities
LTC Waivers & Home Care
MA LTSS Average Monthly Cost: Facilities vs HCBS
82
1990, $1,928
1990, $1,101
2023, $8,197
2023, $4,766
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Ave
rage
Mo
nth
ly C
ost
per
En
rolle
e
State Fiscal Year
Source: 2019 End of Session Forecast
LTC Facilities
LTC Waivers & Home Care
LTSS Summary (FY2019)
Source: 2019 End of Session Forecast83
ProgramAverage Monthly
EnrollmentAverage Monthly
Cost Total Spending
FY18-FY23 Annual Growth
Nursing Facilities 14,146 $6,087 $1.0 billion 7.3%
DD Waiver 19,676 $6,432 $1.5 billion 6.4%
CADI Waiver 26,888 $3,235 $1.0 billion 9.6%
Elderly Waiver (FFS+MC) 26,205 $1,421 $447 million 7.0%
Personal Care Assistance (FFS+MC) 36,968 $2,336 $1.0 billion 6.4%
Contact Information
Alex Kotze, CFO
Dave Greeman, Budget Director
Minnesota Department of Human Services | mn.gov/dhs 8410/10/2019
Questions?
10/10/2019 Minnesota Department of Human Services | mn.gov/dhs 85
Facilitated Discussion
Next meeting
Blue Ribbon Commission Meeting 3
Thursday, Oct. 24, 2019
1:00 pm – 4:00 pm
Spirit Mountain; Moosehead Room
9500 Spirit Mountain Place
Duluth, MN 55810
