Report From the States

A Warning From Minnesota

Twila Brase, RN, PHN

In 1991, the Minnesota Health Care Access Commission, an advisory consultant group, recommended a comprehensive package of health care reform initiatives and a funding mechanism for them. Writing in the Heartland Institute's Intellectual Ammunition (March/April 2000), as president of Citizens' Council on Health Care, I advised state legislators seeking to expand health insurance coverage that they should learn from Minnesota's "costly experiment" what they should not do when passing new laws. The Commission offered proposals which were intended for the managed care industry to be funded via a tax on health care services. In that article, I therefore explained that the resulting MinnesotaCare legislation of 1992 --- promoted to the public as a new insurance program for the uninsured --- also enacted a provider tax and initiated the mass consolidation of Minnesota's health care market. In 1993, the health care provider tax was levied on hospitals. By 1995, the tax was extended to all health care professionals, including wholesale drug distributors and surgical centers. Minnesota thus became one of only eight states to levy a tax on health care services and supplies.

Legislators were also assured that the subsidy program would not only insure more people, but would save money in the process. Additionally, this "wonderful" reform would not only shrink the number of the uninsured, but would allow health care providers to be paid for their services. The tax was also expected to lower the cost of caring for the uninsured. Following the rule of unintended consequences, as is usually the case with more government involvement, I concluded, "contrary to public perceptions and expectations, the tax has increased the cost of health care and created a financial burden for the sick and those who care for them. There has been no decrease in the uninsured population rate, but there has been the creation of a slush fund for various state department projects and managed care initiatives. State legislators around the country might want to consider these findings carefully before following Minnesota's example."

Ms. Brase is president of Citizen's Council on Health Care. E-mail address:

Originally published in the Medical Sentinel 2000;5(4);143. Copyright©2000 Association of American Physicians and Surgeons (AAPS)