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Legislative News and Views - Rep. Jennifer Schultz (DFL)

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RELEASE: Attorney General and state lawmakers call for bipartisan action to stop the legal privatization of billions of dollars in public health care money

Tuesday, April 23, 2019

St. Paul, Minnesota—Without action from the Legislature this session, for-profit companies will be legally allowed to privatize billions of dollars in public health care money. The Attorney General and state lawmakers called for bipartisan action today on for-profit health plan conversions, before a new law takes effect this year. The Minnesota House will be voting to stop the so-called ‘health care heist’ in its Health and Human Services omnibus bill tomorrow.

“Minnesota was the only state in the nation that still banned for-profit companies from selling health insurance,” said Rep. Tina Liebling, chief author of the Health and Human Services omnibus bill. “There’s a clear reason for that—money for health care should go to care, not profits.”

The issue began in 2017 when the Legislature repealed the ban on for-profit health insurance companies, without including guidelines around the conversions. This will make it legal for for-profit health insurance companies to privatize huge sums of community assets.

“Minnesota’s nonprofit health plans had $10 billion in assets and reserves when this law was repealed, according to former Attorney General Swanson. This is our money, and it was intended for health care,” said Rep. Jen Schultz, chief author of a key bill on HMO conversions.

Minnesota’s nonprofit health insurance companies built their reserves through taxpayers, through their nonprofit tax status, health care premiums, and public health care contracts.

“It’s our responsibility to protect assets that belong to the public. This is not a political issue. It’s about doing what’s right for Minnesotans,” Rep. Schultz said.

Minnesota’s nonprofit health plans have not indicated any intentions of converting to for-profit companies. However, in at least 15 states that converted nonprofit health plans to for-profits, either executives walked away with ‘golden parachutes’ or the public was short-changed out of its charitable assets.

“Nonprofits don’t have owners or shareholders; their charitable assets belong to the people. Nonprofit HMOs have benefited greatly from the decades of tax breaks and public dollars that taxpayers have given them,” said Attorney General Keith Ellison. Their charitable assets are our money that they’re holding in trust for us. In exchange for taxpayer subsidies, they’re supposed to act exclusively in the public interest. The only appropriate use of that money is to improve the health of Minnesotans. Shipping these assets out of our state, using them to pay for-profit executives’ exorbitant salaries and bonuses, or for any other for-profit purpose is wrong.”

Since the law was repealed in 2017, consequences have already taken effect. With the state no longer requiring that nonprofit health plans spend money on health care, Medica, a nonprofit insurer, was able to transfer over $100 million out of state.

Advocates are calling for strong public protections around for-profit health plans, as well as a return to the ban on for-profit conversions that’s included in the House HHS omnibus bill.

“There is no reason why we should leave the door open to a legal health care heist,” said Rose Roach, executive director of the Minnesota Nurses Association. “While we’re dissatisfied with the use of HMOs as a vehicle to provide health care—allowing for-profit health plans in the state is a huge leap in the wrong direction.”

“We have a choice in front of us,” said Rep. Tina Liebling. “This is our money. We can open the door for corporate health care groups to walk away with our money, or we can do everything in our power to ensure that our money for health care goes to care. We need the Senate to act with us.”