Health Insurance is Expensive Because Corporate Greed is Expensive

Over Thanksgiving, I was perusing the Dairy Star at my brother-in-law’s house in Stillwater, Minn. Having grown up on a dairy farm, I still like to see how the industry is doing. A column by Sadie Frerichs called, "The Negative Impacts of Health Insurance," caught my eye.

Because of the recent health insurance rate increases in Minnesota, ranging from 14 percent to 49 percent, the Frerichs dairy farm family will have to pay almost $20,000 per year in health insurance. As a member of the Land Stewardship Project's Healthcare Organizing Committee, this is an unfortunate story I’m hearing all too often from other LSP farmer-members.

Although only 6 percent of Minnesota’s population buys insurance on the individual, commercial market, there are a disproportionate number of farmers and rural residents affected by these exorbitant rate increases. If you don’t qualify for a public program like Medicaid or MinnesotaCare, meet the age requirement for Medicare, or if your employer doesn’t offer health insurance, which is often the case in rural areas, there are no other options.

While our farmers and rural residents are struggling to maintain their businesses and their health, supposed nonprofit HMOs are doing exceedingly well in Minnesota. According to the Star Tribune’s Annual Nonprofit 100, Blue Cross and Blue Shield is at the top of the list in overall revenue. HealthPartners and Medica are in third and fourth place, respectively.

What does a nonprofit do with extra revenue? One place this extra revenue is being funneled is into reserves. Minnesota Commissioner of Commerce Mike Rothman, who approved the 2016 rate increases, admitted that there is need for reform. One recommendation he suggested is “…closer monitoring of insurance company financial reserves and profits, with the possibility of establishing maximum thresholds, or ‘caps,’ to prevent excessive reserves.”

Under Minnesota law, health plans must maintain minimum capital reserves to be considered solvent. But in 2013, the total Minnesota HMO reserves were over 600 percent more than they needed to be. Equally disturbing is that an estimated 24.9 percent of the $1.785 billion in 2012 HMO reserves were accumulated through earnings from Minnesota public health insurance programs. These funds were originally intended for healthcare access. Using this money to boost reserves to excessive levels is not a good use of taxpayer dollars.

Another way revenue is being spent is through an increase in executive compensation. Blue Cross and Blue Shield CEO Michael Guyette took in $2.9 million in total compensation in 2014. Even more egregious are the earnings of the CEO of the for-profit United Health Group, which is headquartered in Minnetonka. The Star Tribune reported that United Health Group CEO Stephen Hemsley took in over $66 million in total compensation during 2014.

Although for-profits aren't allowed to sell insurance directly in Minnesota, United Health has a huge business here. The company sells its services to every major health plan and health system in the state. As the Star Tribune reported, United Health "…runs 24-hour nurse hotlines, manages prescription drugs, sets up electronic medical records and even owns a bank that handles health savings accounts.”

I’ve heard insurance companies say that health insurance is expensive because healthcare is expensive. Let’s be honest. Health insurance is expensive because reserves, executive pay and profits are expensive. I didn’t even mention administrative costs.

A lot more people could lead healthier lives if all of that money was used to provide actual healthcare for everyday, working people. If we want to see farmers and rural communities thrive, we need a health insurance system and a healthcare system that works for people, not corporations.

Joe Kriegl has been a Land Stewardship Project member for over 15 years and currently serves on the organization's Healthcare Organizing Committee. He grew up on a dairy farm outside of Baraboo, Wis., and earned an agricultural degree from the University of Wisconsin-River Falls. From 1964-1966, he was part of an agricultural team, working alongside educators and community health workers, for the International Voluntary Services in Vietnam. From 1982-2000, he owned and operated Blomkest Fertilizer in Blomkest, Minn. He currently is retired and lives with his wife in Redwood Falls, Minn.