Minnesota’s health system largely has grown in a nonprofit environment. Most of the best-known names in both health care delivery and insurance are nonprofit organizations.

Last year, the Minnesota Legislature reversed decades-long policy and voted to allow for-profit companies to be licensed as health maintenance organizations, or HMOs, in the state.

The St. Paul Pioneer Press neatly framed the argument for and against for-profit insurers in a February 2017 article :

“The change is a cultural shift for Minnesota with uncertain results for the insurance marketplace and consumers. The much-debated nonprofit-only clause had withstood decades of legislative challenges until this year.

“Supporters say the move could introduce more competition to the state’s troubled individual insurance market, where premiums have soared in recent years.

“’I favor a chance to have a real market and real competition in the health care world,’ said state Sen. Jim Abeler, R-Anoka. ‘Not (just) to drive prices down, but also to make sure people are satisfied.’

“Others like Sen. John Marty, DFL-Roseville, say for-profit insurers would be more expensive and ‘less in the public interest’ than the current nonprofit HMOs.

“’Their fiduciary responsibility to their shareholders to make a bigger profit can come two ways: either charging higher premiums, or cutting back what they pay out,’ Marty said.”

It’s likely that both sides of the debate will fall short in their predictions. Some for-profit companies likely will enter portions of Minnesota’s marketplace, but the state already has a robust, competitive market unlike much of the rest of the country. In fact, while Minnesotans can choose from five or more health plans in most parts of the state, a single insurer dominates the marketplace in more than four of 10 metropolitan areas throughout the country, according to the American Medical Association.

As a result of existing competition, Minnesotans generally pay less for health insurance than consumers in other states. For example, the average 2016 premium (employer and employee share combined) for employer-based insurance was $17,545 in Minnesota, below the national average.

It is true that nonprofit health plans don’t have shareholders to satisfy, as Sen. Marty pointed out. However, all organizations – nonprofit and for-profit alike – need capital. Minneapolis StarTribune columnist Lee Schafer discussed this reality in an enlightening column in December 2017 :

What all nonprofits need is capital. That’s true for Mayo Clinic and the other big health care companies on the top of the list of largest nonprofits down to the local food shelf or community theater.

“It doesn’t matter whether it’s called the reserve, a surplus or net assets — it’s all capital. There’s only one reliable way to get such a cushion: That’s consistently spending a little less than they take in.

“Yes, that means making a profit…

“In a nonprofit there won’t be shareholders equity, but in the lower right there might be something called net assets. That’s the capital. And in the upper left — and in the same place it would appear on the Target Corp. balance sheet — is cash and investments.

“If the nonprofit had money in the checking account, or at least positive net assets, then it had some time. It could get to work on trimming expenses or figuring out ways to charge for a service or cultivate more donors. No money and zero net assets, well, then it was time to start laying off staff while praying for divine intervention.

“Nonprofit managers rarely seem to think about this scenario, because adopting a balanced budget and then hitting it always seem like the right things to do. Yet that’s just breaking even. To do better than that at a social service or arts nonprofit takes some unrestricted money, too, as government and foundation grants must get spent on the programs they were meant to fund.

“A financial cushion in a neighborhood arts organization plays the same role it does in a big insurance company, like at HealthPartners or Medica. It absorbs the financial blow of an unpopular play, an unexpected expense or a down year in the business.”

More competition in the health marketplace has some benefits, and that’s as true among the health providers – the large health systems that deliver care – as it is among insurers. In Minnesota’s marketplace, though, the incentives to be efficient, to keep a lid on costs and to provide the best service at the lowest price already exist. The challenge is to recognize that there are no easy solutions to rising health costs, no quick fixes and no single answers.

Health policy is complicated, as policy makers quickly discover when facts replaces wishful thinking.