Duluth-based health insurance program expanding

A small Duluth program providing subsidized health insurance for low-income workers is expanding into much of Northeastern Minnesota.

HealthShare is one of three Minnesota pilot projects testing new approaches to making health care affordable. So far, the Duluth program has had just modest participation, but a big infusion of public money is helping it expand.

Jan Witte is a satisfied customer with HealthShare, first offered in Duluth last November. Witte is a nurse who's out of work with crippling back problems. She gets HealthShare coverage through her husband's employer, a nonprofit.

"Needless to say they don't have a lot of money," Witte said. "We had insurance previous to HealthShare, but it was costing $600 a month, which this non-profit can't afford."

Under the old plan, her deductable was so high she paid most medical bills out-of-pocket and the couple avoided routine care. Now, with HealthShare, Witte feels she can afford the treatment her doctor recommends.

They OKed an MRI, they OKed back surgery," she said. "I could never have had back surgery. I couldn't stand, I couldn't walk; I don't know what I would have done."

"They OKed an MRI, they OKed back surgery. I could never have had back surgery."

The goal of HealthShare is to help people like Witte, by making health coverage affordable to small employers.

Blake Shippe is with Shiprock Management, a Duluth property management company. Shiprock couldn't afford to provide employees with health coverage.

"That's something that's really close to us, and that's something that we've always wanted to provide," Shippe said. "So when HealthShare came available I read an article and we were in that same day."

It turns out, Shippe was one of only a few employers to sign up. Some 9,000 people in the Duluth area have no health insurance. Seventy percent of them have jobs, but either their employers can't afford to offer insurance, or it's so costly the workers can't afford to take it.

Despite the apparent need, HealthShare is off to a slow start in Duluth. Only about 60 people in 20 small businesses are enrolled.

HealthShare Director Dan Svendsen said timing and the economy have a lot to do with that.

"We started in November of 2008, which was right in the middle of the financial crisis," Svendsen said. "And, when a small business makes the decision to purchase health coverage, it's coming out of the owner's pocket."

But a similar program in Muskegon, Mich., has served more than a thousand members after a decade in business. The state has committed $1 millions over five years for HealthShare. A Duluth foundation has provided another $190,000.

HealthShare is one of three demonstration health coverage projects the state is helping to fund. Portico Healthnet serves low-income uninsured people in the Twin Cities area, while PrimeWest Health is just starting up in 13 rural counties.

HealthShare targets businesses with fewer than 50 employees; with employees that make a median around $12.50 an hour. The companies pay just 60 dollars a month, while their workers pay about the same -- a little less if they participate in a program to promote better health.

Healthshare Director Svendsen said the program tries to keep people healthy and prevent illnesses from snowballing into serious conditions for lack of care.

"We want them to build a relationship with a primary care physician, so that when they are sick they can call, get an appointment, get in, and be seen," Svendsen said.

HealthShare doesn't cover risky behavior, however. It won't pay for injuries incurred while drunk, or while doing things like rock climbing. There's a lifetime $200,000 cap on benefits.

HealthShare keeps costs low with public funding combined with generous payment terms from Duluth area doctors, clinics and hospitals.

Despite the relatively low reimbursement, Jo Ann Hoag, with Duluth's St. Lukes Hospital, said it's cheaper to keep people healthy and out of the emergency room.

"Some of the times these folks come to us, and then they're in greater peril, and the cost of care that we deliver is even greater than if we can get them in to a primary care physician so that you're preventing that whole hospitalization piece, that can't be afforded," Hoag said.

And now, HealthShare is expanding beyond Duluth, to include St. Louis, Carlton, Cook, Lake, Itasca, Koochiching and Aitkin Counties. A federal grant provides $35 million over the next five years, while the Minnesota Department of Health just awarded $208,000 for continuing operations.

The question is whether business owners will have enough confidence in this fragile economy to spend the extra money on HealthShare's coverage.

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