Perfect Storm Brewing for Rural Health Care in Minnesota


The warning signals are getting stronger every day.

Newspapers and television report daily on problems in our health care system. Its failure to cover millions of Americans and its woeful lack of cost-effectiveness are among the few things that presidential candidates from either party can agree on.

But the strains on the system are seen most clearly in rural America. Even in Minnesota, which is considered a leader in medical access and innovation, a perfect storm is brewing in rural health care, with danger looming on three threatening fronts.

On one side, fewer and fewer individuals and families have affordable health coverage. On the other, there is dwindling access to health providers. And rushing down from the north is increased financial strain on rural hospitals and clinics.

Alone, any of these problems presents a great challenge. Taken together, they could wreak irreparable damage.

Fewer people with health coverage. Right now, more than 250,000 rural Minnesotans lack health insurance. That’s about 9 percent of the outstate population, and the situation is worsening. According to the Kaiser Foundation, more than 83,000 Minnesotans lost health insurance from 2003 to 2006. Many were forced off public programs such as MinnesotaCare because of state budget cuts.

Rural Minnesota absorbed the lion’s share of the cuts. In 2004, 8 percent of urban Minnesotans were uninsured, compared with approximately 10 percent in rural counties. Rural Minnesotans are also more likely than urban residents to be insured by public programs or carry individual insurance (rather than employer-sponsored coverage). In 2004, only 77 percent of rural Minnesotans had health insurance through their jobs, compared to 81 percent for urban residents.

Fewer than half of employers in Greater Minnesota – 38 percent — provide health benefits to their workers. And that will only get worse as options for coverage vanish.

Dwindling access to care for a graying population. There is a growing shortage of health care professionals and clinics in rural Minnesota. The Twin Cities have one physician for every 830 residents, while in rural Minnesota the ratio is one for every 1,430 residents.

Thirty Greater Minnesota counties and portions of 20 more have been federally designated as Health Professional Shortage Areas – meaning they have less than one physician for every 3,500 residents. Dentists are in even shorter supply than physicians — one for every 1,820 rural residents — and most outstate clinics and hospitals have a hard time finding nurses, lab technicians and other health care workers to fill openings.

At the same time that providers are struggling to fill jobs, the rural population is getting older, increasing demand for scarce services. The percentage of seniors 65 years and older is increasing across the state, but even faster in rural areas. In northwest Minnesota alone, about 20 percent of the population is over age 65. By 2020, that’s likely to increase to 30 percent, and the fastest growing population segment will be those 85 and older.

More financial strain on rural hospitals and clinics. Since 1987, 34 Minnesota hospitals with 2,500 beds have closed, and more could be lost in the next few years. According to the Minnesota Department of Health, one-fourth of the 119 hospitals in Greater Minnesota are operating at a loss or have such a small operating margins that they cannot afford routine capital improvements.

Add to this precarious financial situation increased pressure from state budget cuts, and you have a recipe for disaster. Budget cuts in 2003-2004 stripped state-supported health coverage from close to 40,000 Minnesotans. Payments to hospitals were cut by around $50 million, which forced a corresponding loss of about $40 million in federal funds. Approximately $37 million of the cuts hit rural hospitals.

Some budget cuts were restored by the Legislature in 2005 and this year, but underfunding still has taken its toll. Had Gov. Tim Pawlenty gotten his way, much of the matching federal money that will go to hospitals this year would have gone into the state’s General Fund instead.

Despite these troubles, Minnesota’s health care system remains the envy of our neighbors. But the struggle to provide decent health care for our rural residents is a glimpse into the future for all of us.

During the next few years, we must look for ways to insure the health of more Minnesotans, improve health access in rural areas, strengthen the financial foundations of rural health care facilities and reduce costs for rural employers who offer health coverage as a benefit.

We should see this as the real opportunity it is. The states that meet the health care crisis first will have a leg up on the rest of the country in attracting businesses and creating jobs and economic opportunity. We’ve been slipping on too many fronts lately. It’s time for us to be out in front again.

Matt Entenza is Minnesota 2020 Board Chair.