Imagine the state of Minnesota deciding to get into the farm implement sales business and setting up a new dealership to compete with local dealerships. It's a sure bet with the state's ability to subsidize its dealership and get around regulations that its prices magically would be lower than the other dealerships in town. Eventually, one by one, private dealerships would have to close, and the community would be left with fewer implement choices.
The same is true for the MinnesotaCare health insurance buy-in proposal being supported by some politicians.
A recent Minnesota Poll claims there is strong public support for consumers to buy into Medicare or MinnesotaCare. But the poll is very simplistic. Reality is much more difficult to assess. As experts in both representing and educating consumers on their health insurance options, we know just how complex the system can look to consumers.
Consumers obviously are interested in having options and are always eager for less-expensive products. Recently adopted state reforms gave us just that. Competition in the insurance market means insurers have to offer good plans at affordable prices if they want business.
Medicare and MinnesotaCare buy-in plans look good on the surface, but anyone who looks at the details, with the help of an expert insurance agent, will see it's not the silver bullet they may have thought it was.
Programs like Medicare and MinnesotaCare pay doctors, hospitals, and clinics a very low reimbursement rate. Many times, this rate doesn't even cover the provider's cost to deliver the care. This "loss" is then shifted to the rest of the insured market, meaning Minnesotans with private insurance pay higher rates to make up for what the government programs don't pay.
If more people buy-in to MinnesotaCare because it appears to be less expensive, more people will be paying doctors, hospitals, and clinics lower reimbursement rates. This, in turn, very likely would lead to severe cuts to local doctors, hospitals, and clinics. Cutbacks in service and quality certainly would follow, particularly in nonmetro Minnesota where important health resources are already critically scarce.
Even the administration of Gov. Mark Dayton understood how badly its plan underpays doctors and hospitals when it changed its original proposal for MinnesotaCare buy-in from using Medicaid-based rates to using Medicare-based rates. While that's inside baseball to most consumers, those paying attention saw that the change led to a whopping 46 percent increase in the projected price for the program - and even with the increase, the program still pays providers less than the cost of actually providing the services.
If, as expected with a buy-in option, more patients shifted to the cut-rate government plan, smaller clinics and hospitals would not be able to withstand the low reimbursements and many would have to close.
The true impact would be fewer options for insurance and providers, not more. Once the government steps into the market with a cut-rate plan fueled by artificially low payments to doctors, don't expect other competitors to stay in the market for long. Consumers could be left with just one choice: buying from the government.
The dirty little secret of the MinnesotaCare buy-in proposal is that, other than in name, it wouldn't really be MinnesotaCare. The deductibles, copays, and premiums all would be much higher than the MinnesotaCare program people now know. Consumers would find that to keep the plan price low, the network would include fewer doctors, and fewer benefits would be covered.
It's the kind of bait-and-switch that is illegal in the private sector.
We wouldn't let it happen if it was an implement dealer, and we shouldn't let it happen to our health insurance. It is critical Minnesotans let their legislators know they oppose this expansion of government before they find they have no choices for health insurance or even doctors.
Marie Bell is president of the Minnesota Association of Health Underwriters and an agent at DeRuyter-Bell, LLC in Minneapolis. Bob Stein is the Legislative Committee chairman for the Minnesota Association of Health Underwriters and is an agent at Armbruster Executive & Employee Benefits in Oakdale, Minn.