Almost every Minnesotan believes all people should have access to health care. Unfortunately, 4% of Minnesotans remain uninsured, a number that will likely increase as continuous Medicaid coverage created under the public health emergency comes to an end and eligibility determinations resume (called Medicaid unwinding). Furthermore, 23% of Americans are underinsured, meaning out-of-pocket health care costs are 10% or more of household income, or deductibles equal 5% or more of income.
Health insurance coverage is no longer affordable for many Minnesotans. In 2021, the average deductible for employees with employer-sponsored insurance in Minnesota was $4,254 for family coverage, doubling in the last eight years. Approximately 85% of Minnesotans pay a deductible. Average annual premiums were $21,327, increasing more than 50% since 2010, a rate higher than wage growth (27%) and inflation (19%). Small employers with 50 or fewer full-time employees face 50% greater premiums and deductibles.
Therefore, it is not surprising that employers are becoming more concerned with the cost of coverage. In a 2021 poll of business leaders conducted by Kaiser Family Foundation, 96% agreed that “employer costs for health benefits are excessive,” 89% said they are unsustainable in the next five to 10 years, and 85% believed a greater government role in coverage and costs would be needed.
We need affordable health care for every Minnesotan. A proposal ( HF 96 ) to expand MinnesotaCare to create a public option is being considered in the Minnesota Legislature this session. This bill would allow Minnesotans the ability to buy in to a successful program with low cost-sharing and affordable premiums.
Contrary to what a March 10 column in the News Tribune said, allowing folks to buy in to MinnesotaCare would provide more choices, competition among health plans, and reduced cost-sharing. That column (Local View: “Public health option would hurt more than help Minnesota”) stated that a buy-in would lead to higher prices, reduced access, and government-run, lower-quality health care. The column provided few justifications for these claims. America already has the highest medical prices of all developed countries, and we ration health care based on ability to pay while other developed countries are close to universal coverage. MinnesotaCare, created with bipartisan support, is administered by private health plans and relies on private providers. This is not a government-run health care program.
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The column suggested that focusing on private insurance has led to more affordable health care coverage on the individual market (non-group coverage). These “affordable” premiums are the result of significant state government subsidies using a reinsurance program where the state pays 80% of all medical claims between $50,000 and $250,000; essentially the state is an insurer of all large claims.
Since 2018, more than 5 billion of Minnesota taxpayer dollars have been used to drive down premiums on the individual market, which covers 160,000 Minnesotans. But deductibles and cost sharing on the individual market are high, with average deductibles of $5,000 for individual and $10,000 for family coverage — and 70% of enrollees paying coinsurance and/or copayments for services. Most of the plans offered on the individual market are simply not affordable, even with the significant state subsidy, and offer inadequate coverage with high deductibles and cost-sharing.
The state subsidy could be used to support the public-option program that would be open to more Minnesotans, particularly workers not offered affordable employer coverage or workers at small businesses with no offers of coverage. Many states have implemented or are proposing quasi-public options to provide more coverage at affordable premiums.
Proposals to expand coverage are needed but fail to address the underlying problem of high medical prices. This is why we need to pass legislation ( HF 2202 ) to create a health-affordability board. This board would set health care spending targets for hospitals and providers. Nine states have implemented spending targets, with Massachusetts saving more than $7.2 billion over 5 years .
A health-affordability board would determine a health care cost growth target, often referred to as a benchmark, which is a forecast of allowable per capita total health care spending growth. The board would measure and publish how all health care payers and large providers perform against this benchmark. The board would develop accountability mechanisms such as requiring a performance-improvement plan, detailing how the organization would meet the benchmark and what steps it would take to lower growth in health care costs. Providers that fail to submit adequate improvement plans would likely face steep financial penalties. The board would collaborate with state agencies using detailed data submitted by payers to analyze and understand the specific drivers of health care cost growth.
It is time to demand more accountability for high medical prices and provide incentives to minimize costs. Creating a health-affordability board would benefit all Minnesotans, particularly those paying high premiums and deductibles.
I urge support for these key pieces of health care reform legislation, appropriating funding to implement a public option to provide coverage to more Minnesotans, and creating health care spending targets. By passing these reforms we would be aligning with the values of Minnesotans, those who want their friends and neighbors to have access to health care.
Jen Schultz of Duluth is a former Minnesota legislator, is a professor of health economics at the University of Minnesota Duluth., and has a Ph.D. She wrote this for the News Tribune.
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The Trust Project
