Lawmaker's view: There are solutions to the crisis of health insurance costs

This year’s cost crisis in the individual health insurance market is one more result of our broken health care “system.” MNsure, which is simply a listing service and website where people compare plans, is not to blame for the rising premiums in the market. It is the private insurers on and off the exchanges that are having difficulty dealing with the costs of people with complicated health problems, skyrocketing drug costs, and increasing use of expensive tests and treatments. Having too few insurers reduces competition on price, and insurers have weak positions to negotiate reimbursements with providers. The individual health insurance market is small and does not receive the tax exemptions that benefit employee insurance.
The Affordable Care Act did bring people into the insurance market who previously were denied insurance because of their health history, driving up some costs. But most people agree all Americans should be able to get health insurance. Even without the Affordable Care Act, the individual health insurance market would be in trouble. According to the Congressional Budget Office and other research, exchange prices offered in 2016 were less than individual health insurance plan premiums in 2013, prior to the Affordable Care Act, and 20 percent below the Congressional Budget Office projections made in 2009.Individual health insurance policies would be just as expensive without health care reform, but many Americans would still be uninsured or severely underinsured.Gov. Mark Dayton has proposed an immediate solution to address the rise in premiums, as reported in Friday’s News Tribune. He would offer a 25 percent rebate to those who do not qualify for federal subsidies, approximately 123,000 Minnesotans. This solution can be easily implemented and would provide immediate relief to consumers. That’s unlike tax credits, where costs are refunded only at tax time. Another proposal is to offer rebates to those paying more than 10 percent of their income.Other potential long-term solutions are many. A state reinsurance fund could be implemented to cover expenses of high-risk enrollees; more Minnesotans could be allowed to use the successful MinnesotaCare program; and people could be allowed to benefit from the state’s ability to negotiate good prices by allowing Minnesotans to enroll in SEGIP, the insurance plan for state employees, where large customer pools increase negotiating power to lower costs. These are all good possibilities.Bold steps in changing the tax treatments of employer insurance and individual insurance would require federal changes to work well but could improve insurance markets as well as labor markets and employment. National programs such as opening Medicare for buy-ins by people older than 50 or with certain conditions also could help deal with higher-utilization patients. However, these plans would require congressional approval, dubious in the current political climate.It is critical we do not allow this crisis to cause the adoption of programs that destabilize the market further, such as selling junk insurance with poor coverage, leading to increased uncompensated care by providers and causing higher prices for quality insurance as well as discouraging patients from seeking needed care. Allowing outsiders into existing small-group coverage would lead to adverse selection, driving up costs, as we saw in the 1990s with MEIP, or the Minnesota Employees Insurance Program.One important takeaway is that it is private insurance that is having trouble dealing with health care issues. For public programs, the state may want to consider using direct contracting with provider groups and global budgets, bypassing insurers and creating incentives to improve health.We need to avoid health care “solutions” that are based on passing more cost on to insured people who then cannot afford to get the care they need. We need to resolve the higher premiums facing more than 100,000 Minnesotans immediately and then address long-term solutions from an informed, objective perspective. Rep. Jennifer Schultz represents Minnesota House District 7A in Duluth. She is a professor of economics at the University of Minnesota Duluth and is director of the school’s Health Care Management Program. Last year she was appointed to the governor’s Health Care Finance Task Force, which made 33 bipartisan recommendations to improve health care delivery in Minnesota.This year’s cost crisis in the individual health insurance market is one more result of our broken health care “system.” MNsure, which is simply a listing service and website where people compare plans, is not to blame for the rising premiums in the market. It is the private insurers on and off the exchanges that are having difficulty dealing with the costs of people with complicated health problems, skyrocketing drug costs, and increasing use of expensive tests and treatments. Having too few insurers reduces competition on price, and insurers have weak positions to negotiate reimbursements with providers. The individual health insurance market is small and does not receive the tax exemptions that benefit employee insurance.
The Affordable Care Act did bring people into the insurance market who previously were denied insurance because of their health history, driving up some costs. But most people agree all Americans should be able to get health insurance. Even without the Affordable Care Act, the individual health insurance market would be in trouble. According to the Congressional Budget Office and other research, exchange prices offered in 2016 were less than individual health insurance plan premiums in 2013, prior to the Affordable Care Act, and 20 percent below the Congressional Budget Office projections made in 2009.Individual health insurance policies would be just as expensive without health care reform, but many Americans would still be uninsured or severely underinsured.Gov. Mark Dayton has proposed an immediate solution to address the rise in premiums, as reported in Friday’s News Tribune. He would offer a 25 percent rebate to those who do not qualify for federal subsidies, approximately 123,000 Minnesotans. This solution can be easily implemented and would provide immediate relief to consumers. That’s unlike tax credits, where costs are refunded only at tax time. Another proposal is to offer rebates to those paying more than 10 percent of their income.Other potential long-term solutions are many. A state reinsurance fund could be implemented to cover expenses of high-risk enrollees; more Minnesotans could be allowed to use the successful MinnesotaCare program; and people could be allowed to benefit from the state’s ability to negotiate good prices by allowing Minnesotans to enroll in SEGIP, the insurance plan for state employees, where large customer pools increase negotiating power to lower costs. These are all good possibilities.Bold steps in changing the tax treatments of employer insurance and individual insurance would require federal changes to work well but could improve insurance markets as well as labor markets and employment. National programs such as opening Medicare for buy-ins by people older than 50 or with certain conditions also could help deal with higher-utilization patients. However, these plans would require congressional approval, dubious in the current political climate.It is critical we do not allow this crisis to cause the adoption of programs that destabilize the market further, such as selling junk insurance with poor coverage, leading to increased uncompensated care by providers and causing higher prices for quality insurance as well as discouraging patients from seeking needed care. Allowing outsiders into existing small-group coverage would lead to adverse selection, driving up costs, as we saw in the 1990s with MEIP, or the Minnesota Employees Insurance Program.One important takeaway is that it is private insurance that is having trouble dealing with health care issues. For public programs, the state may want to consider using direct contracting with provider groups and global budgets, bypassing insurers and creating incentives to improve health.We need to avoid health care “solutions” that are based on passing more cost on to insured people who then cannot afford to get the care they need. We need to resolve the higher premiums facing more than 100,000 Minnesotans immediately and then address long-term solutions from an informed, objective perspective.Rep. Jennifer Schultz represents Minnesota House District 7A in Duluth. She is a professor of economics at the University of Minnesota Duluth and is director of the school’s Health Care Management Program. Last year she was appointed to the governor’s Health Care Finance Task Force, which made 33 bipartisan recommendations to improve health care delivery in Minnesota.