Republicans rejoiced last week when Gov. Mark Dayton finally admitted that the Affordable Care Act is no longer affordable.
“I'm not trying to pass the buck here, but the reality is the Affordable Care Act is no longer affordable to increasing numbers of people,” he said. “Minnesota is not alone in this. There are many other states that have experienced significant increases … and there are other states where providers, like in our case Blue Cross Blue Shield, have left the market entirely.”
All of the insurance companies operating in Minnesota have threatened to stop providing coverage for folks buying plans on their own – as opposed to getting it through their jobs – in 2017. The insurers claim they’re losing money on these clients because health care costs far exceed premiums.
There’s a bunch of complex reasons why the insurance business is not working out in the independent market. Minnesota is a small state with lots of big companies that insure their employees. Those left behind were a small slice to begin with – just under 5 percent of the population, or 300,000 people. They are young adults, 55- to 64-year-olds, poor people working for companies that skimp on insurance, and the undocumented.
Minnesota also had a good way of looking after people with preexisting conditions, even before the Affordable Care Act. Folks who were considered high risk – like the 60-year-old overweight guy with a benign lump who was repeatedly denied coverage – could go into a separate pool. And because this pool was clearly designated as high risk, insurers could better gauge what premiums to charge.
The Affordable Care Act made it so that no one could be denied insurance because of preexisting conditions – a very good thing. But it took away Minnesota’s high risk pool and put everybody into the individual market, which was suddenly flooded with the uninsured, the sick, and anyone moving out of employer coverage.
Insurers weren’t sure how to price this new cross-section. Soon enough, they realized that they needed to raise premiums to offset their costs. Eventually premiums outpaced the fines of not having insurance at all, which convinced increasing numbers of younger, healthier people in the individual market to take a risk and go without coverage. And so the problem grew.
But the Affordable Care Act has been successful in many ways. It’s working well in bigger states with a bigger independent market than ours, like California and New York. In Minnesota, it reduced the number of uninsured by half, created new coverage options, and allowed a lot more young people to stay on their parents’ health plans as they searched for jobs.
“You can talk to the Republicans who want to get rid of MNsure and want to get rid of the Affordable Care Act, but we’re still going to have to figure out where those people are going to get their coverage,” says U of M professor Lynn Blewett. “Just getting rid of it isn’t going to do any good. We have to provide coverage for preexisting conditions. It’s not like we can go backwards. We have to go forward.”
The governor suggested that Congress, which has been deadlocked on making any improvements to the Affordable Care Act, needs to do come up with subsidies for “catastrophic health care occurrences.” At the state level, he says the next legislative session must try to give insurers more flexibility.
Blewett agrees that in any case, Minnesota needs to find additional funds to subsidize the individual market and bring premium prices down. “We have one year to get this figured out,” she says.
Minnesota’s problem calls for an immediate Band-Aid. But the runaway cost of health care in America is what got us all into this mess in the first place, and that’ll eventually require a long-term solution.
For starters, no other country pays as much as we do for health insurance and drugs.
Back in September Mylan, maker of the EpiPen, raised the price on a two-pack from $100 to $600 just because it could, even though EpiPens hold only about $1 worth of medicine. At the same time, the price of two EpiPens held steady at $100 in France, while the British could get a different brand of adrenaline autoinjector for about nine euros.
Other developed countries like Japan, Sweden, and the United Kingdom have government agencies that negotiate reasonable rates with insurers on behalf of their people. The result: quality care that is also affordable, and the people in those countries live longer than Americans do.
The problem with Obamacare was that it never addressed cost control. The pharmaceutical lobby is the biggest spender in Washington, and insurance the second, so the feds were not about to go there.
That left some states to try independently moving toward single payer. Vermont got pretty close in 2011, but made the key mistake of exempting large corporations. That increased taxes on ordinary people by 30 percent and ultimately doomed the law. Colorado, which is projecting less drastic costs than Vermont, has single payer on their ballot this year.
In Minnesota, Roseville state Sen. John Marty (DFL) has been proposing a single payer model since 2013, but his bill keeps dying in committee.
Though America may try to work toward single payer, Blewett says the reality is that there are too many barriers, politically and financially.
"Our country has developed our system incrementally over time and it is what it is today."