Experience from voucher plans 15 years ago shows big premium increases can quickly derail even the most innovative health care plans.
Confusion and delays in the MNsure roll out led many to find “navigators” to help them sign up before the deadline for coverage. The health exchange’s next challenge is to keep enrollees happy with services that could escalate quickly in price.
Minnesotans are almost palpably relieved that MNsure finally appears to be stabilized, past its rocky launch and two-hour holds on phone calls. More than 200,000 people have now signed up for health coverage through the state’s online marketplace, along with 8 million others who signed up in the other 49 states for the first full implementation of the Affordable Care Act (ACA), or Obamacare.
Count me among those pulling for MNsure’s success. I find the specter of working people unable to afford access to health care for themselves and their families tragic and disgraceful.
But the logistics hurdles in setting up MNsure pale before this one: What if the ACA and MNsure carry the seeds of their own demise?
I ask that because, in an important way, we’ve seen this movie before — in the 1990s.
I worked then for eBenX, a Minnesota-based firm that helped large employers set up defined-contribution health plans — or vouchers. Employees were free to use their voucher to buy their own health coverage on a private Internet exchange, instead of accepting an insurer selected by their employer.
There was a lot of excitement about these plans’ potential to bring consumer-driven market pressure to bear in the system, thus holding back annual cost increases, which had been rising in double digits.
What happened next, circa 2000, is what makes me worry about the future of MNsure and its peers.
Typically, if annual family coverage premiums rose by, say, $1,000, to a total of $11,000, employers refused to continue absorbing 90 percent of the big increases. So if a 10 percent increase were passed on entirely to the worker, his or her share of the total premium typically doubled, to $2,000.
Do that two or three times and you’re going to have one angry workforce. Thus, eBenX was acquired by a Southern company in 2002 and became history.
Moral of the story: A system that lacks true cost discipline will sooner or later — most likely sooner — collapse because it becomes too expensive. Back then, we couldn’t stop the freight train of annual double-digit premium hikes driven by use of health care services.
Under the Affordable Care Act, state insurance regulators such as the Minnesota Department of Commerce have the power to review rates and impose some controls. But, it’s not clear it will be enough to prevent a sequel of the movie I’ve just described.
On the other hand, I’m optimistic that a reformed system can do better by the millions of additional people it aims to serve. There’s been lots of cost- and quality-related innovation since 2000. For example, my current employer, Prime Therapeutics, a local pharmacy benefit manager, held drug-related annual spending increases to the low single digits for the past decade.
And it’s not a fluke that the individual premium rates under the Affordable Care Act in Minnesota are among the lowest in the nation. The collaboration of engaged consumers, employers, hospitals, physicians, legislators and insurers in Minnesota has already shown what’s possible, not just theory, in health care.
That’s a great start. We and our rivals will compete on the basis of cost, of course, but also on quality and service — or as we call it, the customer experience. But recent history is a constant reminder of the need to remain nimble, our radar tuned relentlessly to unjustified costs charged to the consumer that could undermine the whole enterprise.
Now that it looks like we’ve solved the problem of the system’s on ramp, and are getting people signed up, I think we have a shot at showing others how it’s done.