Minnesota is about to get a health insurance exchange. It is supposed to help more people get insurance, improve quality and reduce costs. It probably will not.
When the Affordable Care Act (ACA), also known as Obamacare, was passed in Washington, it was done with the members of one party taking over and doing it all their way. In Minnesota, we said we could do better.
But when the time came for Minnesota to lead the way, those in one party took over and did it all their way. We could have done better.
None of this will be free. In fact, the Minnesota model will cost us $332 million by 2016, and $68 million or more every year after that.
As the exchange adds a hoped-for 300,000 people to the insurance rolls (subsidized with borrowed federal money), the rest of those who buy insurance are certain to pay more. The ACA will add at least 15 percent and as much as 40 percent to the cost of a premium by 2016. The cost of the exchange and all the new rules it envisions could add another 5 percent. Funny way to control costs.
The Minnesota Chamber of Commerce, National Federation of Independent Businesses, Business Partnership and other job-creating groups offered ways to make the exchange leaner, more effective and actually more likely to work when the start switch is pushed on Oct. 1 this year. Those suggestions were largely ignored.
The exchange as passed allows an unelected seven-member board to set new insurance rules and standards that will likely increase costs significantly and not change much of anything for consumers. The board is barred from allowing anyone to serve who is currently working in this complicated industry. If knowledge is power, experience is king in a complex matter such as this. But not even a practicing physician is allowed, for fear he or she would be somehow biased.
The exchange board can pick and choose which plans will be offered. It will likely severely limit options for consumers. Choice breeds competition, and competition improves cost and quality. Minnesotans are smart enough to not have to rely on somebody else to limit their choices. We like having options, and we don’t like others telling us which choices we get. And if consumers want help choosing a plan, they can use brokers, navigators, carriers or the state’s new $41 million website to guide them.
The exchange will collect a 3.5 percent premium tax on every plan it sells. That is a lot. And that cost won’t be borne by some big, fat-cat businesses. No, it will be charged to small businesses and individuals who are barely making it now. And they will start paying a year before the state even needs to pay for the exchange.
The ACA already imposes a lot of new taxes and penalties that will fall disproportionately on these micro-engines of our economy. These new costs will come directly out of employee bonuses, additional staff budgets and capital investment. More drag on our small job creators won’t help us boom the economy.
Quality matters to all of us. The initial products offered will be subject to our highest, nation-leading insurance standards. Whatever ideas the board creates will likely have little impact on our already stringent rules for these plans, but they will cost more and reduce plan options. What a bargain — more cost for the same quality and less choice.
And while there will be a lot of reports filed about this board, no overseeing entity can do much except talk about how much money they spend. The Legislature and governor can “look but not touch.” There is no cap on the exchange’s budget nor controls on its spending.
When Minnesota listens to all of its voices, it does better work. On this most crucial of projects, it listened to just a few and ignored the rest.
Because ideas from business experts were not incorporated, the exchange will cost much more. It won’t be as effective. Quality improvements will fall short of what they might have been.
We should have learned from Washington’s mistakes. We could have done better.
Jim Abeler, R-Anoka, is a member of the Minnesota House.