America has a health care problem. The individual insurance market is unraveling, and the Affordable Care Act (ACA) may be repealed. Millions of Americans are worried.
Minnesota has a health care problem, too. The ACA increased coverage, but it hasn’t worked as planned. New federal rules that came with the ACA called for the state to dissolve Minnesota’s high-risk pool into our individual insurance market, but not enough people are enrolled to support the costs of those with serious health care needs.
The problem is the rising cost of health care, and the issue long predates the presidential election.
Minnesota has long enjoyed high-quality health care costing less, on average, than in most of America. Today, that picture has changed. Minnesota’s health care costs are now fifth-highest in America, according to recent data from the Health Care Cost Institute.
The high cost of health care has translated into a significant jump in premiums; the individual market is shrinking. The premium dollars coming in aren’t covering the dollars going out in payments to hospitals, physicians and drug companies. Blue Cross alone has lost $500 million in the individual market over the past three years — a hefty toll for anyone, let alone a nonprofit insurer.
This isn’t just a worry for the 250,000 Minnesotans in today’s individual market. Small group, large group — even self-funded plans and public programs — are all beginning to feel the impacts in our interconnected marketplace. Just this week a Minnesota insurer withdrew from the state’s Medicaid and Minnesota Care programs citing financial losses, affecting more than 300,000 Minnesotans. Through September, we at Blue Cross have experienced a loss of $90 million on the same Medicaid business.
Blue Cross is working alongside its health care partners to address this new reality by creating new, affordable, high-quality provider networks — without the enrollment caps other plans have implemented. We take seriously our responsibility to ensure that all heath care expenses are predictable and consistent, and we continuously negotiate rates with providers to contain cost increases for our members.
We remain committed to working with legislators and the governor to stabilize Minnesota’s individual market. But we can’t afford to wait for a national solution; we need to tackle this problem now. We need to:
• Reestablish something like the old high-risk pool, the Minnesota Comprehensive Health Assurance (MCHA) program. This would stabilize or “reinsure” premiums for those with greater needs and for healthy individuals. If a federal waiver is needed, we should seek it. MCHA worked well before the ACA, and it can work again.
• Strengthen eligibility verification. With limited upfront eligibility requirements, and a grace period for premium payments, the current system is easily exploited. We’ve even seen non-Minnesotans list a local hotel address for coverage purposes, then leave the state after receiving treatment. We need stronger eligibility verification statewide.
• Crack down on financially conflicted third parties. Some providers are recruiting people from public programs — agreeing to pay their individual premiums through a third party — so they can receive higher reimbursements. The scheme works like this: Providers set up a foundation, which offers grants to people on medical assistance, steering people to individual plans and paying their premiums. The same people are steered back to providers who receive their money back and more in higher payments. This example alone is driving up spending by hundreds of millions of dollars.
• Provide a one-time subsidy. Minnesotans need help now, not a year from now. But one-time subsidies — welcome as they are — will only stabilize the market temporarily. To sustain the individual market, we need to increase enrollment and control premiums for the long term.
• Tackle the real problem: cost. Access is a worthy goal, but the current health care system cannot be sustained unless we address the rising cost of medical services and prescription drugs. Providers want to transform our complex, fragmented system, just as we do. How much we spend on health care as a state and country is a complex subject that will require all parts of the medical and health community coming together to develop solutions. But we’ll need serious public policy and business engagement across this state and nation to make health care affordable again.
No one knows exactly what Congress and the Trump administration will do at this point. But Minnesota shouldn’t wait. Let’s get started.
Michael Guyette is president and CEO of Blue Cross and Blue Shield of Minnesota.