The Daily Planet’s New Normal Project is a series of news stories and community conversations devoted to identifying community priorities as we face serious economic challenges. Every month we’ll tackle a different topic, including neighborhoods, the state budget, education, health care, public services, immigrant communities, the environment, work and inequality. You’re invited to join the conversation, either online (by commenting on articles like this one) or by participating in a community conversation on health care.
How can we ensure that all Minnesotans have access to affordable, dependable healthcare?
Is the best solution:
1) Universal single-payer insurance?
2) State insurance exchanges where consumers can comparison shop?
3) Consumer-directed healthcare attached to health savings accounts?
4) Some other approach?
- The number of uninsured Minnesotans grew by more than 100,000 from 2007 to 2009. That means that 9.1 percent of the state’s population—or 480,000 Minnesotans—lacked health insurance in 2009, compared with 7.2 percent—or 374,000 people—in 2007.
- More than four out of five of Minnesota’s uninsured residents, or 82.4 percent of the total, belonged to working families.
- People with low incomes, and those who are self-employed or work for small employers, are especially likely to be uninsured. Almost half, 46.6 percent, of individuals and families in Minnesota with incomes below twice the poverty level—$42,400 of annual income for a family of four in 2008—went without health insurance at some point in 2007-2008.
- By comparison, 17.1 percent of individuals and families with incomes at or above twice the poverty level lacked insurance at some point during that period.
- Although whites account for the largest number of uninsured Minnesotans, Latinos and African Americans were far likelier to be uninsured: 51.7 percent of Latinos and 39.5 percent of African Americans went without health insurance in 2007-2008, compared to 21 percent of whites. (Note: The Families USA report was based on data from the Census Bureau’s Current Population Survey and the Survey of Income and Program Participation, as well as the Medical Expenditure Panel Survey used by the Agency for Health Care Research and Quality.)
- In Minnesota, there are more than 250 insurance companies and public plans.
We won’t take sides on whether the current economic hardships are permanent (“the New Normal,” as some people claim) or temporary. In either case, right now we see neighborhoods, cities, counties and school districts forced to make difficult budgeting choices with declining resources. Whether we’ve come across the phrase or not, all of us, in some way, are experiencing a “New Normal.” Because of the economic downturn we may have lost a job or experienced job insecurity. We may be worried for the first time ever about whether we can afford to keep our house, make rent payments, or pay for health insurance. We’re nervous about our futures and the futures of younger people in our lives.
This month the Twin Cities Daily Planet continues a series of news stories and community conversations devoted to exploring the New Normal and seeking solutions, with a focus on jobs and work in Minnesota.
The first step toward any type of health insurance system came in the late 1920s when a Dallas hospital arranged for public school teachers to pay a small amount, at a group rate, each month, for healthcare. This idea spread during the 1930s and employer-based health insurance became the norm after World War II, when it served as a perk for employers trying to lure prospective hires to newly-created jobs. Changes in tax laws provided employers still greater incentive to offer insurance benefits, and by the 1960s a full 70 percent of the population was covered. These developments laid the groundwork for a system of mostly privately-owned and -operated healthcare facilities and employer-based private insurance plans.
Beginning in the 1960s, a number of public programs providing insurance to targeted populations were created. Medicare, Medicaid, TRICARE, the Children’s Health Insurance Program, and Veterans Health Administration are all federal programs. There are also state-run programs, such as MinnesotaCare, a publicly subsidized program designed to serve residents who do not have access to affordable health care coverage. Most Minnesotans are not eligible if their employer offers health insurance and pays at least half of the monthly cost.
As employer-based insurance became more and more expensive, Health Maintenance Organizations (HMOs) were devised in the 1970s to control costs by discouraging unnecessary hospitalization and overuse of specialists. While HMOs were initially popular, sentiments shifted as insurance companies added more rules to doctors’ contracts. These rules forced doctors to see more patients, and required pre-approval from HMOs for a larger number of services. Critics charge that HMOs have resulted in higher healthcare costs due to considerably higher overhead, increased the number of uninsured citizens, driven away healthcare providers, and reduced quality of care.
With time, there has been a growing realization that the U.S. system of delivering healthcare is inadequate at best. That the system is broken is reflected in the number of Americans who are uninsured or underinsured, the amount of money being spent per person on healthcare—much of which goes to administrative costs—and the high levels of medical debt and bankruptcy tied to expensive care. At a time when people jump from job to job and place to place with some frequency, tying insurance to employment has come to be more of a problem. It is widely known, too, that insurance providers routinely deny coverage to whomever they deem a “risk,” normally because that individual has a “pre-existing condition.” Even more troubling are stories about insurers finding cause to terminate those diagnosed with a serious condition requiring expensive treatment. Today the United States remains the only wealthy, industrialized nation without a universal healthcare system.
Universal, single-payer coverage
The Minnesota Health Plan (MHP) is the only plan currently being proposed that would cover all medical needs of every Minnesotan. According to the Minnesota Universal Health Care Coalition (MUHCC), a universal plan “treats health care as a basic right, not something you need to ‘qualify’ for.” One must only be a state resident, and once enrolled the coverage continues for the duration of one’s residency. “Single-payer” means that doctors and hospitals are compensated by one health plan and a single public fund, which would be operated by an independent Minnesota Health Plan Board composed of doctors, nurses, patients, and families, rather than multiple insurance bureaucracies. There are generally no deductibles or co-pays in a single-payer system.
Physicians for a National Health Program (PNHP) emphasizes that streamlining payment through a single nonprofit payer would save more than $400 billion a year, enough to provide comprehensive, high-quality coverage for all Americans. “The reason we spend more and get less than the rest of the world is because we have a patchwork system of for-profit payers,” it explains. “Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay.” In addition, doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. “Combined, this needless administration consumes one-third (31 percent) of Americans’ health dollars.”
In the Minnesota Legislature, South Minneapolis Rep. Jeff Hayden (DFL) introduced a bill this past session that would guarantee universal healthcare for all Minnesotans regardless of income, and allow patients to choose their own providers. A number of liberal colleagues in the House signed on as co-sponsors, with Sen. John Marty (DFL) authoring a companion bill in the Senate.
State-run insurance exchanges
New state-based health insurance exchanges are a key element of the federal Patient Protection and Affordable Care Act (PP-ACA). Such exchanges will require millions of Americans to shop for health plans in an Internet-based “marketplace,” and purchase policies from private insurers beginning in 2014. If they do not, they face a tax penalty.
One stated aim of such exchanges is to provide a more adequate array of options for employees of small businesses, self-employed and unemployed citizens, and workers who retire before becoming eligible for Medicare. Another is to bring insurance prices down by creating pools of such categories of people. Massachusetts is one of a small handful of states that created a similar type of exchange before passage of the federal healthcare law. Advocates of this approach contend that exchanges make the process of shopping for insurance more efficient, and provide oversight and structure that the current system lacks.
At one point, former Gov. Tim Pawlenty advocated the creation of a nonprofit “Minnesota Insurance Exchange,” to connect employers and workers with a range of more affordable health coverage options. He later reversed his position, saying that such exchanges amount to government interfering with the free market. In the legislature this session, Rep. Erin Murphy (DFL-St. Paul) promoted a robust insurance exchange with a public option, to be administered by a state agency. Meanwhile, Rep. Steve Gottwalt (R-St. Cloud), chair of the House Health and Human Services Reform Committee, proposed legislation that would give the state greater control of insurance exchanges. An opponent of the health reform law, Gottwalt argued that if Minnesota does not establish its own exchange, and the U.S. Supreme Court allows the new federal law to stand, then the federal government will step in to run an exchange.
Consumer-Directed Health Care (CDHC).
Conservatives, including Peter J. Nelson of the Center for the American Experiment, argue that the ACA “intrudes into individual liberty, makes massive new spending commitments, assumes unrealistic future cost savings, raises taxes and fees, and increases federal control over health care.” An alternative advocated by many Republicans is Consumer-Directed Health Care (CDHC), which combines a high-deductible health insurance plan with a tax-deferred savings account to be used for paying routine healthcare expenses. CDHC is rooted in the idea that Americans are more prudent healthcare consumers when forced to pay more of the costs of their care.
According to Kaiser Health News, “In a typical CDHA model, individuals with a HSA (health savings account) pay for routine health care expenses out of their savings account. After the accounts are depleted, individuals pay directly out-of-pocket until they have reached the relatively high deductible amount in their health plan.” It adds, “Because the plan has a high deductible, monthly premiums are often lower than traditional health insurance.” Consumers may keep any unspent dollars in their account, if there are any, “creating an additional incentive to be cost-conscious when purchasing their health services.” The Minnesota Republican Party Platform voices support for the expansion of HSAs, “so individuals can purchase and control their own health care.” The party also wants all health care expenses to be fully tax deductible.
The Citizens’ Council for Health Freedom (CCHF) is an advocacy organization that champions key initiatives sought by opponents of the new federal healthcare legislation, including U.S. House Tea Party Caucus member Michele Bachmann (R-MN). CCHF calls for “reduced dependency on government healthcare programs,” a “free and open health care market, including Medical Savings Accounts,” “market competition at the patient and consumer level,” and equal tax treatment for purchase of health insurance.
The politics of healthcare reform
A widely-reported study produced by Kaiser Health News and the Washington Post reveals that Minnesota’s business community, including the state’s Chamber of Commerce, has come out in support of insurance exchanges, but a stalemate has occurred among Republicans “because of concerns that grassroots Tea Party forces will rise up in defiance.”
At the close of the regular 2011 legislative session, Gov. Dayton vetoed bills that eliminated healthcare to more than 140,000 Minnesotans and blocked implementation of the federal Affordable Care Act. Debates over healthcare show no signs of ending.
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