If the government is going to require citizens to buy a product, then it better make sure the product is accessible.
Obamacare is complex; some parts are good, some not. On the plus side, Obamacare expanded coverage for the working poor. It knocked out exclusions for pre-existing conditions. It eliminated annual and lifetime benefit caps. It requires coverage for preventive care. It extended coverage to age 25 for children under family policies.
Most people get coverage through an employer. Obamacare requires employers to provide a minimum level of health coverage, or pay a tax. Of the rest? The poor qualify for Medicaid. Low-income families qualify for MinnesotaCare. The elderly qualify for Medicare.
About 6 percent of the population — mostly self-employed — composes a residual "pool" of people who must buy individual coverage, or pay a tax. This small "pool" is now comprised of higher-risk policyholders, as younger, healthier folks have continued without coverage rather than pay high premiums. The result? Rates have soared even higher for individuals in the pool who are mandated to buy health insurance.
Deb and Doug live on a farm in Brewster. Last year was a good year for farming. They made about $70,000. Their health premium is north of $20,000. They were told to expect a 50 percent premium increase next year.
Tiffany, Ryan and their children own a farm in Lamberton. Their adjusted gross income is about $100,000 a year. Their health premium is about $17,000 this year. Next year, it will jump to $34,000.
Joy and Rod are a farm couple near Redwood Falls. Their net income is about $70,000 a year. They paid about $26,000 for health coverage this year. They are told they will pay $34,000 in 2017.
These premium increases are not acceptable.
Long-term solutions to the shrinking individual market may have to come from Washington, D.C. But in the meantime, St. Paul must step up.
I was commerce commissioner in the 1980s. While health insurance wasn't as erratic then, we had plenty of problems in the property and casualty market, but we didn't simply blame the federal government.
What can we do?
1. The commerce commissioner should be skeptical of actuarial opinions, especially since the insurers always seem to end up with more profit than they project each year. Several times in the '80s, the department bypassed actuarial opinions and added up each individual claim (and reserved loss) for a representative period of time. We found administrative costs allocated to claims and insurers that were charging three times more than the actuaries claimed. Insurers dropped their rates.
2. Health insurers in Minnesota rank among the highest for net worth (e.g., risk-based capital). In the '80s, the state enforced a maximum limit for net worth. Most Minnesota health insurers now exceed the old caps. We should reinstate a net-worth limit.
3. More than 100,000 policyholders will be tossed to the wayside in December by insurers and HMOs, even though some policyholders paid for what they thought was a "guaranteed renewable" plan. Blue Cross and Blue Plus are subsidiaries of Aware Integrated, Inc. They shouldn't be allowed to toss policyholders from one company to another. The same goes for Medica and HealthPartners.
4. Insurers and HMOs claim they lose money insuring individuals, yet they profit from programs supporting school districts, state employees, counties and medical assistance. Companies that withdraw from the individual market should not, directly or indirectly through affiliates, be allowed to administer public-health programs.
5. In 2012, the state was supposed to audit HMOs and insurers believed to have excessively profited from administering medical assistance-managed care plans. Why no audit?
6. The state should make MinnesotaCare available to everyone. It could be on a sliding-fee scale, or through government-sponsored reinsurance for insurers in the individual market. There would need to be a subsidy from an assessment base beyond individual policyholders that overcomes hurdles of ERISA (Employee Retirement Income Security Act) preemption and retaliatory premium taxes. A creative look at the Workers Compensation Reinsurance Association might be explored.
An aggressive reading of current law permits the state to take some of these actions now. For others, a special session of the Legislature can be called.
We have special sessions for unforeseen crises. We shouldn't hesitate to have a special session when there is a man-made one. By anyone's reckoning, $30,000 health insurance premiums for a family is a crisis.
Mike Hatch was Minnesota attorney general, 1999-2007, and commissioner of commerce, 1983-1990.
