ST. PAUL LEGAL LEDGER CAPITOL REPORT
Regardless of how much damage the U.S. Supreme Court does to the federal Affordable Care Act, Minnesota as far as we can see in the future will continue to be squeezed by unsustainable health care inflation, uninsured and underinsured families, and growing inequality in health care access and outcomes based on race and income.
We simply must find a better way, and chart our own state’s path to improved physical and economic health, especially if major elements of the ACA are struck down.
There is a basic idea on the policy table for a sweeping redesign that shows great promise. That concept: a unified state system covering all Minnesotans, with a comprehensive benefit set, continuous lifetime coverage, one network that allows access to all the state’s licensed providers, uniform rules and reimbursement rates, and equitable financing that uses taxes rather than premiums. This model typically has been called “single-payer,” but “unified and universal” is a more accurate term, since other nations employ universal and unified models that feature choices of insurers.
Our recent Growth & Justice report, based on economic modeling performed by The Lewin Group, a highly respected and independent national firm, shows that such a system would reduce total statewide health spending by 9 percent compared to projected spending in 2014 under full implementation of the ACA.
Long-term savings could be impressive. The Lewin Group projections estimate that we could save between 12 and 33 percent by 2023, compared to projected growth under the ACA. All the other wealthy industrialized democracies have unified and universal systems, and they all pay significantly less than the United States does on health care, as a percent of the total economy.
The Lewin Group’s analysis shows that the cost reductions for this universal and unified system are achieved primarily through administrative savings of almost $5 billion. Anybody who has tried to navigate the current bureaucratic thicket — sorting out what’s covered and which provider is in or out — can understand the studies showing enormous administrative inefficiency in the world’s most complex and fragmented health system.
Further, the negotiating clout of a single buyer could save Minnesotans nearly $1 billion on prescription drugs and medical equipment. And with a single claims administrator and the subpoena powers of a state program, we could reduce fraud and realize another $200 million in savings.
Meanwhile, paying for the system with a progressive dedicated tax structure, rather than increasingly expensive premiums, would reduce average health care costs for the vast majority of Minnesota businesses and households. Only those in the highest income brackets and those who currently can afford coverage but risk going without would pay more.
These savings would be achieved despite covering an additional 262,000 Minnesotans who are expected to be left uncovered by the ACA. (Some 500,000 are uninsured at present.) The savings would be more than enough to offset both the increased use of health services that would result from covering every Minnesotan, and the elimination of deductibles, coinsurance and most copays. These savings accrue even with a fairly generous benefit package covering medical, dental, mental health, hospitalization, rehab, vision, hearing and prescription medications.
The Lewin Group study estimates that employers who currently offer insurance to their employees, on average, would save as much as $1,200 per employee per year. A further benefit to employers is being freed from the onerous task of negotiating and administering health care benefits for their employees. Families who currently pay health care premiums would save an average of $1,240 on annual health spending.
Minnesota would not be alone among the states if it forged ahead to provide a universal and unified health system. Governors, legislatures and citizens groups are pushing similar reforms in Vermont, Montana, Oregon and Hawaii. Minnesota Gov. Mark Dayton favored a universal system for Minnesota in his 2010 campaign, and in a real-world political sense, this option already is on the stove, albeit on a back burner.
Of course there are implementation hurdles and political, legal and logistical challenges. Paying for health care with taxes instead of premiums, even if the latter is cheaper and fairer overall, won’t be wildly popular at first and will come under heavy attack from anti-government and anti-tax ideologues. And yes, sweeping change would create disruption, including the loss of some 42,000 jobs in the current health care bureaucracy. But studies have shown that those losses eventually would be made up by economic growth in other sectors that benefit from greatly reduced health care costs.
Unified and universal systems are popular in the countries that adopted them long ago. And surely few of us are satisfied with the way things are, or are convinced that the Affordable Care Act is the final reform, even if the U.S. Supreme Court upholds it.
The facts are clear: Enacting a more rational, simplified system would be both more cost-effective and more humane. It would assure that Minnesotans would not have to worry about whether they and their children are covered, whether they can afford to see a doctor when illness strikes, or whether a new entrepreneurial idea or career opportunity is thwarted because of health insurance considerations.
If business associations or the medical establishment comes forward with a plan that covers everyone, reduces costs overall, and lessens our growing health and economic disparities, that plan deserves respect and full consideration. But let’s give serious and respectful consideration to the unified and universal option for Minnesota, with the knowledge that we can afford a system where each person can be assured access to health care when they need it and be otherwise free to pursue their entrepreneurial passions.
A version of this column originally appeared in the St. Paul Legal Ledger Capitol Report on Thursday, April 5, 2012.
Amy Lange is a registered nurse, certified nurse-midwife, and a policy fellow on health care for Growth & Justice, a research and advocacy organization focused on expanding prosperity in Minnesota. Dane Smith is the president of Growth & Justice.