By Dave Dvorak, M.D.
Duluth News Tribune, Oct. 23, 2014
“Not sustainable.” That was the way PreferredOne CEO Marcus Merz described the circumstances leading to his insurance company’s decision to withdraw from the MNsure exchange.
Now, with double-digit cost increases forecast for many of the plans on the exchange, perhaps it’s time to finally acknowledge what is truly unsustainable: the increasingly costly and complicated patchwork of insurance coverage that passes for an American health care system.
Spending twice per capita on health care compared to other Western democracies might be defensible if it demonstrated results. But a Commonwealth Fund study earlier this year ranked the U.S. health system dead last among 11 industrialized nations on measures of quality, efficiency and access.
Not sustainable, indeed.
Despite increases in coverage rates under the Affordable Care Act, millions of families on tight budgets are encountering unaffordable deductibles and copays. Take a 60-year-old Minnesota couple earning $63,000 who purchased a specific plan this year on the exchange. If either of them should experience significant illness, they would face more than $25,000 in expenses, including their premium and out-of-pocket costs — 41 percent of their pre-tax income. Not surprisingly, the leading cause of bankruptcy in America is unaffordable health expenses.
The entrenched private insurance industry vigorously promotes the value of choice in our health plans — 84 separate plans will be offered on next year’s exchange — while corralling its “members” (that’s us) into increasingly narrow provider networks. It is our health premiums that pay for those attention-grabbing billboards and commercials, marketing departments, underwriters, lobbyists, eight-figure executive salaries and investor profits. All are costly administrative functions of private insurance that play no role in actual health care.
The good news resides in the ACA’s little-discussed Section1332. Known as the State Innovation Waiver, this provision allows individual states in 2017 to apply for federal waivers to implement their own innovative health systems — provided they can cover at least as many residents as the ACA without adding to the federal deficit. This offers a huge opportunity for Minnesota to get it right.
An increasingly discussed alternative to the status quo is state-based, single-payer reform. Hardly a fringe concept, single-payer was endorsed by 64 percent of Minnesota physicians in a Minnesota Medicine survey in 2007.
More recently, in August, the Minnesota Medical Association, while not taking a position on single-payer, hosted a policy forum to discuss the pros and cons of moving to a state-based single-payer system.
The chief feature of single-payer is a single, unified funding stream that slashes the inefficiencies of the private insurance industry. Single-payer creates transparent and uniform pricing for health services and products. It replaces the cumbersome and costly practice of itemized hospital billing with global annual budgeting, directing more health care dollars toward actual health care rather than webs of hospital administrators and bloated billing departments.
Meanwhile, single-payer keeps the delivery of health care largely private, encouraging market-based competition where it matters — among health care providers.
In its 2012 economic analysis of single-payer reform in Minnesota, the Lewin Group determined that single-payer could provide quality health and dental coverage to every Minnesotan while saving the state a staggering $65 billion in health spending over 10 years. About
95 percent of Minnesotans would spend less on health care — an average savings of $3,512 per year for a median-income Minnesota family.
The conversation is well underway. Through single-payer reform, Minnesota can guarantee fair, affordable and quality health coverage to every individual and family in the state while saving billions. Now that is sustainable.
Dr. Dave Dvorak of Minneapolis is an emergency department physician and a member of the Minnesota chapter of Physicians for a National Health Program (pnhp.org), which advocates for universal health coverage through single-payer reform.