But it could cost you dearly
By Dave Racer, MLitt
Health care and private insurance are nearly unaffordable. As a result, it is predictable that sometime in 2024, the DFL legislature will give Health Care for All Minnesotans its long-sought victory. The party in power will finally force government-run health care on nearly all Minnesotans.
Stamp prices soar
During the last 12 months, the U.S. Postal Service raised the price of first-class stamps by 10 percent – from 60 to 66 cents. Since 2011, the same stamp that sold for 46 cents has increased by 160%. America’s Founders gave the Postal Service a monopoly over delivery of first-class mail because they recognized it as vital to liberty.
With apologies to postal workers, imagine health care run by the USPS, or as is now likely, by the Minnesota government – to which 2023 DFL legislation points us.
True enough, spending and cost are a crisis now, but should we summon Government to take it over?
Health care costs spiral higher and the DFL has a plan
It is relatively easy to demonstrate that health insurance and the cost of medical care is nearly unaffordable and getting worse. If you want to see how costs have gone sky-high, and are headed higher, read this next section. Or you might skip ahead to read what Minnesota’s DFL majority has in mind for you.
How much are the costs? Why the urgency to do something?
The average annual cost of employer-provided family health insurance in the U.S.A. in 2022 is $22,221. Since 2011, when it cost $15,073, premiums have spiked by 150%.[i] Since 2011, across the entire US health care systems, average individual spending on health care has spiked from $8,600 to $12,894 (2021) – an increase of 150%.[ii] This is almost the same percentage increase in the cost of a postage stamp during the same period – but a 66-cent stamp is a whole lot less than $22,221 in premium.
That premium number, however, does not include the actual amount of money it costs each of us to have access to health care services. To the premium cost we must add out-of-pocket spending.
Out-of-pocket spending includes your deductible – what you pay before insurance pays anything (excluding various primary care costs that are covered at 100%)—plus any co-insurance costs you pay before insurance pays 100% of your covered benefits.
Maximum out-of-pocket spending is set by the federal government in a range from $0-$9,100 for individuals, and $0-18,200 for family coverage [2023] depending on your health insurance plan design.[iii] These limits do not include premiums or other non-covered medical expenses some people incur.
A small percentage of individuals spend the maximum out-of-pocket. A 2017 report showed that, “…in 2017, one in 100 [1%] Americans under age 65 spent $5,000 or more out of pocket for medical services, and about 1 in 20 [5%] spent more than $1,700.”[iv] The World Health Organization reported that in 2020, the average for all Americans was $685.[v]
Other reports show the average out-of-pocket expenses (this is cost over and above premiums) of those covered by private health insurance in 2022 totaled $5,802.[vi] This suggests that, for families that receive their health insurance from an employer, if they use it enough, they will be responsible for more than $28,000 (premium and out-of-pocket) in spending in 2022. A family of four could see their premium and out-of-pocket spending exceed $32,000 or more.
A family could buy a new car for $32,000 or pay tuition for two children in a private K-12 school in Minnesota. How would you spend $32,000 if you were in control of it? Would you spend it on health insurance and medical care? Or should there be some other way to pay for health care that reduces your costs?
Would you support a government-run plan to reduce your cost of health care – and would government-run health care cost less, and if it did, would you get less?
What the DFL has planned for you
The Minnesota Democrat-Farmer-Labor (DFL) legislators, and Governor Walz took advantage of their tripartite control of government on a number of fronts in 2023. This included health care which, under their plan, will change dramatically.
DFL leaders are in the process of imposing a government-run health care solution on us. You will hear them talk about a “public option.” Dig into their 2023 bill regarding this public option, and their goals emerge.[vii]
The legislation cleverly hides behind a mandated study of the best way to establish a public option health plan, not a study that compares it to private health care models. Their idea is to replace private insurance with a plan operated by the Minnesota government. They see it as government bureaucrats negotiating reimbursement rates with providers, and then administering claims and payment processes (or they might farm this out to mega-third party corporations as the federal government does with Medicare).
To ensure their government-plan is cheaper than private insurance, the DFL plan will pay providers at a rate less than Medicare reimburses, though this fact is not clear in the 2023 legislation.
Think about this. The government plans to pay providers 50-70% less than private insurance pays them. If you were a doctor, would you happily accept a 50% cut in pay? If you were a hospital, would you be excited about providing care at 60-70% less than you receive today? Or do you think that anyone with private insurance would gladly accept a 30-50% increase in premiums to help underwrite providers’ losses from the government plan?
Receiving lower payments from a government plan would be disastrous for providers and us. Yet if the government mandates that providers must accept patients from a health plan that pays them 50% to 70% less, what do you think providers will do? They will close up shop, or consolidate to save overhead, or find something else to do with their lives than practice medicine. Or they will move to a state that allows for a health care marketplace where providers can compete for patients.
How many people would enroll in a government-run health plan? Since it will be paying providers 50-70% less than private insurance, no doubt a near majority of individuals would sign up, and they would save thousands of dollars on insurance premium. Finding a provider, however, will be a different story.
Adopting a government-run public option plan will also drive the cost of private insurance higher. Providers cover their losses from Medicare, Medicaid, and other government plans like a public option, by raising prices for individuals with private insurance, or who pay cash. It’s like a hidden tax.[viii] Who would willingly continue to underwrite the cost of a government-run health plan, when they can save 50% or more dropping private insurance and enrolling in the Minnesota Health Plan?
Minnesota Health Plan
The new 2023 law requires a government commission to consider whether the “Minnesota Health Plan” could meet the goals of this new government public option. The law requires the commission to start meeting this July. Long-time supporters of the Minnesota Health Plan are quietly asserting that the commission will recommend their plan to the 2024 legislature.
Put simply, expect the DFL legislature, with its one-vote margin in the Senate, and its six-vote margin in the House, to pass Sen. John Marty’s “Health Care for All” bill. Minnesota will thereby force single-payer health care on its residents. The law will be signed by DFL Governor Walz with great celebration.
The Legislature will exclude itself and other state employees, allowing them to purchase private insurance at taxpayer expense. But that will make no difference when it comes to the time to see a doctor or undergo necessary surgery.
When hospitals cut staff, close buildings, and clinics, when physicians and surgeons leave Minnesota to practice elsewhere, the kind of insurance you have will not matter much. You will struggle to find a primary care doctor, and specialists who find a way to survive on reduced incomes will have weeks- and months-long wait times.
A postage stamp sold by a government agency that has monopoly power goes from 60-66 cents in one year. What will happen when Minnesota bureaucrats run our single-payer health system?
If you anxiously await a check in the mail, but the mail carrier messes up, you won’t die. But, if hospitals are understaffed because of a shortage of surgical specialists and other medical professionals, you will suffer needlessly, and you might die.
Keep a close eye on the DFL’s efforts to impose government-run health care on your family and you. Meanwhile, across the country there are smart people working on solutions to reduce health care prices without destroying medical care in the process. Watch for these ideas in the coming weeks.
[i] Kaiser Family Foundation in their annual report on Health Care, published since 1998.
[ii] Centers for Medicare and Medicaid services. National Health Expenditures, Historical. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nationalhealthaccountshistorical
[iii] Silva, D. “Deductible vs out-of-pocket maximum.” Policygenious. 1/19/2023. https://www.policygenius.com/health-insurance/deductible-vs-out-of-pocket-maximum/ Accessed 7/25/2023.
[iv] https://www.commonwealthfund.org/publications/issue-briefs/2020/apr/catastrophic-out-of-pocket-costs-problem-middle-income
[v] https://www.who.int/data/gho/data/indicators/indicator-details/GHO/out-of-pocket-expenditure-(oop)-per-capita-in-us
[vi] The author admits that trying to find true average costs is nearly futile due to the individual nature of health care and insurance. Some have estimated the average out-of-pocket cost as nearly $13,000 or more.
[vii] Conference Committee Report on SF 2995. https://www.house.mn.gov/cco/journals/2023-24/J0522077.htm#10478
[viii] Racer, D.; Dattilo, G. The Manual – Health Care 2020: Connecting the Dots. Alethos Press, St. Paul, MN. 2020. https://alethospress.com/product/the-manual/
