Commentary
An Opportunity We Cannot Afford to Lose
By Sen. Linda Berglin
The passage of federal health care reform is one of the most momentous events in recent American history. It’s interesting to note, however, that many of the reforms included in the federal legislation also appeared in the 2008 Minnesota Health Care Reform Act. Although Minnesota was able to put a framework for reform in place with passage of the state legislation, we really have needed federal changes in order to make it happen. For example, we need a critical mass of participants in our health care home initiative to effectively change the way we deliver and pay for care of chronically ill patients. Right now, health care home providers can only receive care coordination payments for patients on state-sponsored health insurance programs. Medicare patients are excluded. Approximately 80 percent of primary care physicians in Minnesota have indicated interest in being health care home providers. Others have said they would participate in accountable care organizations, groups of primary care physicians, specialists, and hospitals that will be held accountable for the cost and quality of care delivered to a specific population. For many of these physicians, Medicare is a large part of their payment mix. When Medicare pays for volume instead of value, it makes it hard for these providers to change their approach to delivering care. Because of federal reform, Minnesota now can include in these initiatives Medicare participants, some of the very people who can benefit the most from them.
Another example of how Minnesota has led the way on a reform initiative but needs partnership at the federal level is our 2007 dependent benefit law. Three years ago, Minnesota began requiring that health insurance companies allow dependents up to 25 years of age to be covered under their parents’ policies, regardless of whether they were enrolled in school. However, the federal ERISA law superseded this state regulation. As a result, the state requirement did not apply to the approximately 60 percent of Minnesota workers employed by large companies. Federal reform extends this coverage to all families, regardless of where they work. Another positive change prompted by the federal reform law is that the dependent benefit is not counted as taxable income as it was under the Minnesota law.
I have often heard that it’s not possible to expand health insurance access and lower health care costs. I have vehemently disagreed with this, noting how much we spend when people who are uninsured end up in hospital emergency rooms getting care for medical problems that could have been prevented if they had had access to primary care. Because of the development of health care homes in Minnesota, which are aimed at preventing unnecessary hospitalizations, the state expects a savings in its payments for inappropriate emergency room use and will reduce payments to health plans by 5 percent to reflect this change.
Estimates by the Congressional Budget Office affirm what I have been saying for years: We can cover an additional 30 million Americans, including more than 260,000 people in Minnesota, while reducing the federal deficit by $138 billion over the next 10 years and $1.2 trillion during the following decade. In Minnesota, our health care reform efforts are projected to reduce health care spending by 10 percent to 15 percent by 2020. In 2008, Minnesota spent more than $35 billion on health care. Without reform efforts, spending was expected to exceed $69 billion by 2018.
Many people are concerned about the individual mandate to buy health insurance and the requirement that employers provide coverage to their employees. It’s important to note, however, that without a purchase mandate, people would wait until they got sick to apply for coverage. If that happened, our insurance companies would not remain solvent. There are many provisions in the bill that will help defray the costs for individuals and allow everyone to participate in the market. For example, businesses with fewer than 25 full-time employees whose average annual wages are less than $50,000 may qualify for the Small Business Tax Credit, which will be available starting in the 2010 tax year. To receive the tax credit, an employer must have a group health plan and must pay at least 50 percent of the employee’s premium. The tax credits will increase in future years and will be available to larger businesses as well. Also, there will be a limit on the out-of-pocket expenses an individual can incur when the insurance mandate goes into effect in 2014. And beginning that year, no one will be required to pay more than 9 percent of their income toward health insurance; if costs exceed the 9 percent limit, the individual will be eligible for federal subsidies. Finally, individuals who have insurance will be able to keep the coverage they have now, and that coverage will get better. The legislation prohibits annual and lifetime coverage limits, eliminates rescissions for individuals who become ill while insured, bans coverage denials for pre-existing conditions, and reduces the cost of preventive care. It also limits the amount insurance companies can spend on administrative expenses, profits, and overhead.
Where do we go from here? The state Legislature was successful in putting in place a number of provisions that will allow Minnesota to fully participate in the opportunities federal health care reform will bring to our state. The issue that received the most attention at the end of the 2010 session was whether Minnesota would take advantage of early enrollment in Medical Assistance, the state’s Medicaid program. In 2014, all adults without children whose incomes fall below 133 percent of the federal poverty guideline will qualify for Medicaid. Because Minnesota has already provided coverage to this population through the General Assistance Medical Care (GAMC) program, we are one of 11 states that the federal government has said could be an early participant in the program. The cost of opting in to early enrollment over the next four years would be approximately $188 million. The benefit would be a 50 percent federal match of the health care costs already being absorbed by the state. (In 2014, when all states become eligible for the program, the federal match increases to 100 percent.) For Minnesota, the return on our additional spending would be more than $1.4 billion. This would give us a nearly 7 to 1 return on our additional investment.
There is widespread consensus among hospitals, churches, nonprofit organizations, and the medical community that participation in early enrollment in Medicaid is a good idea. It would solve our ongoing problem of funding coverage for the people enrolled in GAMC, provide a richer benefit set to the poor and sick, and better compensate the providers who treat them. Unfortunately, when we promoted the idea, we met with great resistance from the executive branch. In the final hours of the 2010 legislative session, a compromise was reached. The early enrollment option was codified in statute, the additional funding included in our biennial budget, and the authority to opt in to the program given to the governor. If the current governor does not decide to allow Minnesota to participate, the next governor could do so without further legislative action. Although it is unlikely that the current administration will opt in, I have great hope that we will move forward next year. We truly can’t afford to wait any longer.
Linda Berglin is a Minnesota state senator from Minneapolis who serves as chair of the Senate Health, Human Services, and Corrections Budget Division.