The federal Affordable Care Act (ACA) is before the U.S. Supreme Court this week, while its implementation in Minnesota is tied up at the Legislature. You, John or Jane Q. Public, are probably suspecting that no matter what happens in either venue, your premiums and deductible are only headed up and your access to care down.
What if single-payer were feasible? What if it looked nothing like socialized medicine?
What if it were not only possible to accomplish but also would save money for most Minnesotans and deliver a competitive boost to employers and the market?
On Wednesday, the St. Paul-based progressive-leaning think tank Growth & Justice made its case, releasing a first-of-its-kind analysis showing that a unified system of health care could provide all Minnesotans with guaranteed cradle-to-grave care at a projected savings of about $190 billion over 10 years. By 2023, overall savings could be 12 percent to 33 percent per year, it said.
“This is a cost savings to the state,” said Amy Lange, the policy fellow who designed the study. “It is a cost savings to Minnesota families. It is an economic boost.”
(Another Kramer disclaimer: MinnPost Editor Joel Kramer founded Growth & Justice and continues to serve on its board. As on the education beat, which regular readers by now know is populated by Kramers, decisions about the stories I cover are made in conjunction with my direct editors and not with Joel.)
Pipe dreams from starry-eyed liberals, you’re thinking? Yes, but backed by data crunched by hard-nosed capitalists. Growth & Justice commissioned the Lewin Group, a Washington, D.C.-based subsidiary of UnitedHealth Group, to conduct the comprehensive economic impact study.
The results should grab the attention of the business community. Critics are likely to raise many of the same arguments made against the ACA: that it will do nothing to control spiraling health care costs, will constitute an expensive entitlement and, ideologically, is a step toward socialism.
The report’s premise was simple: More than 10 percent of Minnesotans are uninsured, and the number of employers offering coverage is dropping. Assuming the ACA goes into effect in 2014, that number of uninsured is supposed to drop from the current level of 475,000 to 262,000. Those who are covered can still count on being made to shoulder an increasing share of the cost of care.
Uniform comprehensive benefits
The unified system contemplated in the analysis would provide the same comprehensive benefits to every Minnesotan and allow access to all licensed health care providers, who would all receive the same per-procedure reimbursement. There would be no deductibles and only minimal co-pays for some services. Mental health and dental would be included.
The system could be financed through a variety of mechanisms: An employer payroll tax coupled with an employee payroll or income tax and possibly increased “sin taxes” on tobacco and alcohol. The first $12,000 of wages would be exempted to protect low-wage jobs from being eliminated.
(Why a payroll tax if the idea is to “de-couple” coverage from employment? The answer: So businesses can continue to enjoy the tax advantages.)
Taxes would go up, but the bottom line would go down for most. The average family would save $1,240 a year on premiums; employers who currently offer insurance would save about the same amount per employee. Employers who do not currently offer care and families with incomes above $150,000 a year could see increases.
At the same time, the amount of care consumed would go up an estimated $1.5 billion a year as the uninsured and underinsured gain coverage and cost-cutting strategies that limit access are eliminated.
How would this miracle of doing more with less be accomplished?
Reduced administrative costs
The biggest savings — almost $5 billion in 2014, the year chosen as a benchmark because it’s when ACA is supposed to go into effect — would come from reduced administrative costs by insurers, hospitals and physicians. In the process, some 42,000 administrative jobs would be eliminated.
Another $877,000 a year in savings would come from bulk purchasing of drugs and equipment.
Other items of note: The unified system presumably would capture all of the public money now being spent on Minnesotans’ care, and some savings are predicted to come from increased access to preventive care.
Some of the aforementioned administrative savings would come from the elimination of high-deductible and small-group plans, which are much more expensive to administer than comprehensive ones.
Thanks to a provision crafted by Sen. Al Franken, the ACA will require large plans to spend 85 percent of their premium dollars. Small-group and high-deductible plans can’t meet that threshold, never mind that the latter is billed as more cost-conscious.
And the high-deductible plans can actually drive poor decision-making: 57 percent of low-income families and 42 percent of affluent ones delay or skip needed care because of the cost, according to the report.
U.S. an exception on universal coverage
The United States is the only wealthy industrialized nation that does not have universal coverage. Those that do guarantee care through a variety of models and all enjoy lower costs and better outcomes.
England and most of Scandinavia have socialized medicine — that is, government-financed and -delivered. Taiwan and Canada use a publicly financed, privately delivered system. Germany, France and Switzerland use tightly regulated nonprofit insurers.
Critics note that all of the approaches have weaknesses that keep them from being a panacea for the ills of the U.S. system. Germany, which is often held up as the model approach to unified coverage, has the same aging population and rising health care costs as the United States, for example, and officials are struggling with raising employer and employee contributions and cutting benefits.
The Lewin study did not try to estimate the potential macroeconomic effects, such as an increased gross domestic product, wage increases or job creation. Other studies cited in the Growth & Justice report suggest the stimulus could be substantial.
How does the think tank plan go from pie-in-the-sky to reality? By making sure that as the expected flaws in the ACA are revealed, the business lobby, conservative policymakers and others are exposed to their data.
A good analogy: For the last decade, Art Rolnick, a senior fellow at the University of Minnesota’s Hubert H. Humphrey School of Public Affairs and the former director of research and public affairs at the Federal Reserve of Minneapolis, has published and spoken as widely as possible regarding research he and colleagues conducted on the eye-popping return on investment of every dollar invested in early childhood education.
Armed with the data, advocates have created a sea change in policymakers’ attitudes toward early ed. The linchpin to their success: Making the case that what had been written off as wasteful social policy could be a cost-effective solution to a business crisis.
“This option will be good for business,” explained Dane Smith, Growth & Justice president. “We know business in other countries with whom we compete are reasonably happy with their [unified] systems and would not change places with our system.”
During his gubernatorial campaign, Mark Dayton supported a single-payer system for Minnesota, Smith added. The advent of ACA presents a good opening to put the topic back in the public discourse.
“This option needs to stay on the table,” he said. “It is an attempt to change the conversation. … This is one of the last big hurdles for a fair and just society. You can’t just check out of the social contract.”