State Sen. John Marty, DFL-Roseville, thinks our society should view health care in the same way we treat police and fire protection — as a public service.
“When you go home at night and find your home is broken into, you call 911,” says Marty, chairman of the Senate Health, Housing and Family Security Committee. “The police dispatcher does not ask you, ‘Do you have police insurance? Does your policy cover home burglaries?’ We’ve addressed that problem and we ought to see health care in the same way.”
In the last three years, Marty has pushed a bill that would set up the Minnesota Health Plan, essentially a single-payer plan that would shift the premiums we and/or our employers now pay for health insurance to a public entity that would cover necessary health services from cradle to grave.
Hasn’t he heard that a single-payer plan isn’t politically realistic, as they’re saying in Washington? Does he ever feel lonely being in the minority? “Yeah,” the seven-term senator chuckles during our Q&A. “I’ve felt in the minority about a lot of things.”
Marty is making another run for governor next year after losing in 1994 to Republican Arne Carlson. “I won the primary but got clobbered in the election,” he recalls.
Regardless of what happens next year in the governor’s race, he thinks momentum is building for the Minnesota Health Plan. The bill now has 70 co-sponsors, and it has passed in not only his committee but also the “insurance-friendly Commerce Committee.” He thinks it will take another three to four years to work its way through the Minnesota Legislature.
Before you dismiss Marty’s plan as another pie-in-the-sky proposal from a progressive Democrat, take a look at the principles of the Minnesota Health Plan and the frequently asked questions (FAQs) on the website.
The “biggest misconception” is that it will cost more money, says Marty, who welcomes the opportunity to talk about the plan to tough audiences like Chambers of Commerce.
Meanwhile, he watches the national health-care reform debate and ponders how it got off-track from the original goal of universal health care. Here he shares his best hopes and worst fears for reform and more about the Minnesota Health Plan. (The transcript has been edited for length.)
MinnPost: What are your best hopes and worst fears for national health-care reform?
John Marty: The best hopes are that we figure out what we need to do and we do it. The best hopes are that the nine principles I’m referring to in Article 1 of our bill — principles such as making sure everyone has access to high-quality health care; making sure we cover all necessary care including mental health, chemical dependency, prescription drugs, dental care, long term care, etc.; making sure — and this is key — that we don’t save money by restricting, delaying or denying care, reducing the quality of care but that we save it through administrative efficiencies and limiting bureaucracy.
My biggest fear, on the other hand, is that we get so wrapped up in the politics and the strategies of political power and who can score political points that we forget what we’re trying to do. In Washington, it’s happening in both parties. Some of the stuff is just hateful misinformation: the death panel stuff — “we’re gonna cut Grandma off, Grandma’s gotta die.”
Aside from the hateful stuff, there are a whole lot of people who get driven by ideological views of what they favor — “we want a free-market approach, we want this approach or that approach.” And they get into, “Well, this is feasible, we can do this.” [U.S. Senate Finance Committee Chairman] Max Baucus in Washington is saying, “Well, we’re not going to consider single payer because it’s not politically realistic.” People get so wrapped up in the politics and the political strategy they forget what they’re looking for.
The only thing you’ll hear about vision, about what we want, about what are we trying to accomplish in Washington … is you’ll occasionally hear politicians talk about universal health care. Even the ones who are speaking about universal health care, President Obama and others, the proposal in the House would cover 94 percent.
My math, my mind does not call 94 percent universal. … They start out talking about universal health care and the next thing they’re doing is talking about a proposal that will be some form of insurance, no matter how pathetic, for 94 percent of the public. So, then, what was the vision? What was the goal? What is the focus of what we’re trying to accomplish? What happened to that terminology? What happened to that reality? So, my fear is that politics and political strategizing and political point-making is trumping the discussion of what we need to accomplish in health care reform.
MP: Do you ever feel lonely being in the minority for a single-payer solution?
JM: Yeah, I’ve felt in the minority about a lot of things. I call it the single plan instead of single-payer because a lot of people have more preconceptions and misconceptions about what single-payer is. I think public support for it is actually stronger than for any other option right now. I was calling one of my DFL colleagues from a very conservative part of the state to ask him to support my gubernatorial race. And he said that he’s not endorsing any of the DFL candidates for governor because politically it would be very tough in his district. But he said, “Keep pushing on your Minnesota Health Plan because my folks are desperately in need of it and they’re beginning to understand the importance of it. So keep talking about it.” That’s a very conservative part of the state, and I think it says a lot for it.
So, yeah, I’ve felt like a small minority in the past. But we now have 70 co-authors for my bill. I think the public is ahead of the politicians on this one.
MP: Any Republican co-authors?
JM: We had a Republican vote for it in committee for the first time, but whether that will be sustained [is hard to determine]. The partisan politics has gotten so fierce in recent years that if a Republican supports such a plan they get beat up by their activists. But I think that when you look at other countries that have moved this way, at one point it was really controversial. But once they got it, everybody favors it.
The thing is calling it a health plan vs. single payer. What is single payer? Is Canada single payer? Is England single payer? Is Taiwan single payer? Well, they’re all different sorts of things so … I don’t tend to use that terminology because our plan is so different from everybody else’s that I think it’s worth talking about on its own.
We get into details such as the plan covers all prescription drugs except those that are marketed direct to consumers in Minnesota. Why does that matter? Well, $100 million are spent every year just in Minnesota marketing pharmaceuticals directly to patients, feeding a need where there may not be a need and pressing doctors to prescribe things they don’t think are appropriate. Why do we want to spend $100 million of our health-care dollars in one state, in one year, on advertising pharmaceuticals to people who may not be needing them?
MP: What motivated you to get involved in the universal-health-coverage movement and to propose the Minnesota Health Plan?
JM: The reason I ran for office in the first place is the belief that we could do a better job in society. We’re a country that could tackle any obstacle. Right after the Depression, we battled fascism in World War II. In the 1960s we could put a man on the moon.
But we’ve given up; we’ve surrendered on so many issues as a society. Universal health care? “Well, it’s a nice dream but it’s not going to happen in our lifetime.” What kind of vision is that? What kind of defeatism? That’s why I got involved. It’s Martin Luther King Jr.’s statement: “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”
I’ve been involved in health care all along. I became chair of the Senate Health Committee a couple of years ago and I started working on these principles five, six, seven years ago. We’re trying to start the discussion beyond what we talk about in Minnesota: the Democrats pushing for insuring more people, the Republicans pushing for health savings accounts. I’ve thought that before we figure out how we’re going to get there, let’s figure out where we want to go.
When I became chair of the Health Committee, all of a sudden I had a chance to take a leadership role. Seeing no other proposals out there that were going to meet these principles, we put together a bill that would. I wouldn’t be wedded to the Minnesota Health Plan if someone else would come up with a plan that meets those principles. Take the plans in Washington. The plan I’m supporting is the best of the not-very-good options out there. It does not cover all people. It doesn’t stop people from restricting, delaying or denying care and reducing quality of care. It doesn’t cover all necessary services.
MP: Was there any singular experience in your life that inspired your involvement?
JM: I’ve never been denied health care. … But I hear stories every week — every week. Last year, the Senate Health Committee had a hearing in Mankato, and one farmer talked about how he had taken his kid to an emergency room because there was something seriously wrong with the kid, they thought, and they took him in as any good parent would do. It turned out to be something they could have avoided if they’d known more. The kid turned out to be fine. But it cost them 500 bucks. … So, next time, you know they’re probably going to gamble and say, “Well, we’ll wait until Monday. We don’t have the 500 bucks.”
People are gambling with health care.
Just two weeks ago, I heard from another woman who told me about a sister of hers, 50 years old, who lost her job, lost her health insurance and lost her life because she had some sort of infection that was perfectly treatable but she didn’t have coverage and didn’t go in.
People are gambling their lives away on this. I didn’t personally suffer, but I’ve known so many people who have personally suffered and people who have lost their lives. I think everybody in the state knows people who have gone this way.
MP: What are the prospects for the Minnesota Health Plan bill in the next Legislature, given that national reform is front and center and that the state budget deficits have been running in the billions of dollars?
JM: We’re not realistically hoping to pass the Minnesota Health Plan next year. We have a three- or four-year plan to make it a reality. We are hoping to pass it through another committee or two. … This is one issue that is so big and so complex and so important — it’s [health-care] one-sixth of the economy and it’s easily bigger than state government. Frankly, I want to make sure that this is thoroughly aired. It has passed through two committees now — my committee and the insurance-friendly Commerce Committee.
This is a bill that bypasses insurance. We don’t use [the term] health insurance; we use health care. We want to provide health care. So, we’re hoping we can pass it out of another committee or so this year. I’ve been speaking to any group interested in hearing about it. I’ve spoken to the Ramsey County Medical Society. I spoke to the Minnesota Hospital Association CEOs. I’ve spoken to nurses groups. I’ve got an invitation to speak to a local Chamber of Commerce; I want to speak to more Chambers of Commerce. I don’t expect the state Chamber of Commerce and local chambers to endorse the bill. They are perhaps blinded by some ideological beliefs and they represent health insurance companies and the pharmaceutical lobby.
But there are also a lot of members from businesses who … are being killed by health- care costs. What I’m trying to do now both at the Legislature and around the state is to expose more people to the ideas behind it, get their feedback; get their advice. We’re constantly looking at changes and improvements in the bill.
MP: How do you explain funding this plan to your peers and the public? How much would the startup costs be and what would the payment mechanism be?
JM: We estimate the cost will be 20 percent cheaper than what we’re spending now in terms of total health-care dollars spent in Minnesota. That’s extremely expensive; about the only thing that is more expensive is what we’re doing now. Unlike the proposals in Congress, which are looking for a trillion dollars or more over the next decade, we want to do more than they do: cover everyone and all medical needs and do it at less cost. That’s the good news.
Getting an accurate projection on it is not something that state agencies have the staff to do this sort of thing. Wilder Research is committed to doing a cost study of the bill, and they are putting up some of the money.
[Colorado hired] The Lewin Group, which as you know is owned by UnitedHealth Group and is not particularly favorable to single-payer plans like this one because it really doesn’t leave much of a role for them.
The Colorado Legislature, like the Minnesota Legislature about two to three years ago, formed a health-care access commission and they did it differently than ours. They did it the way I think we should have.
Instead of doing a study of insurance reform and payment reform and public health and fixed cost containment, this and that, our commission was given the legislative charge to develop a system that would ensure that “every Minnesotan have access to the full range of quality health care by 2011.” Our commission just didn’t do that. Instead we looked at how we can change this and 50 little things that were nice things, but the bottom line is we didn’t come up with a proposal on how we could make sure that quote, every Minnesotan have access to a full range of health care services.”
The Colorado commission said instead, “Hey, we want to provide health care to people”; they took the four plans that were the most promising and they asked The Lewin Group to analyze them. [Here is PDF of analysis; look at Page 105 for cost savings from single-payer plan.]
I pulled together a chart of the number of people left uninsured under each of the proposals and the costs of each of proposals. First of all, Colorado starts out with about 792,000 people that are uninsured, which is twice as many as in Minnesota. The first proposal would cut the number of [remaining] uninsured to 467,000 and cost $595 million. The second plan cut the number to 138,000 and would cost $271 million. The third one was 109,000 [remaining] uninsured but that one cost $1.3 billion.
The way I sell it to my colleagues and to others wanting to know about the Colorado Health Services Program, which is a single plan like ours, is that it doesn’t take six digits to tell you how many people are left uninsured. It’s ZERO. And the change in total health-care spending is $1.4 billion, but it’s got a MINUS sign in front of it. …
So I’ve got this chart and I’ve waved it in front of my colleagues. The Colorado commission looked at four proposals and it seemed obvious which one they would choose: if one of the plans eliminates the number of uninsured … and it’s the only one that saves money, well, obviously they’d pick that plan, right?
But, of course, they didn’t, because it was not politically realistic.
The way I sell it to colleagues and others is saying, If one plan works and it saves money and all the other plans don’t work and they cost more money, I don’t care if it’s politically realistic or not. We’ve got to make it realistic to the people who are dying for lack of health care; we better make it realistic.
We think the Minnesota Health Plan would save money. The Lewin Group does not favor single-payer plans, but their own analysis of Colorado showed that the only plan that covered everyone was the single-payer one and the only one that saves money is the single-payer one. … Our plan, because it’s a much more comprehensive plan, has a lot of factors we think would save more money. That’s why we’ve asked Wilder Research to analyze it and why we’re asking state and national foundations to help with the cost of the study.
The reason foundations might be interested, even though the plan is seen by most of the political experts as “oh, it doesn’t have a chance,” I think they’ll see that we’ve got a lot of co-authors. We’ve gotten it through a couple of committees. There seems to be growing support, and it’s fundamentally different from all the others.
What’s happening in Washington is that they’re looking at a mix of what Massachusetts and Minnesota and other states have done, and Minnesota and Massachusetts are spending a lot of money on health care and not solving the problem. So maybe we should try and figure out what solves the problem instead of doing more of what’s not working.
I think Wilder is recognizing that in the next couple of years we’re going to have to do something bigger. This is what’s so disappointing to me about the Washington debate. Obama is putting all of his political capital on the line on this thing and even if he gets everything he wants, which he’s not going to get, it hasn’t solved the problem. We’ve got a more expensive system, and it doesn’t cover everyone.
When people say, “Well, does he [Marty] really think this thing has a chance of passing in three or four years?” That’s one of the reasons I’m running for governor. … It used to be something where low-income people couldn’t afford health care. I’m sure you’ve seen that of the people who go bankrupt because of medical expenses, 78 percent had health insurance at the time of their illness or injury.
If you look at how much we spent on health care in Minnesota last year, it was $35 billion, according to the Minnesota Health Department. That’s $7,000 per person, slightly less than the national average. But projections are that it will grow from $35 billion in 2008 to $55 billion by 2015.
Just to put that into perspective, $20 billion in growth in the next seven years is bigger than the entire state budget. The entire state budget is about $18 billion a year. It’s (health care) already bankrupting the state, bankrupting local government, bankrupting businesses, bankrupting families and we’re going to add the entire cost of state government to what we’re spending on health care in seven years?
It just doesn’t work, and saying we’re going to reduce the curve in increased spending … well, maybe that suggests we ought to start with what we want to accomplish first. If there’s something wrong with the principles, then tell me. We’ll modify them … if these principles make sense; that’s what we want, then let’s start with what we want to end up with and how we’re going to get there.
We save up money to help send our kids to college. We save up money for a down payment on a house. We save up money to buy a new car sometimes. People save money for those things, but saving money [in Health Savings Accounts] so you can afford to get sick? I don’t want to do that, and I’m sick of it. Every Saturday night, every other town across the state has one of those sign boards out front of the Legion Hall [or another community meeting place] saying, “Come out Saturday night for the fundraiser for the Chris Johnson family” or somebody because their kid got leukemia. It’s immoral that people can’t get the health care they need or they have to go bankrupt to get their kid health care.
The reason I like focusing on the principles is because people are so ideologically bound. Let’s figure out not what kind of ideology we believe but what we want to accomplish. I want health care to be like a public service. The reason I think government has a role to play in this is it’s a public need and it should be treated like a public need.
Police and fire are a perfect example of that. That’s why I use this example: When you go home at night and find your home is broken into, you call 911. The police dispatcher does not ask you, “Do you have police insurance? Does your policy cover home burglaries?” We’ve addressed that problem and we ought to see health care in the same way.
We all need police and fire protection. We hope we don’t need much but we need the protection and we need it to be there when we need it. It’s the same thing with health care. We know it’s going to be needed sometime. You may need 10 times as much as me; I may need 10 times as much as you. We can’t know that but we all are going to need it in some way, shape or form.
MP: You have quite an extensive set of FAQs on your Minnesota Health Plan website. What are two of the toughest ongoing questions you’ve faced about your single-payer bill, and how do you address your critics? And, what key points of the plan seem to get lost?
JM: I wouldn’t say that any one key point is getting lost right now. We’re still at the stage where people are trying to find out more about it, or they don’t know anything about it and they’ve never heard of it. That’s why I like tough audiences and why I’m looking forward to talking to chambers of commerce about it; I’m glad to speak to doctors, hospitals and administrators about it. So I don’t know that there’s any particular point that’s being lost.
When I met with the CEOs of the hospitals, HCMC and Regions and all the big ones, they gave me an hour and a half to present. At the end of the session I’d say a lot were skeptical but very interested. … I raised the point of how do we deal with uncompensated care. I pointed out that a former Senate tax committee chair proposed to help HCMC and Regions, by far the biggest charity hospitals in the state, by changing the fiscal disparities pool. … I told hospital administrators that’s kind of backwards. … Why don’t we fix the uncompensated care problem and make sure everybody has compensated care? Let’s make sure we have fair payments to the hospitals. I think that as we present and discuss, they learn from it.
The biggest misconception is that it costs too much. This is one thing [on which] I’ll agree with Obama: Doing nothing is not an option. We can’t afford to do nothing.
MP: How again does your plan save money?
JM: There are a whole range of things. The biggest single savings are administrative. We’re spending 31 cents on every dollar on administrative costs. Now, if you look at most of the proposals in Minnesota in recent years and most of the proposals in Washington, everything they say they’re going to do to save money administratively, somehow that’s going to knock down Medicare costs.
In other words, we’re going to increase administrative costs to reduce medical costs. There are times you can do that, and I’m not saying you can’t. But the bottom line is … your head spins. Even if you’re an economist, your head should be spinning when you hear all these ideas of how they’re going to do this. If we’re spending 31 cents on the dollar now, we’re going to be spending 35 cents on the dollar when we’re finished. Maybe we’ll be able to knock down the medical costs enough to make up for those new administrative costs, but you’ve got a big burden before you even break even.
One analogy I give is that if we ran an elementary school the way we ran a hospital, every teacher would be required every day to sit down and calculate how many notebooks and pens each kid uses, how much of his or her time is devoted to each kid — five minutes here with this one, the next 45 minutes will all 30 of the kids, and two minutes with this kid.
You’d have to tally up those things, and all of the overhead costs, give each parent a school insurance plan, and the insurance plans obviously pay different rates for the same things. So, two minutes of a teacher’s time might pay more for one than another and some of the plans don’t cover everything and some of the kids wouldn’t have school insurance. You have to re-allocate everything and re-bill everybody for the difference; you’d spend half the school day every day trying to figure out who owes what.
We don’t want that. We want schools to teach. We want hospitals to heal. We don’t want nurses to be tracking for the billing department how many doses of whatever does a patient get.
We save money through administrative savings, we save money through negotiations and bulk purchasing of supplies. … We’d save money through eliminating certain functions like underwriting and marketing. We’d save money through efficient use of services. For example, people are going to emergency rooms for dental care 22,000 times a year in Minnesota because they don’t have a dentist.
The vast majority aren’t people who had their teeth knocked out in an accident. They are people who had tooth decay. It was untreated, it got infected; they got an abscess. It hurts like hell. They go in to the emergency room, the emergency room gives an antibiotic and pain relief, and tells them to go see dentist in the morning. So, in other words, they didn’t fix anything other than the infection.
Boy, at 500 bucks roughly a visit times 22,000 … just for dental problems? So, our plan would have a 24/7 nurse line available to everyone in the state. That avoids people going into emergency rooms. We would have access to urgent care everywhere in the state where you have an emergency room. If you don’t have an emergency you go next door to urgent care. We would deliver health care in a smarter way.
When I was in kindergarten, it was the year the polio vaccination came out and they lined us up in the gym and we all got the vaccination. When my kids were in elementary and high school and we wanted them to get the flu shot, which they now recommend for everyone, every kid at least, it would mean my wife or I would have to take time off work, pick up the kid at school, take them to the clinic, get the shot, bring them back to school. Maybe 10 percent of kids will get flu shots, and we’re at risk of a flu pandemic.
What if we went back to a single plan where somebody’s in charge and somebody can say, “Look, if want kids to get vaccinated, let’s put a nurse in the schools, have the nurse send home a note to the parents asking if they want their kid to get a shot, and line up all the kids in the school gym. It costs a third as much and gives nine times as many kids the shot.
It’s also the allocation of the medical infrastructure of hospitals and surgical centers based on need.
There are two radiation therapy clinics across the street from each other in Maplewood, which used to be in my district. … They’re not located there for convenience. One of them is owned by the hospital, the other one owned by some doctors who are making a buck off doing that.
We’ll have a logical distribution of the medical infrastructure and we’ll be negotiating provider fees. We would actually pay more for some groups in rural areas because there’s a shortage; we might be paying less to others and certainly for pharmaceuticals. The Canadian average price for pharmaceuticals is 40 percent less than what we’re paying here. You negotiate prices and you get a fair rate, so it’s a whole range of things.
It does cost more to cover more people for more things, but it saves money because realistically, those who aren’t uninsured we pay for them now at the emergency room. We pay for them now through untreated chemical dependency. We pay for them now through our prisons and jails.
MP: Aren’t you essentially putting the insurance industry out of business in Minnesota, and any idea how much Minnesota’s insurers and/or health-care providers have spent lobbying against you and your bill?
JM: I’ve NEVER heard that question before. [He chuckles.] It’s an obvious question. The insurance industry is not particularly fond of this. First of all, we’re not putting the insurance industry out of business. I have homeowners insurance, I have auto insurance, and I’ll continue to have them. We would be putting the health-insurance industry out of business in Minnesota. [In turn] you’d be saving money on auto insurance, you’d be saving money on homeowners insurance, you’d be saving money for businesses; you’d be saving money on workers compensation because all the medical stuff would be covered by the Minnesota Health Plan.
But, yes, there would be some displacement of jobs and employees, and I don’t mean to minimize that at all. It is a very, very serious issue, and the health plan has in it a requirement that the board address dislocated worker programming to retrain people, help them financially adjust to loss of jobs. There are a couple of things that mitigate that of course, which is that this kind of proposal clearly creates more jobs and creates more business because it takes a big headache out of business.
Think of the stereotypical entrepreneur who has come up with some great invention and they’re working in the garage 80 hours a week to bring it to market. That stereotypical person isn’t so much there anymore because they’re working 40 hours a week to get health-care benefits and working nights and weekends in the garage.
This will stimulate the economy in a lot of ways. An awful lot of people work for health insurance companies but a decent number have medical degrees. Let’s get them practicing medicine where we need them instead of denying claims, which is what we’ve been using them for. … I wouldn’t encourage this but we’d actually save money if we just took all the people working in the health insurance industry and paid them to do nothing but sit at their desks all day because it wouldn’t require hospitals like HCMC to have 100 people in their billing department.
This past year, from January to now, Minnesota lost 2,000 to 3,000 jobs every week. There’s one advantage for people who would be losing their jobs under this bill, which none of those people who lost their jobs had this past year, and that is that they would have their health insurance taken care of. Why? Because the Minnesota Health Plan would cover them. The woman I told you about who died after losing her job and losing her health insurance last year … you wouldn’t have that kind of tragedy. The biggest unknown for anybody who is laid off is, “What am I going to do for health care, how am I going to pay for it and am I going to be able to get it?”
It’s not to trivialize or minimize the difficulty when you’ve been laid off. It’s a tragic thing. It’s almost as tragic as the workers losing their jobs in the last year and a half under the recession. The good news is we’re creating more business, creating more jobs by this plan and making the community healthier and bringing in more business that way.
MP: Any idea how much the insurance industry has spent trying to block your plan?
JM: You’ve seen the numbers on how much they’re spending in Washington [$1.4 million a day]. They haven’t really started fighting this yet. It’s on their radar screen for sure. When this bill starts moving forward, they’ll put a lot more resources into it but I don’t know if they’ve spent much on it so far. They’re just tracking it now. Again, if we have a governor who has this at the top of the agenda, if we have a Legislature that’s really hearing from people … again I’m hearing from some of the most rural parts of the state. Health care is a mess in the metro area, but it’s a disaster in Greater Minnesota.
The article in which you talked about the subbasement (the individual insurance market) — that’s a good way to describe it. It might be a housing-loss prevention policy and it may stop some people from going bankrupt. But the thing is, we hear testimony from farmers who have to demonstrate to the banker that they have some form of health insurance before they can get a loan. … Our health system has been screwing up every part of the economy, and it’s getting worse fast.
MP: Anything else you’d like to say that I haven’t asked you about?
JM: To get back to your first question on best hopes and worst fears: Again, my fear, my disappointment is over how wrapped up everybody in Washington is over the strategies and the partisanship and so on. Other than the initial talk about universal health care, there’s no real look at what we expect out of the health care system and no real expectation that we can do better.
This is a country that for years was always the country willing to tackle anything. Obama has basically said we need a single-payer plan if we want to cover everyone. He’s admitted that. To say that in this country, the richest country in the world, where we think of ourselves as way ahead of the world; to say that we cannot provide health care to everyone and we don’t expect to be able to in our lifetime, that’s just not acceptable.
Casey Selix, a news editor and staff writer for MinnPost.com, can be reached at cselix[at]minnpost[dot]com.
The sun was barely rising over the big lake this morning when I first read the Selix/Marty story… but you could say ‘the sun also rises’; rose again for this reader with some hope, after reading one powerful, informative interview.
Great questions asked. All questions answered.
A rare one indeed considering the throat clearing, hemming,hawing, public vocalizing coming from some of our gang of Washington repesentatives.
But then, consider this…we’ve got one who used to be a stand-up comedian, another who obviously wants to be, and another who is a stand-up joke.
Go figure…and again I tip my hat to this interview; interviewer and interviewee…applause, applause!
O
Easy does it. I can envision it. I preach it. People understand it.
Under the Minnesota Health Plan, the health insurance industry COULD indeed still have a revenue stream, selling Minnesotans a health policy for cosmetic surgery, cosmetic dentistry, and non-“medically necessary” health services.
But whatever’s medically necessary, it’s covered in full for every Minnesotan, by the Minnesota Health Plan. No question. No comment. No bill.
Once you see that vision, our current health care “system” shows itself to be unrelentingly provincial, backwards, immoral and expensive.
Where is Sen. Marty getting his figure that we are spending 31 cents of every dollar on admin? This MN Department of Health publication says that the average admin cost amongst health plans in MN is 8.2% (As of 2007)
http://www.health.state.mn.us/divs/hpsc/hep/publications/privatemarkets/admn2007.pdf
By the way admin costs are not a bad thing. Inefficient admin costs are bad. For example, by lowering admin costs you might have to cut things like fraud investigation and disease management services. These two things alone help save money but investigating/preventing fraud and helping people to manage their chronic diseases.
Wouldn’t it be amazing and wonderful if Minnesota turned in this direction and once again became a leader and forerunner for the nation? Keep at it, Senator Marty! The “voice crying in the wilderness” will yet be heard!
I can only hope and pray that your comments about police and fire protection continue to be true. With Gov Palwenty’s endless draconian cuts in LGA and, considering that local property tax payers can only support about so much before the elderly start losing their homes due to the inability to pay their ever-rising taxes, how long will it be before those with means will be purchasing, in effect, “insurance,” in other words, private security and fire protection over and above what the general public has. (It’s already happening, of course.)
I can’t help but wonder if that’s an underlying (if unconscious) agenda of our Governor and the Rebs – to save those who have benefited the most from the infrastructure in our society (including public services) from paying for those services in proportion to the benefits they have and will continue to receive.
If the rest of us are not wise enough not to allow them to invoke our inherent selfishness, they will continue to move us closer to the day when the general public lives in poverty and squalor without basic services or protection while the more fortunate live in massive mansions, in gated communities, send their children to private schools, and procure their medical care from private-access hospitals.
By calling forth the worst in our human nature (rather than the best, as Senator Marty is attempting to do), they will take us down to third world status in everything, while the “conservatives” among us who are less well off, and the liberal perfectionists, who are determined to make “perfection” the enemy of any “good” changes, both being unable to look in the mirror for the source of their problems, continue to blame some other side for their impoverishment.
Like I’ve said before, the health plan sells itself once you explain it. As to the discrepancy between 31% and 8.7%, the state gets that 8.7% from the industry, and they always under report administrative costs. It’s all about how you define: “Administrative”.
i am not sure where Mr Simplot gets his numbers for cost of administration of private insurers. So, I went right to the absolute positive source: United Health’s latest financials for last 6 months:
In brief they claim about 18.5% for overhead, PLUS 6.5% for NET profit, or $3.1 Billion profit for the period. Those two items add up to 25% alone. They have Revenues of $43 billion for the period, up from$40 billion. Included in the 18.5% is about a billion FOR SETTLEMENT OF TWO CLASS ACTION SUITS THEY LOST; AND ANOTHER SUIT COVERING CLAIMS MADE BY THEIR EMPLOYEES — all of which says something in itself. In addition to the overhead costs, they have certain “soft” expenses like depreciation etc. I know the 31% has been used frequently, and I am not sure it is far from wrong; but it certainly is many time higher than the 3% admin costs attributed to Medicare.
A.M. Best recently reporte that the BCBS plans nationwide had “improved” their “healthcare expense ratio” from 86.1% in FY 2007 to 85.9% in FY 2008. Put another way, the comparatively well run BCBS plans reduced the portion of income (premiums and investment income) actually spent on healthcare. This is considered an improvement. I’m not sure all of the money they spent on things other than healthcare are considered overhead, but since they are legally a “non-profit”, what else would it be called? So their “not spent on healthcare” percentage rose from 13.9% to 14.1%. Some other players in the industry proudly report “healthcare expense ratios” as low as 55%, with various estimates as to what the overall average is, mostly around 25%. Even if it is as low as 8.7%, the various state run Medicad programs report aggregated administrative overhead averages of around 3%, with individual states running between 2% and 5%. In Canada’s much maligned system it is just 1.3%. So, even if the national average for private plans was 8.7%, the difference between those and Medicaid would be $88 billion/year. If the national average is more like the 25% which is commonly reported, the difference is over $400 billion/year. Minnesota has about 1.3% of the US population. 1.3% of $400 billion gives us an estimate of cloe to $5 billion/year. And that is not covering the reduction in hospital and clinic overhead in no longer having to staff so many people to wade through the differing coverages, reporting and the like for hundreds of different plans. Imagine that, more of the people working at the hospital actually working to provide care, rather than to argue with the insurance company!
TJ Simplot: Private insurance administrative costs include the things noted in comments above, but also include those TV ads asking you to “ask your doctor if $$$pill$$$ is right for you.”
Plus over two million employees nationwide whose job it is to find reasons NOT to pay your claims or to give you coverage at all.
Plus lobbying, especially this year, at $1.4 million per day from the insurance industry fighting a plan that Republicans probably won’t vote for anyway no matter what it contains.
Total administrative costs also include all the extra employees needed by companies to administer employee health plans and by providers to process claims and fight with insurers for payment. (It boggles my mind to hear that hospitals would rather continue being underpaid instead of being assured payment.)
Over 65 percent of Americans favor a Medicare-for-all type national plan and, in Minnesota, over 60 percent of doctors favor one. Should Washington, which doesn’t yet seem to have received that message, settle on some kind of pretend “reform” that doesn’t even include a decent public option, Senator Marty’s plan for Minnesota should be immediately enacted so it can be copied by other states.
Senator Marty is far from alone in this fight.
Mr Spicer, as I noted in my post, the numbers came from the a report created by the MN Department of Health. I did not make them up.
Second, Medicare may have a 3% admin loss ratio but you have to consider one thing. Medicare only covers the disabled and seniors. These two groups have very high claims costs. Private plans cover a more varied base of individuals so they have a lower claim cost. If it costs Medicare and a Private plan both $100 to process a claim, of course Medicare’s admin rate will be lower because they are paying on a higher dollar claim.
There is a good explanation here:
http://americanhealthsolution.com/assets/Uploads/Blog/WM-Medicare-Admin-Costs-06.25.2009.pdf
“Medical Loss Ratio” is an invention of the health insurance industry. It’s a device to calculate claims denial effectiveness, in which you divide revenue received by the total claims paid. The revenue not paid out in claims is either classified as an “Administrative Cost” or a “Profit” (oops I mean a “reinvested reserve” in MN). Many states regulate minimum loss ratios, so that’s what these numbers are dreamed up for. Minnesota no longer regulates how much HMOs can retain in their unlimited “reserves”.
“Administrative Cost” is a fudgy term covering everything from Fortune-500-worthy salaries, perks, that shiny new headquarters, legions of claims processing staff, overhead, marketing, and Lear jet rentals to percentages paid to lobbying firms on K Street and University Avenue.
Medicare has an approximately 2% administrative cost; it’s NOT a loss ratio.
This was a great article. I have come to believe that state-based single plans (as opposed to national) are not only the best fiscal solution but would make for the best health care, and are politically possible.
John Marty has become my hero.
I can’t believe people hold Medicare up as the model. Has anyone been following Medicare? It is scheduled to go broke and is riddled with fraud.
Have you seen Medicare benefits? You have to pay almost a $1000 deductible when you are admitted to the hospital. You have to pay 20% of your office calls with no cap on how much you pay out in a year.
Medicare is so great that most seniors buy a plan to supplement Medicare or buy a Medicare replacement plan.
The stereotype that insurance claims are just looking for reasons to deny a claim is just that, a sterotype. Here in MN insurance companies are highly regulated are all non-profit. You never hear about the 99% of the time the claims are paid properly. You only hear about the 1% where there was an issue.
Yes, I work in the insurance industry and realize that it is not perfect. If everyone worked at one for a short time, you would realize they are not nearly as bad as you think they are (at least here in MN).
By the way, before anyone mentions United HealthCare (UHC) I want to remind you that UHC cannot sell health plans in MN (except for Medicare Advantage plans) because they are for-profit. If you live in MN and are covered by UHC, you must work for a company that is not based in MN. All the other insurers in MN are non-profit.
I am so proud that Minnesota has a legislator that actually uses his common sense to fix the health care system.
Aside from the administrative cost savings, we will save so much money through preventative care with the Minnesota Health Plan. I mean this is the savings that will come from people seeking medical care at the beginning of an illness, thus avoiding spreading illness, going to an acute care setting and missing work. If people do not fear the cost of health care, then they will seek it when appropriate. Going to the doctor is rarely a pleasant experience, but if money is not an issue, I think people will be more proactive about their health and then save the entire system a great deal of money.
John Marty for Governor!
Ms. Anderson, I respectfully disagree with your assessment. If you cover everything at 100% you are essentially giving everyone a credit card with no limit. Yes, some people will go right away, but they will also go for every single issue that may be wrong with them. Not every illness ends up turning into something serious. For the average adult, most illnesses go away within 48 hours.
As mentioned previously, I work in the insurance industry and have for a long time. Most plans I dealt with had 100% coverage for routine physicals with no copay. That benefit got used about 40% of the time even though it cost the person $0 out of pocket.
One of the great things that most health plans offer is a free nurse phone line. People can call it first to speak to an RN to see if an ER/Urgent Care/Office visit is appropriate. Again, this does add to a health plans admin cost, but it does save money in the long run. Last I checked, Medicare does not offer such a service.
IF, and that is a big IF, there were some kind of state plan, there would have to be some sort of sliding scale of copayments based on income.
Canada’s health care system (which 90% of its citizens support) started in one province, Saskatchewan, and soon people in the other provinces were clamoring for similar plans. In fact, the provinces still administer their health plans individually, although people from one province are allowed to get care in another.
I hope Minnesota can be America’s pioneering state.
TJ, there’s no need to keep reminding us that you work for the insurance industry. Its pretty obvious when you keep spouting their talking points. This one is my favorite: “..but they will also go for every single issue that may be wrong with them.”
Yup, doctor visits are sooo much fun that we’ll all “abuse” our coverage by spending our days reading out of date magazines in doctor’s waiting rooms.
But, seriously why am I and my employer paying $1200 a month for something that you don’t want me to use? What other product do we pay for, let alone $14400 a year, that we don’t intend to use? I can’t put my finger on it, but there is something down right un-American about that.
Mr. Tobias. I am not spewing “talking points”. I am speaking as someone who has experience in the health care world. Why is it you do not want to hear insights from someone in the field? My insights are based on my experience, not the mantra of any insurance company.
You and I may not be one of them, but there are people who abuse health insurance. They have the same mentality that you mention. “If I’m paying for it, I’m going to use it.” Yet those same people will not file claims to their car insurance when they have a minor accident because they don’t want their rates to go up.
I have witnessed this exact situation. When you make MD office visits “free” to the member by not charging any copay, people will go for any reason. I can’t tell you how many calls I took from people who wanted to see the MD because they have a cold. Well, an MD can’t do much for a cold. A simple call to a Nurse Phone Line could accomplish the same result and not result in an expensive office visit.
I agree that health plans are not perfect. Health Care providers are not perfect. But patients are also not perfect. They need to be responsible with their healthcare. If you give them insurance without any kind of copay they will abuse it and will only lead to incredibly high costs. I know this because I have seen it. Not because my company told me to say it.
I’m with you Senator Marty. And yes, there may not be the political will to do this on the national level but we here in Minnesota may be able to do it.
I have written to all my legislators. I suggest others do the same. Get involved. Attend a rally. Comment on the blogs. Support Democrats as well as Independents or Republicans that support this idea. Don’t let fear mongering cause you to vote against your own best interests. Keep reading. Stay informed. Help Minnesota show the rest of the country how to get this done.
One can counter Simplot’s Overuse theory with an equally-frequently-observed Underuse theory:
High deductibles and steep copays from crappy individual (or skimpy employer) insurance schemes keep people in pain from seeing their doctors, keeps 58-year-olds from getting that colonoscopy, that cholesterol screening, the flu shot, the diagnostic scan of the achy shoulder. Great, right? Saves the private insurer and everyone in the short term? But down the line, it’s Medicare (us taxpayers) laden with a larger more severe, more expensive problem array, not the private insurer.
Yes, Medicare coverage is not comprehensive (only 80%, plus deductibles) or fringe-benefit-laden (no dental or eyewear or nurse lines) but it’s darned cheap security that can be supplemented in a vast number of ways, and it’s good everywhere and can’t be taken away from you. Private insurance can make NONE of these basic promises.
What the MHP has in common with Original Medicare is its saving grace: the Really Big Pool over which to spread rish, and once you’re in, you’re in.
Senator Marty recgonizes that someone has to take responsibility for ensuring the collective good health of our state residents. I just don’t see that being a long-term interest of a short-term-minded insurer.
L A Krahn: preventive colononscopies are required by MN law to be covered at 100% with no copay along with mammograms and paps. Cholesterol screenings and Flu shots are also typically covered at 100% also.
Insurance companies cover screenings at 100% for two reasons. Yes, one is to have less high claims down the road. The other is they want people to stay health as it is better for the patient (whether you believe it or not). It’s a win/win for both.
I agree that someone “has to take responsibility for ensuring the collective good health of our state residents” but I would argue that the patient is part of it. If you do not have any kind of copay structure set up (based on income) people will want mri’s, x-rays, lab tests etc. of everything and the MD’s will presrcibe them so they can get paid.
Patients need to use their health care wisely regardless of it is public or private. I’m not saying people should not use it at all. I’m saying they should use it wisely. By having no copays or coinsurance there is no incentive for them to use it wisely. They will just use it.
I’ll indulge myself with one more retort for the Simplot theorists:
And if you’ve been declared uninsurable? Or can’t afford the premiums of the plans you are offered? How wise is the neglect of those Minnesotans’ health to our collective good?
Is that than the allowed role of a public insurer in your worldview — to unburden the private insurer of certain financial risk? Or isn’t the role of a public insurer to promote health AND unburden the public of certain financial risk?
L.A. Krahn – In 2007 the uninsured rate in MN was 11%.(lowest in the nation by the way). Obviously that means 89% of Minnesotans were insured.
I deal with a lot of Minnesotans who are uninsured. In my experience these are the common reasons they are uninsured:
1. By far the most popular reason is they do not know about the plans/help available to them. I actually carry the phone number and email address for MCHA with me as so many people do not know about it.
2. They are too proud to go on any government plan.
3. They think they are invincible. They can afford insurance but choose to go without it. These are typically young, single males.
4. They cannot afford it.
I agree that something does need to be done for those who can’t get insurance or cannot afford it. Thing is, those things already exist. MNCare, MCHA, Medical Assistance, etc. (By the way, I did NOT agree with the Governor’s cutting of GMAC).
I have no problem with health plans taking on additional risk. However, as you stated, you need to have a big of pool as possible to help spread the risk. If you want insurance companies to take on those with pre-existing conditions, you will have to come up with some sort of mechanism that prevents them from jumping on and off when they need it and don’t need it.
In my opinion, we should not change the health care landscape in the entire State of MN to solve the problems of the relative few. We need to put more time and energy into solving their issues separately.
TJ, all that stuff is supposed to be covered? That’s not what my individual policy says. (I just checked.) All coverage is AFTER a $1000 deductible for prescription drugs and a $5000 deductible for everything else.
I had a cholesterol screening as part of my one physical since 2003, and the bill came back to me.
When I went for a flu shot at a drug store location, the nurse assured me that my insurer would pay for it, but nope, the bill came back to me.
So either you’re misinformed, or the rules are different for non-group poicies, or my insurance company, one of the Big Three, is breaking the law.
Which is it?
While it’s true that a small percentage of people will abuse a universal health care system, is that a justifiable reason to deny care to everyone? Because some people may not sign up for the plan, does that mean we should scrap Marty’s proposal entirely?
I have to say that the plan my company offers is pretty weak. As a way of keeping the premiums down, coverage is limited to $1,000,000. That’s a respectable sum as long as you’re not afflicted by anything serious. And what do we do next year when premiums are raised another 20%? Do we then lower the limit to $500,000 and hope for the best?
Senator Marty is right on the money: make health care coverage a basic service for all. If we can’t get it done on the national level, push it through on the state level and make Minnesota an shining example for the rest of the state.
Mr Hintz. First of all, it would not be a small percentage. Second, who says you would denying care for everyone? As I said previously, there are already public plans in place for those who cannot get or afford insurance. Lets work on bettering those plans or making them more available, instead of changing the whole system.
In my opinion, we have a house with a broken window. I want to replace the window, Sen. Marty wants to build a new house.
If someone is over-using the system, whether it’s overprotective parents who panic if their child has a runny nose, hypochondriacs, or lonely people who are desperate for attention, isn’t it the duty of the provider to set boundaries?
Shouldn’t the provider tell the overprotective parent that no office visit is necessary, refer the hypochondriac for psychological treatment, or advise the lonely person to join some sort of social group?
Or is the provider willing to take these unnecessary patients just to receive payment?
Whatever the case may be, these isolated cases are no reason to deny the low-income person with worrisome symptoms access to health care.
Good morning.
To keep up Simplot’s analogy, I would counter that health care in America is shell of a once-grand house on a rotting foundation that has shifted and is no longer square, leaving very few intact windows, but the house has siding made up of state-of-the-art LED panels that show “Viagra” and “Allina” and “UCare” ads 24 hours a day.
Profit papers over substance. Oh, and we’re paying an adjustable-rate mortgage on that house.
Ms. Sandness, in an ideal world, the situation you described would happen. In the real world it will not. If people want to see a doctor they will. If their current MD says no, they will go to another one.
This is the reason that copays, co-insurance, and deductibles came to be. Back in the day there were no copays, deductibles or co-insurance. This resulted in incredibly high claims utilization as people would go for every reason. Cost sharing was introduced to help stem the tide of utilization by making the patient think first about going to the MD as it would cost them a bit out of pocket.
Again, I’m not saying we should deny care to those who can’t afford it. Lets make those plans already available to them better.
My problem with Sen. Marty’s proposal as that he is basing his claims on ideal world principals, not the real world.
Mr. Simplot, you typify the saying about the contrast between right-wingers and left-wingers:
A left-winger would rather feed nine cheats than starve one innocent person.
A right-winger would rather starve nine innocent people than feed one cheat.
I dare say that people who “over-utilize” medical care according to your standards fall into a tiny minority of neurotics OR those who are seeking someone who can figure out what is wrong with them. (I could tell you of cases within my own family of people who went to three or four doctors before one finally figured out what was really ailing them and effected a cure.)
In any case, what percentage of people are we talking about? Single digits for sure.