Allowing individuals to buy health insurance from out-of-state carriers is not just a free-market Republican idea to increase competition and try to bring down premiums.
This afternoon, state Rep. Joe Atkins, DFL-Inver Grove Heights, will present his plan to open up Minnesota’s individual health-insurance market to out-of-state carriers. At the same committee hearing, Rep. Laura Brod, R-New Prague, will offer legislation [PDF] that Republican Gov. Tim Pawlenty has been pushing since last year.
“I’ve been thinking about this for a while,” Atkins said, “but I don’t quite have the bully pulpit of the governor. But I do have the ability to introduce actual legislation, and I think it’s important to enhance competition and hopefully drive down costs.”
Atkins said the key difference between the bills is that his proposal requires that out-of-state insurers abide by Minnesota’s consumer protection laws. “Under the other bill, they’re exempt from multiple consumer protection laws,” he said.
Brod did not return a phone call from MinnPost.com. Language in her bill authorizes the commissioner of commerce to identify potential insurers in states that would have an “acceptable degree of consumer protection.”
‘A level playing field’
So, why not just work with the governor?
“I haven’t talked to him (the governor) about it, but I think he’d like mine, too,” Atkins said. “He’s a hockey guy, and I think he might want there to be a level playing field for all the folks on the ice.”
Atkins is chairman of the House Commerce and Labor Committee, but his bill and Brod’s will be heard this afternoon by the House Health Care and Human Services Policy and Oversight Committee.
It will be a busy afternoon for Rep. Paul Thissen, DFL-Minneapolis, who chairs the policy and oversight committee. Besides the DFL and GOP proposals to open up Minnesota’s health insurance market, the committee will consider two bills — one from a DFLer, the other from a Republican — that take aim at potential waste, fraud and abuse of public health programs. Another bill, from Republican Rep. Steve Gottwalt, wants to set up a defined contribution program for MinnesotaCare, a premium-based plan for low-income residents.
Isn’t that a fairly packed agenda?
“We’re going to start at 1 and go to 4:15,” Thissen said Tuesday evening, noting that we’re discussing health care while he’s dining on White Castle. “To me the most important thing is to give these things a hearing so we find out what the pros and cons are instead of making assumptions about the pros and cons.”
An issue in Congress as well
Last year, Pawlenty announced that he wanted Minnesota to become the first state to let residents buy health insurance from out-of-state carriers. The idea is also being floated in national reform.
“There is no reason a Minnesotan should not be able to buy health insurance from other states,” the governor wrote in a recent op-ed piece in the Washington Post. “Doing so would dramatically increase insurance choices and cut costs through improved competition.”
Pawlenty’s plan isn’t going over well with Minnesota’s nonprofit health-insurance plans.
“The issue here for us is that the governor’s proposal takes away the level playing field that we think is an important protection for consumers,” said Julie Brunner, executive director of the Minnesota Council of Health Plans. “We think there’s a fair amount of competition in the market in Minnesota, and if the governor wants to spur competition through bringing in out-of-state companies, then make those companies meet all those requirements and then we’ll see where the competition is.”
Thissen doesn’t expect that either of the proposals “will change significantly the market in Minnesota.”
Simulation found few takers
In fact, a simulation conducted a few years ago found that only 2 to 3 percent of Minnesotans would buy their health insurance from an out-of-state carrier, said Stephen T. Parente, a health economist who ran the simulation for the federal government. But 45 percent of people in New Jersey would be inclined to go out of state, said Parente, an associate professor of finance in the Carlson School of Management, University of Minnesota.
“Minnesota’s premiums are not that high compared to other states … that have much more aggressive regulations — like New York and New Jersey, where they have guaranteed issueance laws … which become very expensive,” said Parente, who was a volunteer health adviser to John McCain’s presidential campaign.
Another concern for Thissen would be the extent of consumer protections in either proposal. “If an insurance company doesn’t properly honor its policy with you … if the insurer is registered in Minnesota, you can go to the Department of Commerce and get relief. If the company is registered in Alabama or Delaware, you have to go there to get relief,” he said. “That’s very significant.”
Waste, fraud and abuse
Also on today’s agenda are a GOP plan to examine billing and collection practices of state public health programs to “reduce waste, fraud and abuse” and a DFL plan to create an Office of Health Care Inspector General in the Department of Human Services “to enhance antifraud activities and to protect the integrity of the state health care programs.”
“There are some indications that a percentage of public programs are being spent for people who don’t really qualify and that we may be overpaying some providers for some procedures,” Thissen said. “We want to make sure we’re using public dollars … as wisely as possible.”
Though there are competing proposals from both parties about the same issues, Thissen thinks it’s worthwhile to hear all of them.
“The thing about health care is that no one has a corner on the market for the right idea,” said Thissen, a DFL candidate for governor.
Today’s hearing is scheduled at 1 p.m. in Rm. 200 of the State Office Building.
Casey Selix, a news editor and staff writer for MinnPost.com, can be reached at cselix[at]minnpost[dot]com. Follow her on Twitter.
The problem with interstate health insurance is that we would be turning over Minnesota health care policy to some other state’s legislature. The interest of that legislature may well be to attract business to that state, not to make sure that good insurance is sold to the residents of some other state, residents who don’t vote in local elections and who don’t burden local services.
We routinely permit out of state auto insurers to write coverage in MN, provided that they certify that all policies they issue on vehicles licensed or principally garaged in MN conform to state laws regulating auto coverage. There are other considerations, but there is nothing intrinsically wrong with health insurance being issued under similar rules by out of state companies, for-profit or otherwise, provided that the companies are sound and the policies conform to MN law.
Permitting non-conforming policies is not such a good idea, IMO. If there are insurance mandates that some believe should no longer exist, let’s put them on the table and talk about them, rather than allow a political appointee to decide what constitutes an “acceptable degree of consumer protection.”
My next statement will no doubt be seen as elitist by many. So be it. In 25 years of the practice of law, I have found, more often than not, that consumers are not willing and able to parse out the meaning of insurance policies, even when written in plain English (as MN law requires). Sales materials rarely spell out the details of coverage and sales personnel rarely know the contents of the policies in sufficient detail to explain the many limitations they contain, if they wanted to do so. (In fact, an insurance agent is likely not to for at least 2 reasons: fear of killing the sale and fear of assuming liability for giving bad advice. As it is, MN law says it’s up to each of us to decide what we want or need in the way of insurance coverage and to read our policies to make sure we got what we wanted. The agent has no responsibility to do anything beyond what he or she agrees to do.)
Insurance policies are difficult to read and often contain time bombs of which the typical insured will be unaware until that bomb explodes. One notable example is an auto policy form currently being used in MN which provides for liability insurance coverage with limits which are reduced when the person making the claim is a family member. Insurers that use this form know that these are among the most likely claimants but, in my epxerience, do not call out this provision to their insureds until a claim is made. Such policies have been upheld by the Minnesota Supreme Court, so long as they provide the minimum coverage required by law. ($30,000 per person, $60,000 per accident, at present.)
Interstate sales? Sure, so long as the same rules apply to all who sell insurance to MN residents. Minimum levels of coverage? It seems to me to have worked quite well in MN, although I readily concede that many think our regulations go either too far or not far enough. Whatever your position on that, I’d hope that we can agree that existing protections can’t be simply swept away by administrative fiat or without public discussion by those accountable to voters.
I am glad that Minnesota political leaders are taking on health insurance problems.
The points made by posters Foster and Hamilton imply that we really need a national solution, rather than 50+ state-level solutions. Of course, getting national agreement has been quite the challenge.
Color me optimistic though. I believe our national legislature will deliver something that is an improvement on the status quo, which is unsustainable.
“We routinely permit out of state auto insurers to write coverage in MN, provided that they certify that all policies they issue on vehicles licensed or principally garaged in MN conform to state laws regulating auto coverage.”
Sure, and if that was being proposed, it would answer many of the objections I raised. And the fact is, we do let out of state insurers operate in Minnesota. Anthem Blue Cross is owned by Well Point. But that isn’t what we are talking about here. What’s being proposed is that the out of state insurers will not be subject to Minnesota state laws.
“Sure, so long as the same rules apply to all who sell insurance to MN residents.”
Again, that’s not what is being proposed. If out of state insurers have follow Minnesota rules, as I am sure respected insurance providers like Well Point do, then I think you will find that their prices will reflect that. The potential cost savings we are talking about will come from out of state competitors who unlike Well Point, choose not to follow those rules.
“The points made by posters Foster and Hamilton imply that we really need a national solution, rather than 50+ state-level solutions.”
A national system of mandates is another big idea on the table. As I am sure Mr. Hamilton could tell you, historically insurance companies have been regulated by the states. This makes sense for a number of reasons. Insurance companies are in the business of suing and being sued. It makes sense for them to have a local presence so that plaintiffs and defendants don’t have to chase them down in some other jurisdiction, or in already overburdened federal courts. Also, insurance compensation is very local. However, maintaining 50 different systems each competing with each other can mean that the winner is the one, not with the best product for consumers, but the one that’s cheapest for employers. National standards can avoid that problem, but also has political problems. It’s “big government” getting in the way of you and your doctor. Socialism, and even Communism. That sort of thing.
In the tit for tat way in which national issues are discussed, national standards are what liberals offer when conservatives talk about sales across state lines. They are different things but sound enough alike to be confusing which is the intent.
While I have raised certain issues concerning interstate sales, if out of state companies were required to follow local rules and statutes, I would be very open to very serious consideration of this proposal. The problem is that that wouldn’t be very different from the status quo, but also Republicans aren’t offering anything in exchange. They wouldn’t support health care reform even if interstate sales were allowed, making the whole issue a political non-starter.