Yesterday, the state Senate approved legislation that would create a health insurance exchange program for Minnesotans. A similar Obamacare provision was passed by the state House on Monday. Once the differences are ironed out and the bill is signed by Gov. Mark Dayton, it will only be a matter of time before Minnesotans see an increase in their medical costs and a decrease in their health care options.
This insurance exchange program is being marketed as a unique and innovative way to make health care more affordable. The state has even set up a website to explain the benefits of such a system, which is designed to make coverage available to those who do not qualify for Medicare, Medicaid or the Children's Health Insurance Program or do not have coverage through their employer.
Using the site's insurance calculator, Minnesotans can enter family size and income to get an idea of how much they will spend on insurance premiums and other health-related costs. For example, a family of four with an annual income of $40,000 would be looking at a monthly insurance premium of $1,149. That would be offset by federal subsidy of $985, and the annual limit on out-of-pocket deductible and co-pay expenses would be around $4,500. These are all estimated figures, of course, meaning the actual costs will undoubtedly be higher.
Exactly how is the government able to make this an affordable option? The same way government makes everything else "affordable", by taking more money from the people. The House version of the bill calls for a 3.5 percent fee on insurance premiums, while the Senate version opts for a tobacco tax.
According to a report in the Pioneer Press last November, Minnesota's insurance exchange program will rely on an initial $71 million in federal grants to fund it through 2014. Beginning in 2015, the program would be self-sustaining, with a funding requirement of about $54 million. Costs are projected to grow to at least $64 million the year after that.
The most concerning issue is that this insurance exchange will grow the size and scope of government. It will add yet another bureaucratic barrier between individuals and their health care. The last thing Minnesotans need is more hidden costs, more red tape and more restrictions, all overseen by an unelected and unaccountable board of directors who will have the power to pick and choose which insurance plans will be included in the exchange.
There was a time when everyone's frustration with the quality and cost of health care could be summed up in three letters: HMO. And yet it was the federal government that forced HMOs on the American public when Congress passed the Health Maintenance Organization Act of 1973, essentially destroying the market for affordable health insurance for individuals. Thanks to continued government growth and intrusion, federal, state and local government expenditures now account for at least 45% of all health care spending.
If Minnesotans want an idea of what the future of health care holds for them, they can simply look to Massachusetts, the state that pioneered the insurance exchange program. Costs there are going up and are even expected to exceed a cost cap set by the state. The cap was supposed to limit the rise in medical costs to the rate of economic growth, which at the time was projected to be 3.6 percent in 2013. Insurers estimate medical costs will rise between 6 and 12 percent, and many small business owners are expecting to see insurance premiums increase as much as 20 percent next year.
The lesson to be learned is that the government's artificial manipulation of the market will always result in higher prices and decreased competition as smaller competitors are squeezed out. But as usual, politicians, in an effort to lessen the effects of previous government intervention, continue to push for more government intervention. Sadly, Minnesotans may have to learn that lesson the hard way.