Single-Payer in Minnesota

One great thing about federalism is that if one state implements a very bad idea, the rest of the country won’t suffer from it. The bad thing about federalism is that if you’re living in one of those states that implements bad ideas, you’ve got some problems on your hands.

Mitch Berg, a blogger in Minnesota, describes an effort in that state to implement a version of a single-payer plan. It’s being led by a member of the Legislature who is also a contender for the governor’s office later this year.

If you’re not from the state, there’s a lot inside baseball, starting with the fact that the Democratic Party is called “DFL.” But he also offers an introduction to (and critique of) the latest incarnation of single-payer. Amazingly, one newspaper columnist thinks it’s a swell idea that’s been working for years–except there’s a big difference between a targeted public program and scaling that up to the entire population. As he says, “it attempts to solve the real problem (uninsured low-income people) rather than the imagined one (insuring everyone for everything).”

Cash, Please

If you’re a doctor who’s fed up with the paperwork and hassles of dealing with insurance companies, what do you do next–push for a government program? Don’t be silly. How about going cash-only?

A blog of The Heritage Foundation talks about one Minnesota doctor who has turned his practice into a cash-only business.  Doing so gives Dr. James Eelkema the chance to spend more time doing what he wants to do, which means he spends more time with patients and less time overseeing an office staff that’s dedicated to filling out paperwork for insurance companies.  He cut his fees by one-third to one-half and started making rather than losing money.

The Minneapolis Star-Tribune, on whose work the Heritage blog post draws, calls Eelkema “a potent symbol of the times.” It offers a perspective from Dr. Patricia Fontaine, president of the Minnesota Academy of Family Physicians, who says that Eelkema is making a statement: “I’m opting out of all the over-regulation and lack of support for primary care.”

The Star-Tribune accidentally discloses another benefit of cash-only practices: Eelkema makes house calls. And if his patients are going to pay cold hard cash, why wouldn’t he?

It wasn’t just the financial drain of shuffling paperwork that bothered Eelkema, it was the nagging from insurance companies: “Over the years, insurers — alarmed at the growth in medical spending — began tracking what doctors do in the exam room as well as patient outcomes. Has a patient stopped smoking? Was her blood sugar under control? At every patient visit, doctors had to record everything they did.” (If politicians take a bigger role in health care, expect the number of those questions to increase.) Don’t forget the hassle of documenting procedures for insurers and government programs: “‘If you undercode, you lose money,’ Eelkema said. ‘Overcode, and you get fined. Now it’s an audit tool.’”

One significant factor that keeps this approach to health care from being more widespread is that federal and state tax law discriminate against it. Run your spending through an insurance plan and you get a tax break. Pay cash and you lose the tax break.

Saving Valuable Programs through Setting Priorities

A substantial effort is under way to save Minnesota’s General Assistance Medical Care program (GAMC) from expiring on March 1. As someone who wholly supports the reinstatement of GAMC, I’m increasingly worried this effort might fail because, to date, none of the discussions at the Capitol adequately consider the state’s broader budget mess — the overriding reason why GAMC is set to end in the first place.

GAMC is a state program that serves essentially two roles: It is 1) a financing scheme for uncompensated hospital care and 2) a health plan for poor adults without children.

As most people tell it, Gov. Tim Pawlenty vetoed GAMC to help balance the budget. This is true, but it’s not where the story starts, and it unfairly paints the governor as a Scrooge willing to cut health care for the poor.

Months before the veto, Gov. Pawlenty actually proposed a dramatic overhaul of GAMC. This would have created an uncompensated care pool, encouraged clinic use over expensive hospitalizations, added care coordination, and reduced costs substantially. This entirely new vision for GAMC is exactly the sort of systemic reform the state needs in the face of long-term budget deficits. Unfortunately, the state Legislature ignored it, and Gov. Pawlenty then vetoed the unreformed program. Importantly, the governor gave legislators time to propose alternatives.

Consider a few more details, and it becomes clear that the governor has consistently used GAMC to help steer the larger budget conversation. The reform I just referred to was a key element in the March 2009 budget revisions. The governor specifically used this proposed GAMC funding reduction as a platform to highlight his budget priorities and to criticize the DFL budget plan for failing to set priorities strategically.

The decision to veto GAMC also was a key part of the governor’s budget-balancing process. The veto came at a time when budget negotiations were stalling, and it’s fairly clear that vetoing GAMC was a strategic play to advance his goals for Minnesota’s budget.

In short, the governor’s proposal and his eventual veto were never about just GAMC. They were always tied to developing, prioritizing, and negotiating solutions for the state’s budget. With that in mind, we shouldn’t be surprised if future gubernatorial action on reinstating the program is similarly linked to broader budget solutions.

Linking the two is altogether appropriate and necessary. The budget landscape turned more treacherous after the November economic forecast predicted an additional $1.2 billion shortfall, followed more recently by a judicial ruling challenging the governor’s unallotment authority. The resulting reality is stark: There’s simply no money to reinstate GAMC. If it is to survive, then lower budget priorities must give way.

To date, lawmakers, health care providers, advocates for the poor, and others have devoted countless hours toward developing GAMC solutions. Quite understandably, these solutions don’t address other budget issues. We shouldn’t expect the Minnesota Hospital Association to take a position on education funding or corporate taxes.

While there may be work yet to do on the nuts and bolts, it’s time for lawmakers to begin discussing how reinstating GAMC fits the new budget landscape. Many DFL legislators will undoubtedly claim that their solution already addresses the budget by slashing costs and fully funding GAMC through new federal Medicaid revenue. However, this ignores GAMC’s place on the negotiating table, the dire need for longer-term budget solutions, and the controversy over how they plan to tap federal funds.

This is not meant to throw wrenches in the works. GAMC deserves new life. It serves people who can’t help themselves, and it keeps the cost of health care more transparent for everyone.

Furthermore, I’m not saying that a solution to fix GAMC must tie into a comprehensive budget solution, but it does need to improve the state’s balance sheet.

To assure GAMC new life, I’d recommend that we start identifying lesser priorities. Let’s start making a list. Washington State’s Office of Financial Management publishes a report that itemizes and prioritizes spending initiatives as a part of that state’s budgeting process. A similar list would serve Minnesota well.

Indeed, last year the governor and the Legislature failed to balance the budget in large part because both refused earnestly to question state spending priorities. One side relied too heavily on short-term budget maneuvers, the other on tax increases. Once we start seriously examining priorities, I’m confident we’ll all agree that GAMC remains a priority worth saving.

Our Votes Were Sold Too Cheaply

As many people (including me), there have been some ugly deals made to grease the wheels for the health reform “train.”

One Minnesota blogger with the pen name “Sisyphus” says, tongue-in-cheek, that his state’s U.S. senators simply gave their votes away.

“Some may argue that [Sen. Amy] Klobuchar and [Sen. Al] Franken are too saintly and fiscally conservative to bring home pork to Minnesota. I say baloney to that.”[Baloney? The link is to a story about the federal "stimulus" package.]

But this time, they sold Minnesota’s health care for a mess of pottage–or as Sisyphus put it, a t-shirt that reads “My senators voted to dismantle the best health care system in the world — and all I got was this lousy t-shirt!“

To borrow from Brian Schwartz, there may now be some jobs opening in the health care bureaucracy for aspiring Minnesotans.

To Improve Health, Increase Traffic Congestion

Once government gets involved in paying for health care, it gets involved in more and more aspects of our daily lives by doing things such as telling us what kinds of food we can buy and nagging us to exercise.

As if that wasn’t bad enough, some citizens may find that their units of government will actually degrade the services they offer, in the name of promoting public health.

The State of Minnesota is giving its counties $47 million in “health-improvement grants.” Counties decide how they will spend the money, and some of them will go back to predictable programs such as promoting yet more smoking bans or trying to get school children to pass up pizza in favor of broccoli.

But here’s one item that really caught my eye: “Dakota County received $2.8 million for 13 projects, including plans to increase biking and walking to schools and community events.”

Sure, biking and walking are great. But did anyone notice that in January of this year, Dakota County set a record low temperature of 26 degrees below zero? Or that the average high during the month was 17 degrees?(National Weather Service records.) Perhaps the health officials in the county think that children really ought to walk uphill in the snow, both ways? There’s a word to describe why we don’t expect that anymore, and it’s called progress.

But drivers in the county may expect some regression. To quote again from the Saint Paul Pioneer Press, “Leaders in Apple Valley and Rosemount are assessing their streets and how they could be converted for more bikes and pedestrians …. Options could include more crosswalks and flashing lights, or squeezing some roads from four lanes to three to create space for bikers and walkers.”

“Squeezing some roads from four lanes to three” means … are you ready some math? Reducing the road capacity by 25 percent–and this in cities that are expected to see significant population growth in the years to come.

Reducing road capacity means increasing traffic congestion, and represents a tax on the time and productivity of county residents.

As P.J. O’Rourke observed, if you think health care is expensive, just wait until it’s free.

Politics over Principle in Health Care Debate

It’s useful when political expediency and sound public policy coincide. Craig Westover of the Minnesota Free Market Institute takes both major political parties to task after some Democratic senators opposed a tax on medical device manufacturers, which is one building block of paying for a government takeover of health care.

In the institute’s weekly e-mail updates, Westover writes:

It never ceases to amaze me how our elected representatives can rationalize away even the most blinding glimpses of idiotic economic logic. Case in point occurs in a story reported in the St. Paul Pioneer Press this week titled “A rare condition in Minnesota – a bipartisan agreement.”

What caused this miracle of cooperation? — the move by the Senate Democrats to approve a $40 billion fee on medical device makers over the next ten years.

According to the pioneer press, fourteen Democratic senators sent a letter to Senate Majority Leader Harry Reid, D-Nev., and other top Democrats recently, including our own Sens. Amy Klobuchar and Al Franken, urging them to moderate the levy [on medical devices], which they said will “threaten the existence of some manufacturers” and cause “significant job reductions” for those that remain.”

“The issue here is that these are very good jobs in our state and in our country,” Klobuchar said in an interview with the Pioneer Press, acknowledging that she is among a group of “strange bedfellows” rallying around the industry. “You want to be very careful when you start assessing taxes on an industry like this.”

Really? Does the economic principle that excessive taxes “threaten the existence of some manufacturers” and cause “significant job reductions” for those that remain only apply to medical device manufacturers? Is that principle somehow suspended when we tax other industries and their employees?

Democrat or Republican, legislators can’t have it both ways. Either excessive taxation is bad for business or it is not. Either it puts businesses at risk or it doesn’t. It threatens people’s livelihood or it doesn’t. The principles of economics, specifically the impact of excessive taxation, can’t be suspended on a whim any more than one can repeal the law a gravity to combat obesity.

And while conservative Republicans will shake their heads at obvious irony of the irony-deaf Klobuchar, let us not forget the “interest-group liberalism” inherent in the “Job Creation through Entrepreneurship Act,” which included Eric Paulsen’s amendment ensuring benefits for veterans were attached to a bill that also included specific government largess for women, Native Americans and a new grant program for Small Business Development Centers. Seems that “stimulus” is okay when it stimulates the right people.

When elected officials get to have their cake and eat it too, only the government gets fat.

Pawlenty Pitches Insurance Standards

CNN reports on the activities of Gov. Tim Pawlenty (R-Minn.) to promote alternatives to a national government takeover of health care. “Minnesota Republican Gov. Tim Pawlenty reached out Wednesday to his fellow governors throughout the country with his proposal for states to work together to allow the purchase of health insurance across state lines.”

He’s partway there. He doesn’t like national standards for insurance, but he wants states to cobble together their own standards. It sounds a bit like states creating their own trusts. I’d much prefer some trust-busting: Minnesota could set its own standards for insurance, but then let its residents buy policies regulated in, say, Iowa or Montana.

Pawlenty says “insurance is an area that would benefit from a consistent standards to enable true market competition to flourish nationally.” Standards are indeed helpful, but those standards should be set in the market, rather than in legislatures or in hearing rooms of multi-state task forces.

We Have Models for Governing Interstate Insurance Sales

Minnesota Gov. Tim Pawlenty, a Republican, has invited his fellow governors to help him set up an “interstate health insurance compact” which would lay the groundwork for allowing consumers to purchase health insurance across state lines.

The compact would be modeled after the Interstate Insurance Product Regulation Compact (IIPRC) which was established in 2004. According to its website, “The IIPRC serves as a central point of electronic filing for certain insurance products, including life insurance, annuities, disability income and long-term care insurance to develop uniform product standards, affording a high level of protection to purchasers of asset protection insurance products.” Currently 36 States participate in the IIPRC.

Pawlenty is responding to criticism leveled by Minnesota Democrats that opening up the health insurance marketplace to interstate competition would gut consumer protection. Creating an interstate health insurance compact would ensure that health insurance products would be tightly regulated and standardized, with strong consumer protections.

Pawlenty’s proposal is particularly interesting because it represents an attempt to actually implement an idea that has been bandied about by Republicans for quite a while. It’s good to see someone finally trying to put some meat on the bones of a really good concep

Loosen up Insurance Market, Pawlenty Says

The idea of allowing consumers to purchase health insurance across State lines got a boost on Tuesday.

Minnesota Gov. Tim Pawlenty unveiled a legislative initiative to allow just that, setting off what is sure to be a lively debate in both the Minnesota Legislature and on Capitol Hill.

Pawlenty’s proposal would allow Minnesota consumers to expand their health insurance options beyond those currently available in Minnesota. Currently just three insurers cover 80% of Minnesotans in the private health insurance market. And due to Minnesota law all insurers must be nonprofit companies subject to strict State regulation.

In keeping with Minnesota’s tradition of strong consumer protection Pawlenty is not proposing to fully open the health insurance marketplace to all comers. Instead the proposal places strict limits on what policies will be offered in the state. Provisions of the plan include:

• the state insurance regulator where the company is based must be accredited by the National Association of Insurance Commissioners;

• the insurance company must have a certificate of authority in Minnesota;

• the insurance regulator in the state where the company is based must review and approve policy forms;

• the insurance company must agree to abide by Minnesota’s claims practices and other consumer protection laws; and

• the insurance company would be subject to Minnesota fees and taxes.

Further restricting the pool of available insurers, Pawlenty is proposing that only policies approved in the 20 States deemed most effective at regulating insurance will be eligible for sale in Minnesota. Precisely how that determination will be made is not clear at this time.

Unsurprisingly, Minnesota’s Democrats wasted no time taking aim at the proposal. A statement from Brian Melendez, Chair of the Minnesota Democratic-Farmer-Labor party (Minnesota’s Democrats) took direct aim at Pawlenty:

“The governor’s efforts to protect HMOs and maintain the status quo on health care are neither new nor innovative, and would not work for the people of Minnesota. Gov. Pawlenty’s more-of-the-same attitude has become his trademark, and today’s rehash of previously failed health-care initiatives shows no leadership, no courage, and no foresight — three qualities that are sorely lacking in this governorship. Sometimes you really can’t teach an old dog new tricks.”

I’m not exactly sure how proposing something never tried in Minnesota is “maintain[ing] the status quo,” but then again it’s been years since I thought like a liberal.

Minnesota Web Site Allows Price Shopping for Health Services

As Nick Gillespie reminds us, a well-working industry makes prices transparent and lets people know how much things will cost.

Current Minnesota law (enacted a few years ago) requires that all health care providers disclose their prices if asked.

A new website in the state goes much further. It takes data from the top four health plans and calculates the average reimbursement for about 100 procedures for almost all clinics statewide. This means that you can learn what they accept for reimbursements from the health plans rather than the outrageous list prices.

This is a first in the nation website with this kind of data. The plan is to add more procedures and eventually add volume by provider.