The current debate over what ails the Affordable Care Act marketplaces allows for room to discuss the current construction of the individual market. How would the individual market continue to function if most users switched to the public option? And if the private market declined dramatically, what would happen to clinics and hospitals if their reimbursement rates dropped off. Here is a brief examination of what the current stakeholders could experience if a Medicaid buy-in became law in Minnesota.
Consumers would most likely prefer a cheaper option, as many already prefer the cheaper fine to opt out than to purchase health insurance. For those that don’t have any insurance right now, they would experience a slight bump in annual costs, but it could save hundreds of thousands of dollars down the line.
Health insurance plans have spent the last several years complaining that the individual market is a black hole for profits, and several major plans have pulled out of MNsure entirely. Despite a half a billion dollar emergency payment to convince insurance providers in Minnesota to stick with the exchange and keep the premiums low, Blue Cross announced that it would stop selling individual insurance next year because the plans are not profitable. A premium buy-down program convinced the HMO subsidiary to stay in the market, but clearly the enthusiasm to remain on the individual market is fairly low for insurance companies, and it will remain tepid until the individual market becomes profitable.
Medical care providers could see some serious financial downsides to the buy-in. Replacing private insurance with a public option that lowers reimbursement rates would certainly sting for health care providers; however, it’s important to keep in mind that only 190,000 Minnesotans bought an individual plan, so any gains in the uninsured population would be seen as a victory.
This combined group only makes up 3.4% of Minnesota’s total population, spaced across several physicians, hospitals, clinics, and health systems. This population also has a high churn, meaning that people often cycle on and off of health insurance because they might find jobs, or conversely, they might see their income drop to the point of falling into MinnesotaCare or Medicaid. If the state received a 1332 waiver to boost reimbursement rates for providers experiencing a large bump in new Medicaid patients, then the providers that really do rely on the commercial rates to stay afloat would have some leeway. In summary, the providers would likely make out OK if Minnesota implemented Medicaid for all.
This analysis is far from perfect, but it provides an in-depth examination of the benefits and costs related to expanding Medicaid for all; namely, the possibility of providing lower-cost, quality health care for more Minnesotans.