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Democrats’ health care law responsible for the turmoil besetting Minnesota’s individual insurance market

The Star Tribune editorial board continues to think ideological blinders are still in fashion.  That’s my main takeaway from their recent editorial on Minnesota’s individual insurance market.

The editorial highlights the urgent need to fix a “colossal problem” with Minnesota’s individual insurance market. Colossal, indeed. Since the moment Affordable Care Act (ACA) regulations were fully implemented in 2014, Minnesota’s individual insurance market has been under constant assault and, on its current trajectory, will implode sooner than any ACA critics, myself included, predicted.

As editorialists, they could not help but call out someone for being responsible for this mess. Who were the lucky recipients of their disapprobation? Congressional Republicans. As they explain, “It’s worth noting that congressional Republicans led the charge to cripple one federal program intended to aid health insurers during the ACA’s rocky inaugural years.”

Seriously?

An entire editorial on the massive damage the ACA has leveled against Minnesota’s individual insurance market—a market that had been functioning quite stably before 2014—and all the Star Tribune editorial board can bring themselves to criticize is congressional Republicans?

It’s ludicrous to cast blame on Republicans for the present turmoil in the individual market. Everyone knows who is responsible for the ACA.   It was congressional Democrats and President Obama who passed the ACA in Washington and it was a DFL-controlled legislature and DFL Gov. Mark Dayton that created MNsure in Minnesota. Republicans had no say in this partisan boondoggle. That is what the Star Tribune should have noted.

Mnsure-Bunyan

If people seriously want to look for a solution, the first step is to understand the problem. Here’s a starting point for understanding the ACA policies now at work undermining Minnesota’s individual insurance market.

The ACA gave zero flexibility to states like Minnesota that had a functioning, stable market.

The ACA discouraged young adults—the healthy people necessary for a stable individual risk pool—from enrolling in the individual insurance market. Young adults must pay higher premiums to subsidize older adults due to the ACA’s restrictions on varying rates by age. Also, if employers offer coverage to children, the ACA requires employers to extend coverage to adult children up to age 26. The result: Many young adults, who might otherwise enroll in the individual market, have enrolled in their parents’ plan.

The ACA allows healthy people to game the system and only sign up for insurance when they need it. Everyone agrees we need to cover people with preexisting conditions. Minnesota did so through a high risk pool that covered people who had been denied coverage in the regular market. It worked. But now, the ACA forces insurers to cover all people and the initial evidence shows healthy people are waiting to get covered until they need care.

The MNsure enrollment process utterly failed and made it so difficult to enroll that many decided to not enroll. These tended to be the healthy folks who had less immediate health needs for coverage and who would have balanced out the pool.

Finally, Minnesota’s insurers set rates too low, in part, because the Dayton administration strong-armed insurance companies to do so ahead of the 2014 election. Evidence shows PreferredOne changed actuarial assumptions to justify lower rates after meeting with state regulators and then the next year PreferredOne suffered such massive losses they needed to exit MNsure. Rate regulation is about protecting consumers. We now see what happens to consumers when the rate regulation process focuses on low rates. Rate regulation should be about guaranteeing that rates aren’t set too low or too high.

These flawed policies continue to undermine Minnesota’s individual insurance market and, yet, the Star Tribune ignored them all. Instead, the editorial board cited various fixes—mostly partisan fixes from the DFL agenda—that would do nothing to address underlying problems with the ACA. This DFL agenda would only paper over and eventually aggravate problems through a strategy to lower insurance rates by shifting the cost to other people.

If a bipartisan solution is possible—as the Star Tribune hopes—then people must agree to address the root of the problem. That’s the only place to start.

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