Mark Dayton admitted yesterday that Mnsure, his pet project and Minnesota’s state ObamaCare exchange, stood on the precipice of collapse. “Ultimately,” the Democratic governor told the media yesterday after announcing approvals of premium rate hikes between 50-67%, “the reality is the Affordable Care Act is no longer affordable for an increasing number of people.” As Rachel Stassen-Berger reported yesterday after the presser, Minnesota Republicans didn’t hesitate to remind everyone that they predicted this outcome all along:
Republicans quickly pounced on Dayton’s remarks with a sharp “we told you so.”
“I guess it’s better late than never, but Minnesota Republicans pointed out these flaws and tried to pass amendments to the legislation when Democrats under single-party rule first passed it without a single Republican vote,” Minnesota Republican Party chairman Keith Downey said. …
The entire Minnesota Legislature is up for election this year, as is the U.S. House, certain U.S. senators nationally and the presidency. In many of those races, health care has been one of the major issues put to voters, and the results will determine what happens next with health care.
Those circumstances sound familiar, eh? Democrats have recently taken to whining that Republicans refuse to act to save ObamaCare, but Democrats keep forgetting that they passed this all on their own at the national level, too. Republicans warned repeatedly of the outcomes we now see from the ACA, while Democrats insisted that it would all run perfectly well and that critics were just scaremongers looking to score partisan points. Now they want Republicans to come to their rescue, rather than agree to scrap the program and start over.
Minnesota Republicans have offered policy changes to improve the situation for their constituents, but Dayton’s not going to like the suggestions. House speaker Kurt Daudt proposed three significant steps to deal with the impending collapse of ObamaCare in the absence of federal action:
Our plan would provide immediate relief by cutting the MNsure Tax by half to save families $22 million over the next three years. Republicans also support using $35 million in leftover funds from a now-defunct health program for direct premium reductions. And passing the tax relief bill unnecessarily vetoed by Gov. Dayton would put money back in the pockets of families that could help defray rising healthcare bills.
Second, Minnesotans need more choices. Republicans believe in giving Minnesotans access to tax credits outside of MNsure. If lowering the uninsured rate is the goal of Obamacare, why limit people’s choices only to plans sold on a broken website? Families need options and easier access to federal premium tax credits, and should be allowed to shop wherever is most convenient for them.
Third, we need long-term stability and competition. While options are constrained by the Affordable Care Act or Obamacare, we can employ creative solutions that stabilize the individual market and lower costs either through portable premium assistance for consumers or a reinsurance program similar in purpose to the former Minnesota Comprehensive Health Association.
For Minnesota’s elections, this could very well be a game-changer — or at least the opening for one. The initial collapse of the state exchange in late 2013 didn’t keep Dayton from easily winning a second term the following year, but Dayton managed to shrug that off with a lot of happy talk and only a hint of the economic damage to come. As Daudt points out, Dayton’s heedless embrace of ObamaCare cost Minnesota taxpayers a fortune, and plans to spend even more:
You don’t hear them anymore, but you may remember those promises from 2013: MNsure would be the Travelocity of health insurance, families would save $500 a year, small businesses would save thousands.
It’s important to remember those promises because Democrats’ primary solution to the current crisis is to keep pouring money into MNsure — at least $400,000,000 of taxpayer money to date — raise taxes on healthcare, and add more Minnesotans to public health insurance.
Even these fixes won’t permanently solve the problem, although it will help in the interim. The Mnsure and larger ObamaCare systems have mandates that create clear internal contradictions and set up the perverse incentives that led directly to the outcomes Dayton decried, as I write in my column for The Fiscal Times today:
As Dayton made clear yesterday, all Minnesota has done is postpone a collapse – and probably for only another year. The biggest problem for insurers in these markets is the unstable utilization rates, which prevent them from accurately calculating risk to set a tenable premium price.
The reason for that instability is that higher prices are disincentivizing healthier consumers from buying expensive comprehensive insurance policies as they opt instead to pay out of pocket for their minimal utilization and pay the tax penalty for non-coverage instead. Thanks to skyrocketing premiums and deductible thresholds, the likelihood of many consumers to have benefits applied to anything but a basic wellness check is remote at best, which makes the risk worthwhile.
As prices go up, the risk for healthier consumers gets lower and lower, which means more of them will opt out rather than pay thousands of dollars every year for benefits they never use. As that continues, utilization rates for the sicker and older consumers who have incentives to stay in the system continue to escalate, necessitating even higher premiums. Eventually, the system exhausts itself and collapses. That “death spiral,” long predicted by Obamacare critics, would have arrived in Minnesota now except for the approval of astoundingly high premium hikes – an event that political realities will almost certainly keep from being repeated. …
It’s time for the Obama administration to admit what a former Democratic president and a current progressive governor have openly declared. Obamacare truly is “the craziest system,” and it will only get crazier every year until it’s finally discarded.
Minnesota Republicans have a potential gamechanger in their hands with Dayton’s announcement. If they organize well enough, they could leverage that into full control of the legislature and position themselves for their first statewide-office win in sixteen years when 2018 rolls around.