More Competition + Less Regulation = Higher Prices

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At least when it comes to the insurance rates charged for comparable plans in Minnesota and Wisconsin under The Affordable Care Act, the conservative mantra that more competition plus less regulation is the way to lower health insurance prices is clearly false, according to an informative story published in the Oshkosh Northwestern yesterday (Sunday 11/10/2013).

When Minnesota state lawmaker Joe Atkins hunkered down to draft legislation outlining the way Minnesota would implement the Affordable Care Act, he had no idea the results would be so dramatic. The Gopher State is now enrolling individuals through its health-insurance exchange by the thousands and at health insurance premium rates that are among the lowest in the country. Next door in Wisconsin, the numbers of Obamacare enrollees have barely hit the hundreds and premium rates are between 25 and 35 percent higher than in Minnesota.

The reason for the large gap in rates is unclear but could be, in part, because of the more aggressive approach Minnesota has taken to implementing the law. The most obvious difference between the two states is their exchanges. Minnesota has its own online marketplace where residents and small businesses can shop for and buy insurance, while Wisconsin is relying on the federal government marketplace, which has been plagued with bugs and technical failures and doesn’t accommodate small businesses. If and when the Obama administration fixes that, the rate differentials will remain. And they are stark.

A 50-year-old Minnesotan who lives just south of the Twin Cities in Dakota County can buy a mid-level, silver plan for $241 a month. Just 20 miles away, across the state line in St. Croix County, the least expensive silver plan available to a 50-year-old Wisconsinite costs nearly three times that price — $622 a month.

Analysts say premiums are based on a number of factors, from health costs and demographics to market competitiveness. But when it comes to Wisconsin and Minnesota, none of those appears to account for such a wide disparity. The nonpartisan Kaiser Family Foundation found that health care costs in the two states are roughly the same. Per capita expenditures were $7,409 in Minnesota versus $7,233 in Wisconsin, according to the most recent data released in 2011 by the Centers for Medicare and Medicaid Services. And the costs have grown annually since 1991 at nearly the same rate — 6.7 percent in Wisconsin and 7 percent in Minnesota. As for competitiveness, only five insurers are offering plans on the Minnesota exchange. Wisconsin’s exchange has 13 carriers.

Cynthia Cox, a policy analyst at the Kaiser foundation, said regulation also plays a role in premium levels. In Minnesota, regulators forced insurers in several cases to resubmit lower rates because they questioned the justifications. In Wisconsin, regulators took a more hands-off approach and let all the rates go through as-is after reviewing carriers’ justifications.

“The fundamental difference between the two states, which are similar geographically and demographically and have very similar underlying medical costs, is that Minnesota has embraced the national health care reform law and is using the tools it provides to deliver more affordable health insurance, while the Walker administration has tried to undermine the law at every turn,” Citizen Action CEO Robert Kraig and researcher Kevin Kane wrote in a scathing op-ed recently published in The Capital Times of Madison.