Last September, 125,000 Minnesotans faced unprecedented HMO premium rate hikes of 50-67% (25% increase the prior year), forcing most of these individuals and families in neighborhoods across Minnesota to struggle to pay for, or go without, health insurance. Being priced out of the market and ending up uninsured leads to worsened health and is a leading cause of medical bankruptcy. At the same time, Minnesota’s big insurers—Blue Cross, Medica, HealthPartners, UCare, Preferred One—retain exceptionally high profit reserves and a high cost structure and high executive and top management salaries with little accountability.
This “premium crisis” became the number one issue of the 2017 State Legislature, as legislators’ phones were inundated with calls. Moreover, the potential for repeal of the Affordable Care Act, which provides substantial insurance premium subsidies for an additional 63,000 Minnesotans, continues to loom. Despite minimal, one-time premium relief, and a new reinsurance program that benefits the same monopolistic insurers (paid for with public tax money), we can’t count on legislatures, neither state nor federal, to solve the ongoing health insurance crisis. But we can count on ourselves, as Minnesota leads the country by far in creating over 1,100 cooperatives of all types, including food, housing and credit unions, to name a few.
Fortunately, this has sparked interest in seeking cooperative, community-based ways to pool resources and purchase group health insurance. Community-based self-funding of health insurance can ultimately cut out the middlemen, and the co-op care model is a great starting point.
A fascinating recent book, entitled “Ensuring America’s Health: The Public Creation of the Corporate Health Care System,” describes the history of how big insurance companies came to dominate U.S. health care. From the late 1800s through well into the 1950s, U.S. physician practices were forming cooperatives and prepaid group practices in which communities paid a monthly amount to receive all the health care they needed. Physicians were paid a salary. There were no insurance companies in this structure. Health care was exclusively a relationship between patients and practitioners. However, every time these self-funded coverage models were formed, it was the AMA and county medical societies whose members sat on state licensing boards that would have such practitioners’ licenses revoked, or prevent hospital admitting privileges in order to stop this movement.
Minnesota’s Group Health was to be such a prepaid group practice under physician control, starting in 1937, but, for the exact reasons stated above, and because Minnesota state statutes only permitted it to incorporate as “Group Health Mutual Insurance Company,” it did so in 1957. That was a key turning point toward health insurance company intrusion, rather than keeping medical coverage community- and practitioner-based.
I believe that once practitioners and communities understand that self-funded insurance was the norm, but was undermined, then practitioners and communities can take health care back. Certainly, today’s advances in health information technology, which streamline administration and operations, make this feasible.
Two present-day self-funded practices are excellent models that can serve as a springboard to action. One is the Pipetrades MN labor union, which has opened three clinics, or, “Family Health and Wellness Centers,” which directly employ physicians who are paid a salary, without insurance intrusion. The mission states: “No copays, no deductible, limited paperwork and extended visits with a physician who is committed to support each and every member as they rediscover their health.” I spoke at length with one of the physicians, who said she has no constraints as to the amount of time she spends with patients.
The second is a self-funded “AgCoop” for Minnesota farmers’ health insurance, just created this year via an ERISA waiver. This waiver, via the federal Department of Labor, exempts the cooperative from state mandates, and allows self-funding in order to take back control of health insurance from HMOs. The AgCoop now can control its own benefit design, determine its own monthly (“premium”) payment, pay for care out of its own bank account, and, perhaps most importantly, is exempt from steep reserve requirements. Stop-loss or reinsurance is required in the event of high cost cases.
Getting back to this community-based and practitioner-based approach and utilizing a phased-in approach of moving operations in-house is a reasonable strategy, and, given the continuous gridlock at the state and federal levels, would be a great grassroots leap forward for proceeding to an eventual single-payer system.
Universal Health Care Action Network of Mn (UHCAN-MN) is working with Micro Advocates Cooperative (MAC), a newly-formed cooperative of self-employed and small business Minnesotans hit hardest by the HMO insurers, to cooperatively group purchase health insurance.
[Joel Albers is a health economist with UHCAN-MN (community-based 501c3), a clinical pharmacist with West Bank Pharmacy and Walk-in Clinic, and is a former instructor in health information technology with the Takoda Institute of Higher Education.]