DFL Governor Tim Walz Has a Plan

This is a time to pay close attention. Gov. Tim Walz released the outline of his new ONECare and expanded premium subsidy health plans. It is not overstating the case to say it could trigger the end to both the private individual and small group marketplace.

If enough people learn about ONECare to persuade legislators to back off, you can still have a chance to re-design private insurance. (In fact, some of us are working on ideas right now which we share elsewhere on this website.)

To summarize, according to the "Office of Governor Walz & Lt. Governor Flanagan," this is what they want to do:

• Use state buying power to set  lower prices for people on government health plans, causing higher prices for working people on private insurance.
• Create ONECare - a "platinum-level-buy-in product" in the individual market. Gov. Walz wants government to set up its own health plan.
• Use tax dollars to fund a Minnesota-premium tax credit to add to the federal premium tax credit.
• Use tax dollars to pay a 20% premium subsidy to buy-down the premiums of a family of four making more than $103,000.
• Extend the Health Care Access Fund - the 2% sick tax - which is due to expire at the end of this year. (Ask your doctor about this one.)
• Having the state offer silver and gold health plans where private insurance offers no plans.

He's fighting the opioid epidemic. This is good, but he's way underestimated the cost. And he's adding money for more mental health services. The demand for money for these last two is nearly bottomless.

The end of traditional, privately-insured plans

It's risky to predict such big changes, but it seems likely that private health insurance will fail. Government health plans rely on minimal reimbursements - as much as 50% less than private plans. Gov. Walz' claim of 3% administrative cost, while spending $112 million just on start-up, is a dream. Of course this government scheme would cost less for the people who qualify for it, making the government health plans more attractive than private plans, but only for a time.

Health care is a debit/credit system. You can spend less by demanding less spending. You can manage doctors, hospitals, and patients by reducing the amount of care they provide and receive. You can use lessor-qualified medical professionals. All of this is possible, though patients will not much like it.

The thing is, you can reduce premiums through a number of management schemes and global budgets. It might be successful enough for a time that almost all folks with individual plans will be tempted to run to it, and small employers will opt for higher paychecks and no health benefits.

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The end game seems obvious: Destroy the private health insurance market and replace it with ONECare. The fact is that this ONECare scheme has not worked anywhere in the U.S. All that seems to matter is passing it into law before working people realize it's only costing them more, and they're receiving even less than today.