As an inoculation against efforts to muddy the waters, we thought it was appropriate to preempt likely attempts by the conservative communication apparatus to call our health care research into question. This week we released a new updated version of our Minnesota-Wisconsin health insurance cost research. The new 2015 version of the research shows that health insurance costs are on average 60% higher in Wisconsin than in Minnesota.
The MacIver Institute, a conservative media operation, has long tried to call into question our research showing large premium disparities between Wisconsin and Minnesota. Our research has substantiated in other's study of the issue (see here, here and here). We know their point is to make our research seem contested and give others an excuse to ignore it. MacIver even attacked a preliminary report we released in late 2014 when the Walker Administration tried to hide 2015 insurance rates until the day after the election. We didn't respond then because we were waiting for the full data to be available to analyze.
In what follows we will analyze the major objections MacIver has raised to our previous research. This will seem in the weeds, so if you don't love health policy you may not want to read further. While the discussion may seem technical, the MacIver critique is not really serious policy discussion, but thinly veiled disinformation designed to create confusion and suppress media coverage of our research.
With these caveats being stated, let's dive into the claims and counter claims.
According to MacIver:
"Instead of basing this claim in fact, CAW just assumes that because premiums are higher in Wisconsin than in Minnesota, it must be Walker's policies at fault."
- We never say it is totally Walker's policies, but it is clear that policy actions of the Governor do impact insurance markets. Does the MacIver Institute believe there is absolutely no connection? Our report clearly quantifies which Walker policies are raising rates and how much of the rate difference these policies are responsible for. In addition, we call on Walker and the Legislature to make health care costs an top agenda item, a call they have so far ignored.
"CAW leaves out an important detail about our northwest neighbor's exchange...PreferredOne decided to leave the exchange and only offer plans in the private market...Now people will have to decide if they want to continue to purchase insurance with PrefferedOne off the exchange."
- Yes, Minnesota gained one insurance option on their marketplace and lost another. Does that somehow invalidate the idea that public policy has an impact on insurance markets? Those who bought their insurance from PrefferedOne have the opportunity to leave that plan and go back to the marketplace and find a different affordable plan, just like the thousands of people who left the substandard individual insurance market to choose a marketplace plan. We don't recall too many tears from MacIver when thousands of people were kicked off of BadgerCare and forced to buy plans not affordable for them. By the way, PrefferedOne's command of the market last year is a new occurrence. In 2012 they had only 3% of the individual market. Other companies used to cover these citizens and they will again, it's not leading to unnecessarily uninsured citizens like Walker's BadgerCare decision does. MacIver's critique might have more strength if MNSure had a net loss of companies participating, but they didn't. A new company is already in place for 2015. In addition, MacIver asserts that Minnesota rates will be rising, but our most recent data still shows a huge price advantage with Wisconsin, undercutting their assertions.
"In fact, Wisconsin has historically had higher rates than Minnesota...The average Wisconsin family premium was about 12.4 percent higher than the average in Minnesota in 2013."
- In 2008 Minnesota undertook a major health reform agenda, using state power to push for higher quality and lower cost health coverage. Their push for integrated delivery reform is laudable and we've encouraged the Wisconsin Legislature for years to take advantage of similar tools that already make Madison the most affordable metro in the state and bring it statewide. It should be noted that MacIver's highlighted data shows only 12.4% higher costs in Wisconsin, our latest report shows 60% higher costs here on average. And yes, that's comparing with Minnesota statewide not just the Twin Cities. We welcome alternative arguments from MacIver institute as to why it is more expensive here. Even Walker's Insurance Commissioner's Office acknowledges the cost differences.
"Medicaid population is too small to cause a major shift in premiums...If there was an impact, a MacIver Institute report shows that expanding Medicaid would actually increase costs for people on private insurance."
- Let's see what others have to say on the matter. The RAND Corporation has concluded that rejecting Medicaid expansion would cause higher costs, as does research for the National Bureau of Economic Research. In fact the American Academy of Actuaries has concluded the same thing. What about their other assertion that public insurance actually raises private rates? Well it seems to be full of it. More and more researchers are concluding that actually the reverse is true, that lower public insurance spending actually reduces private insurance spending as well, and that the superior bargaining power of hospital systems over insurers has made them inefficient and less interested in cost controls, further pushing up costs both for private and for public insurance. Economists have concluded that the profit maximizing hospitals should not be expected to change their pricing for private insurers based on Medicaid or Medicare rates. Thus raising public reimbursement rates will not decrease private health insurance rates.
- Besides, why didn't MacIver speak up when the temporary Medicaid reimbursement bump for primary care doctors was set to expire? Numerous states have continued higher Medicaid reimbursements that the Affordable Care Act temporarily featured until 2014 to ensure that Medicaid patients could get timely preventive services. We believe it was important and pushed for Wisconsin to continue this higher reimbursement amount, not because we were worried about cost shifting to private insurers but because everyone deserves the right to get timely effective preventive service and this policy has shown to help that. MadIver's idea would seem to be not to raise reimbursement rates on BadgerCare, but to instead throw the baby out with the bathwater by cutting BadgerCare.
"CAW also claims that Wisconsin does not have as robust of a rate review process as Minnesota, leading to higher rates....According to Wisconsin's Office of the Commissioner of Insurance (OCI), the federal government approves of the state's rate review process."
- Sure, Wisconsin has rate review powers. We're challenging the idea that they are using them to their fullest ability, or that it couldn't be made stronger. MacIver's argument is like saying "We have a school, the federal government acknowledges that it is a school, so therefore it must be a good school." Besides, if our rate review was so great, why have there been no public hearings even to check to see if rates are worth reviewing? Why does the federal government feel the need to step in and do Wisconsin's job for it?
"OCI's approach keeps Wisconsin from experiencing dramatic shifts year to year...We are fortunate in Wisconsin that we have such a competitive market"
- The Wisconsin insurance market keeps us from experiencing dramatic shifts? In the three years before the passage of the Affordable Care Act insurance rates in Wisconsin rose over 10% each year (2008: +14.7%, 2009: +11%, 2010: +14%). In 2010 Minnesota had roughly half the inflation compared to Wisconsin.
- And why are we fortunate that Wisconsin has more insurance companies? That's more companies that have to take their cut, that have their own administrative costs, that have small economies of scale. The cost of healthcare that consumers pay is actually a negotiation between hospitals and insurance companies. If an insurer has weak bargaining power, like for example if there were so many companies that they had no market power, they will be unable to effectively hold down hospital price increases. Case in point, Wisconsin has this "competitive market" yet is far more expensive than Minnesota. Competition matters, don't get us wrong, but once you get past 4 or 5 insurance companies in a market it stops being effective, because there is a diminishing margin of return.
We get that MacIver feels the need to carry water for the Walker Administration. After all, their primary donor is the foundation led by the man who chaired Walker's last Gubernatorial campaign. But we have to say, if you're going to challenge our knowledge of health reform and how to make health insurance more affordable and higher quality for everyone, you're going to have to try a lot harder.