Suzanne Herzog, Economist, RN

West Des Moines, IA Public Hearing on Stop-gap Proposal to Sustain Iowa's Individual Health Insurance Market

August 2, 2017- Des Moines Central Public Library 5:30-6:30 pm

I believe it is important to recall major factors contributing to our current situation in order to

appropriately consider this proposal:

Well mark BC/BS vigorously lobbied - injecting itself into deliberations that resulted in the final version

of the Affordable Care Act -establishing the requirement that employers remain the primary market

mechanism to obtain health insurance- thus stifling what was at the time the development of a robust,

more competit ive private health insurance market for individuals.

It wasn't enough that the federal government was already granting tax allowances to employers to

negotiate policies that are imposed on consumers with little consumer input, but Wellmark wanted to

make sure that employers would be required to provide health insurance by law, ~~Jrpetuate a model

that sustains its overwhelming market share in the industry. ~~-r -vv~tf<-',_~""1'd\I\.~ :M 4.1""~ ~~\""1)1" I r~-.. ,,.

Countless health economists have expressed the belief that this is the primary contributing factor to

health insurance market failures and healthcare cost inefficiencies in our country.

During the 2008 campaign for the general election, entities likely the California Small Business union was

advocating for just the opposite solution to economic woes for both individuals and businesses related

to the cost of healthcare. A year later I graduated with my degree in economics after being a direct

healthcare service provider for over 20 years. I was able to select an individual health insurance policy

from among multiple insurance providers. I even insured myself as an individual while I was employed

by a giant health network because my individual policy was superior to what my employer had to offer

at the time. I understand that my options were also limited later by other legislative changes of the ACA

that address risk pooling, but this stifling of the development of a robust individual market is really the

primary failure of the ACA. Any solution (temporary or permanent) that you propose should focus on

bolstering transparency and competition.

(We are the only developed nation that offers this failing market model and are now internationally

recognized as a high-cost for low health benefit provider as compared to other nations.)

I understand that legislation beyond the scope of what the insurance commissioner may offer today

with this Stop-gap plan is necessary to rid our country of the burden of employer-negotiated health

insurance for individuals.

(But it is important to take note of these market failures so that we can recognize the true value of a

vibrant individual health insurance market.)

Employer- negotiated (current) health insurance model offers:

-Inefficient Consumption (as actionable consumer information for cost of services has been historically

not readily available to consumers)

Suzanne Herzog, Economist, RN

West Des Moines, IA Public Hearing on Stop-gap Proposal to Sustain Iowa's Individual Health Insurance Market

August 2, 2017- Des Moines Central Public Library 5:30-6:30 pm

-Downward Pressure on Wages (primarily for those of lower incomes, who see real wage increases

eaten up by the rising cost of healthcare as part of their benefit package from their employer.

- Burden Limiting Economic Growth (within small- moderate sized business communities which should

not shoulder the costs of administering or managing health insurance. The increased administrative

costs of having a 3 rd party (your employer) negotiate and manage your policy are shouldered by both

employer and you -the consumer (generally not the insurance provider).

- Unfair, Highly Variable, Risk-pooling Models (your ability to have reasonable premiums for the

coverage provided should not depend on the size or commitment of your employer).

- Friction in the Labor Market (causing inefficient employment transitions - making our economy less

adaptable to any other changes such as technological developments or supply/demand shocks)

(We don't consult our employers for the purchase of home owners, or car insurance policies.)

I am very uncomfortable with the notion that we may now allow Wei/mark BC/BS to participate in the

private individual market in our state- basically on their own terms with little or no competition- still a

near monopoly. It is wrong to shore up their costs with federal tax-payer money. - t,u..-"t ""~ 4i.,:_~~fl.~ k..-2' f- ~·~ w i -fttv tt..,..,irh~ ~r e-lui.wv~l\j' G?v'f~c:v~ -f .. 'rt ~tc~_.,::,(.';_1;iJ,""3( IA-Vlr-k~

Are there no better, alternative proposals that offer a more attractive environment for ot~er entities _ afov. :J>a~ to enter the private individual health insurance market in Iowa? Surely there is a better application of ~'1 ~.~

t'° •l-r~ federal tax-payer money that is more consumer-focused, and corrects market failures instead of -t<u<J- foW'er

sustaining them. ha..1"ri"rers;; ~ e.~y -.q¢y.. 0 '{.t.l!W'-

f' "'V lckfS: We are now painfully aware of the result of Brandstadt's management of Medicaid dollars in association

with options related to ACA legislation. But at least that was an idea that required some creative

negotiations with the Federal Government to allow Iowa to experiment and come up with more

creative, and hopefully some day more effective solutions- as long as can we learn from past failures.

I understand you are limited by the health care legislation being in limbo, but due to this unique

situation, as state insurance commissioner (and hopefully our consumer advocate), there must be other

requests you could submit at this time to the federal government that might allow Iowa to be an

example to other states on how to transition to one of the most robust, consumer -focused, individual

health insurance markets in the nation. As Iowa's insurance commissioner, please support consumer

advocacy over policies that perpetuate corporate welfare.