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For casual observers outside Minnesota health care policy circles, the health insurance exchange that’s being pursued under the strictures of President Barack Obama’s Affordable Care Act appeared to be a collaborative process. At least until recently.

Lobbying pressures force exchange move

Developing Minnesota’s health insurance exchange is now the province of MMB Commissioner Jim Schowalter, who said the effort had been experiencing some “growing pains.” (Staff photo: Peter Bartz-Gallagher)

Transfer to MMB follows complaints directed at Department of Commerce

For casual observers outside Minnesota health care policy circles, the health insurance exchange that’s being pursued under the strictures of President Barack Obama’s Affordable Care Act appeared to be a collaborative process. At least until recently.

But as it turns out, it’s been a summer of discontent for the big players in the state’s health care industry. The Minnesota Department of Commerce held dozens of public meetings about the exchanges and an advisory task force met to hammer out recommendations. But while the information was flowing in to the department, the state’s HMOs and insurance agents and the Minnesota Chamber of Commerce became increasingly exasperated that basic details bearing on the industry were not being divulged.
The tensions played a significant role in Gov. Mark Dayton’s decision Tuesday to remove insurance exchange development from Commerce’s portfolio and to give the Minnesota Department of Management and Budget (MMB) the reins. The exchange is now the province of MMB Commissioner Jim Schowalter, who served as budget director in the administration of Republican Gov. Tim Pawlenty before being named to the top post by Dayton.

Schowalter’s bipartisan profile is a contrast to that of Commerce Commissioner Mike Rothman, who has maintained an active presence in DFL Party politics since joining the administration. Senate Health and Human Services chairman David Hann, R-Eden Prairie, who has been a strident opponent of the federal health care bill and its exchange requirements, saw the development as a way to smooth out the government relations issues.

“Maybe what this signals is a desire to take this more seriously as a policy matter and to attempt to see if there is a way to do something positive with it,” Hann said. “This thing has had huge hurdles from the get go, though, given the way it was passed. This is a hugely partisan federal act that is widely opposed.”

Questions unanswered

The chamber wrote to the commerce department in July to pose a number of questions. What sort of government authority would be set up to regulate insurance sold over the exchange? How much would the exchange cost? Would there be legislation to establish the exchange in law in the 2013 legislative session? A month later, frustrated that they hadn’t received answers, the chamber wrote to the Health Exchange Advisory Task Force to lay out a series of questions and express concern about the lack of transparency with the department’s planning.

“The chamber is concerned that the state has not yet provided information regarding its potential answers to basic questions that shape the overarching structure of a state exchange,” according to the letter.

Then, on Sept. 4, a group of insurance agents called the Agents Coalition for Health Care Reform wrote to Rothman that their submitted questions had been responded to with “vague generalities” while the administration “appears to be moving forward with a specific plan to meet the requirements” of the federal government.

The fears that the exchange was being developed in secret were stoked by the millions of dollars that that have been spent on consultants to work on the exchange’s technical components. The state has secured $28.5 million in federal grants to help design the exchange and has requested $42.5 million more to develop it.

“Clearly there are things going on, and there are some pretty rudimentary questions about what this looks like, and nobody answers,” Hann said. “That’s a huge problem, in my opinion. I don’t believe for a second that those [answers] are not known.”

Rothman defends the Department of Commerce’s process for creating the exchange. He said the task force held 13 meetings and that working groups met more than 50 times, resulting in more than 300 hours of public meeting time.

“Of the many stakeholder groups involved in the Exchange, the notion of transparency concerns were raised by two: the Chamber of Commerce and the Agents/ Brokers. I personally met with both the president of the Chamber and the Agents/Brokers leadership to discuss the questions they had regarding the Exchange, just as I accepted nearly all invitations to speak publicly on the Exchange or meet personally with groups regarding its development.”

House Health and Human Services Finance chairman Jim Abeler, R-Anoka, said the switch was a positive development toward bringing the health care industry on board.

“I think they saw the fire brewing,” Abeler said. “I think the governor, when the dust all settles, wants the Chamber of Commerce and the agents and the health plans to say, ‘Well, it’s not perfect, but we can live with it,’ and it wasn’t going that way.”

Conflict of interest

Regarding the switch from Commerce to MMB, Dayton chief of staff Tina Flint-Smith told reporters that the commerce department had a potential conflict of interest in creating an exchange that it will ultimately regulate. She emphasized that point over the clash with the commerce department.
“It’s increasingly clear to us that some of the core functions of the exchange are potentially in conflict with the Department of Commerce,” Smith said. “What we are doing is starting up a pretty large and complex organization, and MMB has the financial oversight capability that we will need in this next phase.”

Schowalter said the exchanges had been going through some “growing pains,” and a new communications plan has been created to address concerns. Schowalter and Smith met with GOP and DFL legislators Wednesday to get them acquainted with the new regime.

Kate Johanson, the chamber’s health care policy lobbyist, applauded the move to MMB.

“We’re really looking forward to working with Commissioner Schowalter, and our focus remains on policy issues,” Johanson told Capitol Report. “The chamber’s goal is to establish a Minnesota exchange and be involved in shaping that exchange.”

Not much time remains ahead of the Nov. 16 deadline the federal government has set for the state to submit a so-called blueprint of its exchange. Dayton has said he will wait until after the election to make any decisions about the exchanges. That conjures the possibility that there will only be a 10-day post-election window to discuss the blueprint before the administration sends it to Washington, D.C. (In accordance with the law, the federal government will implement exchanges for states that don’t create their own.)

Dayton’s public comment about delaying a decision on the exchange until after the election has conjured fears that he’s going to take advantage of the political calendar to ram through his administration’s exchange.

But one lobbyist noted Dayton made an important shift in outlook in his letter to legislative leaders announcing the MMB switch. “Let me be clear: My administration will not [emphasis in original] commit Minnesota to any final policy decisions in this application, such as how it will be financed or its permanent governance structure,” wrote Dayton. “Due to the great flexibility of the federal approval process, we can request conditional approval in November and then make these important policy decisions early in the 2013 legislative session.”

While the business lobby has vented frustration over the purported non-transparency of Department of Commerce proceedings, they face a bigger threat from a contingent of very conservative Republicans. Several GOP legislators have rejected any policy proposals that have even the slightest connection to the federal “Obamacare” law. Those objections have made it difficult for the Dayton administration to push for the exchanges. It has also created uncertainty among Republican legislators, like Abeler, who see the exchanges as an inevitable fact. One school of thought, mentioned by Abeler and others, is that the Nov. 16 blueprint will be technical in nature and leave significant policy decisions for later.

While it’s an understatement to say the process has been dragging out, Abeler said, the eventual outcome isn’t in doubt.

“If my side is going to be uncomfortable with the governor plotting the course, there is nothing they can do about it,” Abeler said.

About Charley Shaw

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