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Key question: Does Minnesota want to be more like Massachusetts or Utah?

Minnesota insurance exchange will need fast attention

Gov. Mark Dayton, an eager proponent of a state-based exchange, formed a task force last session to study the issue and consider the state’s options. (Staff photo: Peter Bartz-Gallagher)

Key question: Does Minnesota want to be more like Massachusetts or Utah?

Close observers and key players in Minnesota’s project to create a health insurance exchange have some advice for those who want to follow the process: Pay close attention, and don’t blink.

Minnesota faces a hard deadline of April 1, 2013, by which point the governance body of the state health exchange must have met at least once to officially demonstrate its existence to the federal government. The creation of an exchange in each state is a mandate spawned by the 2010 federal Affordable Care Act, aka Obamacare.

Loosely defined, an insurance exchange is simply a marketplace where consumers can compare insurance companies and plans, with the goal of bringing more consumers into contact with more insurance options, and, it is hoped, more competitive plans. Within that framework, states face myriad decisions on how to implement and run their own exchanges.

If the Legislature cannot approve a governance structure, financing system and several other key policy pieces of Minnesota’s exchange in time, the process will default to the federal government, which is prepared to create exchanges in those states that are unready or unwilling to do so. The exchanges will open for enrollment of small businesses and uninsured individuals in October 2013, and are set to go live on January 1, 2014.

In a budgeting year, and with newly won DFL majorities certain to raise other time-consuming issues, the Legislature will have to move swiftly to meet the deadline. More than one insider used the phrase “breakneck speed” in anticipation of the exchange legislation’s progress through various committees before it reaches a floor vote.

Legislators and lobbyists all express confidence that Minnesota can pass a bill in time. But what that legislation will look like, and how it will affect the more than 1 million Minnesotans who will eventually be eligible for enrollment in the exchange, still has to be worked out — and soon.

“I definitely think that is going to be an important message to reiterate,” said April Todd-Malmlov, executive director of the Minnesota health exchange.  “We have to get this done, in this period of time. We don’t have the luxury of more time.”

Two contrasting models

On one key issue, that of how active the state will be in the exchange’s operation, states have two existing models to consider. In Massachusetts, the first state to implement an exchange and the model state for the federal health care reform, the state aggressively screens which plans and companies can participate. Under this approach, known as the “active purchaser” model, the state acts in what it deems the best interests of people who use the exchange.

In the more libertarian-minded Utah, the state’s already-existing exchange is patterned on a free market system, with all companies and plans that meet a baseline level of standards allowed to enter the exchange.

The contrast is fairly stark in some respects. States are given the choice of creating a muscular new arm of bureaucracy that will negotiate on consumer’s behalf, as was done in Massachusetts, or setting up a sophisticated website and letting insurance companies and consumers sort out the rest, as in Utah.

These divergent paths could come to be a sticking point in the course of crafting the legislation. Last session, Rep. Erin Murphy, DFL-St. Paul, co-sponsored a bipartisan exchange bill introduced by Rep. Joe Atkins, DFL-Inver Grove Heights. But later in the session, Murphy authored an exchange bill of her own, one that outlined a significantly more active role for the state in screening which health plans would be eligible for the exchange.

Murphy, now the incoming House Majority Leader, said she expects the “active purchaser” discussion to be “the heart of the debate this session.”

Phillip Cryan, an organizing director with the Service Employees International Union (SEIU) who served on a Dayton administration health exchange task force, said the group’s recommendations would speak for themselves, though he noted that the “active purchaser” model seems to be favored by states with Democratic legislatures and a Democratic governor.

Kate Johansen, a lobbyist and health care expert with the Minnesota Chamber of Commerce, said her organization supports the Utah model, with the state providing an informative marketplace, but not a restrictive one. Aside from the ideological issues, Johansen said the timing of the Legislature’s challenge is daunting enough as it is.

“The active purchaser exchange is not the best exchange for the state,” she said, “and I think that creating it in three months would be a very overwhelming task.”

Likewise, Mike Hickey, a lobbyist for the Minnesota chapter of the National Federation of Independent Businesses, favors an inclusive plan that does not bar insurance companies’ entrance to the exchange. Hickey, who represents many of the small businesses likely to enter the exchange at the beginning of 2014, also said his clients are “very concerned” about an attempt to hammer out a complex piece of legislation on a short timeline.

“Legislators tend to do bad work when they rush,” Hickey said. “And they tend to do way too much of that, way too often.”

With so much at stake and so few days remaining to nail down details, Todd-Malmlov expects many late nights as she and top officials in the Dayton administration work with the Legislature to create and approve Minnesota’s insurance exchange. By this point, she is comfortable with the idea of a race against time.

“You have to make yourself very comfortable with it,” she said, “because there really is no other option.”

Task force work will inform bill

Heading into the 2012 legislative session, there were still two major threats to the ACA. A group of state attorneys general had challenged the health care overhaul as unconstitutional, taking their case to the U.S. Supreme Court. Aside from the legal challenge, there was the political reality that nearly every Republican presidential candidate had pledged to “repeal Obamacare” if elected to the White House.

While Republican majorities controlled both chambers of the Legislature in 2011-12, the creation of a health exchange in Minnesota was essentially a non-starter. Gov. Mark Dayton, an eager proponent of a state-based exchange, had formed a task force to study the issue and consider the state’s options. Dayton opened four seats on the task force to legislators, expecting one member of the House and Senate from each party. But the GOP caucuses balked, refusing to fill their seats on the task force; eventually, the DFL filled the empty seats with two additional Democrats.

SEIU’s Cryan said the GOP majorities’ absence created a difficult situation. “We had to do the best we could, for the last year-plus, with absolutely no cooperation whatsoever from the Legislature,” he said.

With the approach of the 2013 session, the situation has flipped almost entirely. The ACA has been upheld — legally, by the U.S. Supreme Court, and politically, by the re-election of President Barack Obama. Moreover, the DFL’s sweep to power puts the exchange issue into the hands of the Dayton administration and the party’s legislative majorities.

That switch leaves the DFLers who sat on the task force in a prime position to take the lead on crafting an exchange bill. Task force members like Atkins and Sen. Tony Lourey, DFL-Kerrick, will be explaining their findings to members of their own party and, as the newly named chairmen of two crucial committees, will likewise be in a position to act on them themselves. Atkins has been named chairman of the House Commerce and Consumer Protection Finance Committee, while Lourey will hold the gavel in the Senate Health and Human Services Committee.

Last session, Atkins and Lourey were chief authors of ill-fated legislation that would have created Minnesota’s exchange. The proposal gained little traction with Republicans, but offers something of a framework for this year’s bill. While Cryan stressed that the task force recommendations will be nonbinding, he said the DFL’s electoral success lends itself to a streamlined process.

“It was always been very clear that this was an advisory body,” Cryan said. “The election results just make that a much simpler thing moving forward.”

After dozens of meetings, numerous working group reports and input from stakeholders and experts, the task force’s final round of recommendations are due later this month. Atkins said the knowledge he has gained through the task force has been “invaluable.” But he went on to say that he plans to enter a bill with “a lot of similarities” to the legislation he authored last session.

Under the terms of that bill, the exchange would be governed by a 19-member board. Aside from the commissioners of Commerce, Health, and Human Services, the board would consist of groups of experts appointed to represent consumers and insurance companies. Crucially, current insurance company employees, or those who had worked for a company within the previous year, would have been banned from board membership.

Aside from the board’s structure, the bill left other features of the exchange to be worked out at a later date.

Later this month, the four DFLers who served on the task force — Atkins, Lourey, Sen. James Metzen, DFL-South St. Paul and Rep. Tom Huntley, DFL-Duluth  — will meet informally to talk about what they’ve learned, and what kind of exchange they plan to push in the Legislature.

In the 2012 session, Atkins did manage to land a few co-authors among moderate Republicans, and he said he had already connected with Reps. Jim Abeler, R-Anoka, and Joe Hoppe, R-Chaska, to talk about resurrecting their partnership from last year. While Atkins said bipartisan support for the exchange was important to him, he stopped short of saying it was necessary for the legislation to be a success.

In interviews shortly after the election, numerous incoming DFL legislators said they were interested in working to create the exchange, though few professed any expertise on the topic. Atkins conceded that many aspects of the exchange are complex, but thinks the freshmen lawmakers will quickly become acquainted with the project.

“This isn’t one of those issues that’s going to sneak up on anybody,” Atkins said. “It’s going to be front and center for much of the session.”

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