The federal government is providing another $34 million for work on the MNsure health insurance exchange — a move that was cheered on Wednesday by supporters of the government-run marketplace, and derided by critics as a bailout.
With the new money, federal taxpayers will have contributed about $189.3 million to the task of creating the marketplace, which Minnesota launched in 2013 to implement the federal Affordable Care Act.
The new money will fund ongoing improvements to the MNsure website, said Scott Leitz, the MNsure chief executive, during a board meeting Wednesday in St. Paul. It also should help improve the accuracy of MinnesotaCare invoices generated through the MNsure system, he said, and develop a “portal” for health insurance agents and navigators to enroll people in coverage through the exchange.
“We see it as very positive for Minnesotans, because we’re going to be able to do a lot of enhancements … on a much more rapid time frame,” Leitz said.
Not everyone agrees.
Sen. Michelle Benson, R-Ham Lake, said the need for more money shows that MNsure is “fundamentally, fiscally flawed.” At some point, she added, the federal government will stop coming to the financial rescue for the exchange.
“We need to reform MNsure so it’s not dependent on taxpayer bailouts,” Benson said.
But Sen. Tony Lourey, DFL-Kerrick, countered that when the federal government agreed to provide money to create MNsure, the grants included room for contingency funds if the build-out wasn’t complete. The money will fund needed improvements, Lourey said, particularly for the portion of the MNsure system that connects people with public health insurance coverage.
“These are one-time costs,” he said. “If we can get over the hump and get the system working well, and it’s stable — that’s what we’re supposed to take over. So, the feds are still playing the role that was initially envisioned.”
Minnesota was one of 13 states plus the District of Columbia to launch a health insurance exchange, where people can purchase private health insurance with the help of federal tax credits. The remainder of states use the HealthCare.gov website operated by the federal government.
Among the state-based health exchanges, Minnesota and 10 other states have received upward adjustments in their federal grant funding, according to MNsure. The federal government is authorized to adjust grants by up to 25 percent, Leitz said, and the grant adjustment in Minnesota is a 22 percent increase in funding.
Even with the extra money announced Wednesday, federal funding for MNsure is less than the sums put toward most other state-based exchanges, said Joe Campbell, a MNsure spokesman.
Like other health exchanges, MNsure is an option for individuals to buy non-group coverage and tap federal subsidies, depending on their incomes. In addition, people use the Minnesota exchange to enroll in the Medicaid and MinnesotaCare public health insurance premiums.
MNsure currently is in the midst of its second open enrollment period, and health exchange officials have been pushing to get thousands into private coverage to help balance the MNsure budget. The exchange is funded in part by withholding 3.5 percent of premiums from all private policies sold through MNsure.
The budget calls for MNsure to enroll 67,000 in private coverage by Feb. 15, and so far has sold policies for 41,704 people, Leitz said.
“We’ve had a very good first half of the open enrollment period,” he told board members. “We’re well over halfway to our [private] enrollment goal.”
With the new federal money, MNsure’s board delayed on Wednesday a budget discussion that was expected to look at the split of costs between the exchange and the state Department of Human Services (DHS). The department administers Medicaid and MinnesotaCare.
Board member Lucinda Jesson, the state’s human services commissioner, said last month she worried the MNsure budget called for extra funds from DHS. At the time, Jesson also questioned whether a three-year budget plan cut too much money for improving the MNsure information technology system.
On Wednesday, board member Tom Forsythe said the three-year plan now will be adjusted.
“We’ll be working on how best to put this money to good use,” Forsythe said.
One goal, Leitz said, will be improvements to “back office” systems for sending information to health insurance companies as well as the federal government. Ongoing problems with sending electronic data to insurers is one reason that health plans have cited when explaining why some haven’t promptly received invoices and ID cards.
MNsure applied for the extra grant money in November, and got word of federal approval on Dec. 22. The funds must be spent during 2015.