State health insurance exchange gets a $26M boost

  • Article by: JACKIE CROSBY
  • Star Tribune
  • February 23, 2012 - 9:06 AM

Minnesota has received a $26 million federal grant to help build a health insurance exchange, a one-stop marketplace where individuals and small businesses will be able to purchase health coverage among various policies.

The exchanges are a key component of the federal health care law and are expected to debut in 2014. The goal is to simplify the process of shopping for insurance and guarantee a basic level of coverage. The exchange is expected to lower costs by adding competition and allowing businesses and individuals to band together to buy insurance.

The federal money will allow the state to move ahead on creating the building blocks of the exchange -- particularly the high-tech backbone needed to run an online site and call center where consumers and businesses can buy private insurance and where low-income Minnesotans can sign up for public programs.

The money will go to designing "what's under the hood," said Commerce Commissioner Mike Rothman, whose department will oversee the exchanges. "It's putting the operations in place to be able to turn the switch and say, the exchange will work."

The state is in the process of assessing competitive bids from vendors who want to build the exchange website, Rothman said.

Minnesota is one of 10 states to get a share of $229 million in awards announced Wednesday by the U.S. Department of Health and Human Services. The state received two smaller planning grants last year worth $5.2 million.

States face a year-end deadline to prove they will be able to operate an exchange by 2014, or else the federal government will set up its own version.

Minnesota's Republican lawmakers are divided over the exchanges. Some remain critical of the Obama administration's 2010 health care law, yet want the state to control the design of its own exchange.

Last week, three powerful Republican House committee chairmen signed on to a DFL bill to establish a health insurance exchange. The bill is based on a framework hammered out by a task force of health care industry and community members. Republicans have declined to be part of the task force, which Rothman chairs.

The Minnesota Chamber of Commerce, which represents many of the small businesses that stand to benefit most from the exchanges, supports a Minnesota-made exchange.

While states are moving at different rates to plan and establish exchanges, a majority has taken the first steps to begin building exchanges. To date, nearly $610 million in grants have gone to 33 states and the District of Columbia, according to federal officials.

Other states receiving awards were Arkansas ($7.7 million), Colorado ($18 million), Kentucky ($57.9 million), Massachusetts, ($11.6 million), Nevada ($15.3 million), New Jersey ($7.7 million), New York ($48.5 million), Pennsylvania ($33.8 million) and Tennessee ($2.2 million).

Jackie Crosby • 612-673-7335

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