Minnesota State Capitol

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Health Insurance Exchange

About one in five Minnesotans will use the state’s health insurance exchange to buy insurance or determine eligibility for medical assistance programs. The exchange is voluntary — consumers can still buy policies outside if they wish. However, those who wish to use advance tax credits — financial assistance soon available through the federal health reform law — will have to buy on the exchange.

For Minnesota health system, landmark legislation

  • Article by: Star Tribune Editorial Board
  • March 2, 2013 - 5:23 PM

With surprisingly little fanfare, Minnesota is poised this week to take one the most dramatic steps in decades to reform its health care system. Landmark legislation that will soon change how 1.3 million Minnesotans buy health insurance — and hopefully drive down costs by harnessing technology and the power of market competition — has moved with warp speed through a slew of legislative committees with the session just coming up on the midway mark.

On Monday, a bill to establish the “Minnesota Insurance Marketplace,” an online tool to help consumers buy policies and determine eligibility for financial assistance newly available as the federal health reform law rolls out, will head to the House for floor debate and a possible vote. Companion legislation will likely hit the Senate floor on Thursday.

The debate is expected to be heated in both DFL-controlled chambers. The bills would establish a state-run version of the online “exchange” marketplace called for in the 2010 Affordable Care Act (ACA).

Both bills, however, are expected to pass on party-line votes. While Minnesota is indeed best-served by a state-run exchange — a point on which there’s widespread consensus among medical providers, insurers and the business community — the regrettable political fault lines should be a reminder of how poorly the political process here has served individual consumers and eligible small businesses that can voluntarily begin using the exchange website this fall to select coverage.

Minnesota, like every other state, has had three years since the ACA’s passage to figure out how to build the best exchange for the state. But Republicans, who had the majority in both houses of the Legislature until last fall’s election, looked for ways to use the exchange to thwart Obamacare.

The party’s legislative leadership stymied legislation, even some introduced by their own party members, that would have built the more streamlined exchange that many of the party’s business constituents wanted. Republicans also declined to participate in various “stakeholder” task forces set up to advise Gov. Mark Dayton’s administration, which has done excellent work to secure federal grants and hire staff to make the exchange a reality in time to comply with the federal law.

The state would have been best served by a political process that also productively used the past two years to focus on the nuts and bolts of building the best exchange for the state — and considered the best ideas from both parties. That didn’t happen, and this session’s fast-moving process unfortunately was still bogged down by Obamacare politics and didn’t adequately vet the policy details.

Key policy points that haven’t received a thorough airing: What kind of guidance should the legislation provide for the exchange component geared toward small businesses? Does the seven-member governing board (appointed by the governor) have enough authority or too much? What kinds of expenses will the annual operating budget of about $50 million — one of the lowest per capita costs among state-run exchanges — cover?

That raises the question of whether Minnesota should let the federal government step in and run the exchange for a year to give the state more time to build the marketplace. The answer is no. It’s unclear what the federal exchange will look like, what plans will be allowed to be sold on it, when it will be operational, and how much that arrangement would cost. (No, it won’t be free.)

State officials say they can build a less expensive state version and provide more certainty about its operations. And in the exchange’s first year of operation, when bugs will surface, it’s best to have Minnesotans on the job — both on the information technology side and helping consumers resolve their problems buying plans or qualifying for medical assistance programs or advance tax credits to help buy coverage.

The proposed legislation, which if passed will make the state one of 18 to run its own exchange, is also a solid though very ambitious start. The bills clearly reflect the DFL’s vision for the exchange, in particular by giving the exchange’s board considerable authority to limit which plans will be sold in the exchange. This approach, called “active purchaser,” is better thought of as “managed competition.” It has the potential to produce systemwide changes by linking more consumers with health plans that deliver high-quality care at a lower cost.

However, adjustments are needed to ensure that health plans, which would have to make substantial investments in technology to compete on the exchange, have enough certainty at first about selling their product so that they’re willing to invest.

Lawmakers will also need to resolve differences between the House and Senate over the exchange’s financing. The House calls for up to a 3.5 percent tax on premiums sold on the exchange — an approach that has raised concerns from businesses and insurers. The Senate calls for using existing fees on cigarettes that go into the general fund. The House version is a more stable and self-reliant approach for the exchange, but lawmakers should explore whether marketing opportunities, such as ads or naming rights on the exchange, might reduce the percentage withheld and allay concerns. Slightly loosening the conflict-of-interest standard for board members is also worth considering and could help provide operational expertise from the industry.

Much of the work on this legislation will occur as a conference committee smooths out differences between the House and Senate versions. Their goal should be doing so not only quickly, but in a way that strengthens support from all Minnesotans who will be using the new exchange in a few short months.

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