Minnesota’s proposed health insurance exchange is the talk of the Capitol early this session.
DFL lawmakers are racing to pass legislation by late March to implement a state-based exchange — a key component of the federal health care reform law. If they don’t, they could face unwanted federal intrusion.
State officials, lawmakers and a variety of interest groups — from unions to insurance providers — have been doing preliminary work on designing an exchange since early in Gov. Mark Dayton’s term.
Kate Johansen, who focuses on health care and transportation policy for the Minnesota Chamber of Commerce, has been involved in the exchange effort since August 2011.
The lobbyist from St. Paul has been a fixture at the marathon committee hearings dealing with provisions of the incredibly complex exchange.
MinnPost sat down with Johansen Monday to hear about the business community’s views — shortly after the exchange proposal was passed by the Senate Environment Economic Development and Agriculture Committee.
Here’s an edited transcript of the conversation:
MinnPost: What is the Minnesota Chamber of Commerce’s position on the exchange as it stands now?
Kate Johansen: The Chamber has supported the creation of a Minnesota exchange ever since the [Affordable Care Act] came out. The current legislation we don’t support in its current form because it has a lot of elements that we just don’t think will work for business or consumers, and our bottom line is we want an exchange that works. There is a ton to be done … and I think we need to walk before we run.
MP: Can you outline the Chamber’s major concerns related to the exchange?
KJ: Concerns fall into four major areas:
• The governance structure. What kind of entity is going to run this exchange?
• The powers. What can this board do?
• Finance. How are we going to pay for it?
• And accountability. To whom does this exchange answer if it does something that the public doesn’t like or that isn’t good for consumers? …
Right now, the exchange would be run by a seven-person board. No one who is currently serving in the industries regulated would be on that board. That’s really different than where Minnesota boards are currently …
Also, with respect to finance, there’s a really big question there because the current finance mechanism, at least in the House bill, is a 3.5 percent, what is called a withhold, but most people would call a premium tax. And that’s going to get passed right on to small businesses and individuals. They already pay more for health insurance than any other group. ….
And now they could potentially pay more based on the state exchange’s cost, so that’s a really big concern because if we make health insurance even more expensive for small businesses, there’s more likelihood they’ll drop it. One of the funny ironies of the ACA for Minnesota, because we’re so far ahead of other states, is we could actually wind up having a higher uninsured rate by implementing it. It’s kind of like being “the A student” has backfired on Minnesota a little bit.
With respect to the other areas, accountability is one that I think a lot of people overlook, but is very important. This board is accountable only to itself. It has to tell the Legislature what it’s doing, but they don’t have any oversight. It gets to set this premium tax without any sort of legislative oversight, and it collects money without any sort of appropriation, so if consumers don’t like what’s happening, they don’t really have much recourse.
MP: Does the Chamber support using tobacco revenue to fund the exchange?
KJ: We haven’t taken an official position, but I think that’s a vast improvement over a tax on small businesses. The Chamber could never support a bill that included a tax on small businesses to finance a health insurance exchange. I think the virtues of the Senate [tobacco] mechanism are that it is broad-based. It asks the Legislature to prioritize its current funding to pay for the exchange and also it makes sure that the Legislature is always appropriating this money, so there’s a lot of accountability there to make sure the exchange is acting in the best interest of consumers …
With the 3.5 percent tax in the House version, basically the board can set its rate and collect money forever without ever being accountable to anyone, unless the Legislature removes its ability to collect that tax. With the new mechanism, there would have to be a discussion each year of what the exchange is doing and if it’s working well.
MP: One of the major debates in committee has been whether or not the exchange should be an active purchaser or a clearinghouse model. Can you explain that distinction? What does the Chamber think?
KJ: This is confusing point for a lot of people. Who on earth has ever heard of an “active purchaser” before health insurance exchanges, right? But, basically an active purchaser model is one where an exchange board … can exclude certain products from the market. The other model, the clearinghouse model, is one where any product that meets certain criteria is available through the exchange. The Chamber prefers a clearinghouse model …
Small businesses like choice, and the more choice that they have, I think, the better they feel about shopping for products that are narrowly tailored to meet their own needs and resources.
Additionally, we want to look at this in a broader picture because the power of an exchange is really to change the way people look at how they buy health insurance. And if you limit the number of choices they have, you’re disincenting plans, because it takes a lot of research and development to develop these products. It’s costly, and if you could be excluded from that marketplace, you don’t have as much of an incentive to develop those plans, right? And that could hurt consumers.
And then finally, going back to the point of reform, small businesses are more and more interested in letting their employees shop for themselves through defined contribution, where an employer would just say, ‘Here’s a certain amount of money — go shop.’ An exchange can really be empowering in that way, but not if there are so few choices that it doesn’t make sense to incent people to shop on their own.
MP: What is the largest hurdle that the Chamber must overcome to make the exchange palatable?
KJ: I think there’s more than one, not to be difficult. I really think the active purchaser debate is very significant, and the finance mechanism is very significant and the governance structure.
Those are the top three concerns, and the reason they’re concerning is obviously the finance mechanism could make insurance more expensive, always a problem. The active purchaser puts a lot of power in the hands of very few people in a way that is not publicly accountable …
What’s also interesting is there will be a second bill in April or May determining what the market rules for inside and outside the exchange are. And if the Legislature requires products to be identical inside and outside the exchange, the result is you have four people in the state of Minnesota deciding what health insurance products everybody gets to access. That’s a big deal, and it’s not required in the federal law, so why not take more time to have that conversation?
MP: You have been working on the exchange for a long time. Can you talk about what it was like before — during the task force — and then now that it’s in the legislative process?
KJ: There are no unimportant meetings when you are completely redesigning how health insurance is bought and sold. What’s interesting is I think so many folks worked so hard during that task force period, once it became clear that there would be legislation, everybody went into even further overdrive.
The schedules have been out of control. The timeline and number of committees that this bill will go through is almost unprecedented. Rep. [Joe] Atkins jokes about going for the record, and he’s joking, but it’s true. This bill will go to almost 20 committees … in a couple of months. That’s borderline bananas. I think if anyone is ever wondering about their member value at the Chamber, they can just look at the circles under my eyes because no health care interest stakeholder has slept more than four hours since January.
MP: Do you think the bill is being adequately considered, and do you think lawmakers actually understand what’s in it?
KJ: I hope so. I think that being on such a tight timeline necessitates less consideration than is ideal, but it’s also a position that the state is in. It would be better if we had more time to talk about these issues. They are very complicated, and I think legislators are doing their best to wrap their brains around it. This is one of hundreds of bills that they’ll consider, but everyone who is working on it has acknowledged that it’s one of the most important bills of the session and most health care leaders have acknowledged that it’s the most important health legislation since the 1960s. So, I’m hopeful that it’s getting enough consideration.
MP: What is it like being involved in crafting some of the most far-reaching legislation in the history of this state?
KJ: It’s humbling, and it’s really cool. You wake up every day and you get to go to work and you know that, even if you’re a very small cog in a very big machine, at least you’re going to have an impact on something, hopefully, for the better.
I always like to think of lobbyists as being public servants in the private sector, but just collaborating with everybody across so many sectors – even when you have disagreements with them — has been very rewarding. So, it’s cool. This is a historic time in Minnesota health care, and I’m very happy to be a very small part of it.
MP: Is there a scenario where no exchange would be better than what DFL lawmakers may pass this session?
KJ: It’s fair to say that we couldn’t support the current legislation as it stands today. We’ve been very clear about our position, and I really hope that we get to a place where can all support a bill. Very few other Chambers throughout the country have engaged on this issue. Very few businesses — plans, providers — have engaged the way Minnesota’s community has. If ever there were an example of Minnesota exceptionalism, this is it. The way that people have engaged in this process is overwhelmingly smacking of good faith, and I think everybody at the end of the day just wants an exchange that will work.
MP: Can you outline the Chamber’s best-case scenario for what an exchange would look like?
KJ: The best-case scenario for everyone right now would be a really minimal bill. There is so much at stake with just getting the IT infrastructure up that I think the most responsible way to approach this is to do what we need to to comply with federal law and get that done in the next few months. These policy conversations are not going to go away. We’re not going to fix health care in this bill in the next two months, and viewing it as a vehicle to every aspiration is detrimental to the process.
If I had to design a perfect bill, it would be one that just meets our minimum requirements and moves us forward so we can continue having conversations about the policies that aren’t necessary to decide right now, but gets the most functional exchange possible up and running.
MP: Is that something you’re seeing, that lawmakers are trying to tack too much on at once?
KJ: There are things in the current bill that are not required in federal law, and that’s concerning. The active purchaser language, for example, is not required in federal law. There hasn’t been a full vetting of the budget of what the exchange will do, and it costs tens of millions of dollars. We’re going to have almost 100 new full-time state employees. That makes it a large board by any standard, and it’s disconcerting that we haven’t had those conversations before implementing an entirely new state agency.