At first glance, the path toward implementing Minnesota’s health insurance exchange — a key component of the federal reform law — appears to have gotten easier with recent events.
But behind the scenes, there’s still much to do — and not much time to get everything done.
That said, though, two big obstacles have been removed.
First the U.S. Supreme Court and then the November elections handed victories to President Barack Obama and solidified the Affordable Care Act as “the law of the land.” And then DFLers in Minnesota ousted recalcitrant Republicans on Nov. 6 and took back control of both houses of the Legislature, almost ensuring that an exchange bill moves forward.
Republicans who waited and watched, hoping for the election of Mitt Romney and for continued divided Minnesota government are now out of luck.
Gov. Mark Dayton, who was using federal money and his executive authority to inch the exchange along — as federal deadlines bear down — now has friendly partners in the state to complete the exchange planning process.
“One of the things that has held this up from really moving forward … is the idea that somehow it’s just going to go away,” said DFL Sen. Tony Lourey, a health care policy expert and a member of the exchange advisory task force. “Now we should be definitively done with that idea. It’s not going to go away. It’s the law of the land, and we can do good job with implementing it.”
Despite the clearer path forward, however, government officials and industry stakeholders alike agree that getting the massive project done on time will be difficult. It’s also uncertain if the exchange’s first iteration will have all the features that advocates initially imagined.
Exchange supporters say the service will affect about 1 million Minnesotans and will provide a competitive marketplace for individuals and small businesses to purchase insurance with a setup similar to travel websites like Travelocity. But much beyond the basics of what the exchange will look like and how it will function remain unknown.
The federal government announced last week that it would extend a key Friday deadline to mid-December for states to submit blueprint proposals. By all indications, Minnesota will still signal to the feds this week that it intends to move forward with a state-based exchange and instead of a federally produced model.
But the questions remain: Will Minnesota meet the ambitious deadlines outlined in the Affordable Care Act, and if it doesn’t, how will the federal government react?
Lot of work to do
State officials such as Minnesota Management and Budget Commissioner Jim Schowalter, who took over exchange planning in September, have acknowledged the difficult path ahead.
“We have a lot of work to do here,” Schowalter said in a conference call with reporters on Friday. “This is a really big project, and it’s also going to be under very tight timelines, so we’re continuing as fast as we can to work on the technical side, on the business process issues … [and] the other big piece of the puzzle that needs to be tackled, which is the policies.”
As work intensifies, factors complicating the implementation process are coming from almost every direction.
• Republicans in the Legislature treaded water for two years, leaving a host of policy decisions up in the air.
• Factions in the DFL legislative majorities might complicate upcoming policy negotiations more than anticipated.
• The federal government has been slow to release regulations that both state agencies and private health plans are counting on to move forward.
• And the timeline for creating the exchange’s complex IT infrastructure is seriously condensed, compared with projects of similar magnitude.
Minnesota already has secured $71 million in federal grants and allocated $41 million for a contract to build the exchange infrastructure. The Dayton administration has recommended a public-private authority, and the exchange is expected to cost $48 million in 2014 and up to $64 million in 2016.
But without a legislative funding source — and such clear, legislatively approved policy provisions as a governance structure finalized before by March 31 — Minnesota may be forced to default to a federal exchange – an outcome the Dayton administration has spent tens of millions of dollars and countless hours of work to avoid.
“I think that everybody feels behind schedule,” said Dannette Coleman, a vice president at Medica on the exchange advisory task force. “I would speculate that extending this for another month is as much for the [benefit of the] federal government as it is for the states.”
GOP ready to take part
GOP Rep. Steve Gottwalt, chairman of the House Health and Human Services Reform Committee, defended Republican inaction over the last biennium as “part of a policy debate” related to a big issue: “Do we capitulate to a federal demand … or do we try to somehow not do that in hopes that we win the opportunity to kind of self-direct without the Affordable Care Act stepping in?”
“The issue now is that debate kind of got settled for us in the election,” Gottwalt said. “It’s really not feasible to not do anything.”
Gottwalt said he’s pleased to hear that Dayton and Lourey have reaffirmed their invitation to the GOP to take part in the planning process but said there’s a lot of work to be done to come to a consensus.
The representative from St. Cloud struck a more conciliatory tone than usual, and said he hopes to “plead for common sense” during the negotiations.
Is there a reform bill Gottwalt could sign?
“I hope so,” he replied.
DFL pragmatists vs. idealists
Even without Republican input or blockage, there could be enough fractures in the DFL majorities to significantly impede exchange legislation from moving forward quickly.
The likely battle would come down to pragmatists (the Dayton administration, for one) vs. idealists.
“I want to keep my expectations pretty modest for the initial implementation either way, because we’re going to have to keep this project doable,” Schowalter told reporters last week. “We should be looking at a multiple-year format of how we’re going to make this work.”
Lourey, who was DFL lead on the Senate Health and Human Services Committee last session, also said he agreed with a “build-it-as-you-go approach,” which would allow lawmakers more leeway to meet critical deadlines.
Minnesota’s exchange must start enrolling people by next October to meet the Jan. 1, 2014, deadline for the exchange to be operational.
Senate Democrats likely will have a preliminary idea of the number of committees and who will lead them this week, Lourey said, adding that he wasn’t sure who would introduce the exchange legislation next session.
But an exchange bill from DFL Sen. John Marty, a longtime health care advocate and expert, could look significantly different from one the Dayton administration and Lourey might propose.
Marty, perhaps the most progressive Democrat in the Senate, said he would push fora “strong” exchange that would have an active role in determining plan prices and benefits. He said he would also prefer to have advocates, rather than industry professionals, lead the exchange and work with consumers to select insurance.
Those kinds of policies could alienate industry stakeholders and limit buy-in from the health plans into the exchange. But many analysts and insiders also agree that even attempting to inject too many noncontroversial policies or functions into the exchange would be a mistake.
“You can’t shoot for the moon on a deadline like this,” said Kate Johansen, a health care policy manager at the Minnesota Chamber of Commerce.
Federal details needed
While the U.S. Department of Health and Human Services has shown its willingness to relax exchange deadlines, Minnesota state agencies and health plans also have been waiting on key federal regulations detailing what services plans must provide.
The intense process of designing a new plan typically takes 12 to 15 months, Julie Brunner, executive director of the Minnesota Council of Health Plans, said in an interview.
But insurers who want their plans included in the exchange must submit information to the state Department of Commerce by May 17, which leaves roughly six months if the regulations come soon.
“It’s a lot to get done in a short amount of time, and I say that with the full recognition that the state agencies are all working as hard,” Brunner said. “Everybody in the system has got a lot to do right now.”
Johansen, the Chamber of Commerce lobbyist, and others agreed that the federal standards and deadlines would likely be relaxed to accommodate struggling states.
“A year from now, I think it will shock people how many states and organizations have not been able to meet the goals of the Affordable Care Act,” she said.
State officials also have highlighted the huge technical barriers to creating a workable exchange that consumers can easily use to obtain insurance. If the interface doesn’t work easily, no one is going to use it.
Schowalter said numerous technical benchmarks are in the works to make sure the exchange is functional and can mesh with complex federal systems.
The time frame for a project that some in state government said would typically take years has now been condensed significantly. Lourey said he’s confident after speaking with state officials involved in building the exchange that it can be done.
“I thought that the department and the agencies working on it had pretty good answers to that,” he said, noting they were using “off-the-shelf” software tools that are flexible.
But Coleman, a voice of caution on the task force who had given the exchange a 50-50 shot of being completed in the past, said time is running out.
“I do think it’s going to be a really heavy lift for Minnesota to get this done.”