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Minnesota’s health exchange process gets conditional approval from feds

It’s still waiting, though, for word on federal guidelines and a $39 million grant to run the program through the end of next year.

Minnesota received conditional approval from the federal government on Thursday to implement a state-based health insurance exchange, but it’s still waiting on other key factors.

Those include federal guidelines for the project and a $39 million grant the governor applied for in mid-November to run the program through the end of next year.

U.S. Health and Human Services Secretary Kathleen Sebelius said in a Thursday letter to Gov. Mark Dayton that the conditional approval for the exchange “reflects the substantial progress the Minnesota Health Insurance Exchange … has made,” and a continuing expectation that the state will keep meeting federal deadlines moving forward.

The Dayton administration estimates the exchange will serve about 1.2 million Minnesotans as an online marketplace for consumers to compare and shop for health insurance, similar to travel websites like Orbitz.

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The executive branch estimates the exchange, a key mechanism of the federal health care reform law, could reduce insurance costs in Minnesota by $1 billion and could save the average family $500.

Minnesota had to apply for conditional approval because Dayton and Republican legislative majorities disagreed sharply over implementing a state-based exchange. The GOP has largely declined to participate in the exchange planning process.

The governor previously moved forward on his own using federal grants and executive authority, but post-election DFL majorities in the state House and Senate have signaled the exchange is a top priority for the 2013 session.

Commissioner Jim Schowalter
Commissioner Jim Schowalter

“I’d like to thank our stakeholders … for helping us achieve this significant milestone,” said Minnesota Management and Budget Commissioner Jim Schowalter, who is overseeing exchange development. “This designation gives us added affirmation to move forward to the next step of working with legislators to pass a bill early in the 2013 session.”

Sebelius said in her letter that the feds expect Minnesota to follow its blueprint application, meet federal deadlines and show the legal authority to implement the exchange. Minnesota was one of three states on Thursday to receive federal blessings related to exchange implementation.

The exchange is expected to cost $48 million in 2014, the first year it’s operational, and up to $62 million in 2016, when projections stop. If the feds approve Dayton’s latest grant, Minnesota will have received roughly $110 million to fund the project.

 Dayton administration officials acknowledge that it will be difficult to meet key deadlines, such as agreeing on basic exchange policy provisions by late session. The state also must begin enrolling people into the exchange by October in preparation for a full roll out in January 2014.

One of the key obstacles is the federal government itself. Health plans are still waiting on federal guidelines on how to design products to be sold on the exchange, and the state is waiting to see specifics of how the expiring MinnesotaCare public health program might transition into the exchange era.

Despite the trickle of information, Sebelius wrote to Dayton that the federal government “will continue its work with exchanges, including providing more detailed information directly to your state exchange,” referring to Minnesota.