Commission questions health exchange development funds

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The Legislature accepted $28.5 million in federal money last session to help implement a state-run health insurance exchange. But the Legislative Advisory Commission exhibited some buyer’s remorse, saying funds are being used to develop a program that has too many unanswered questions.

Comprised of five House members and five senators, the commission reviewed the latest $42.5 million federal grant, which some say would move the state further down the road to a program mandated through the federal 2010 Affordable Care Act, which may see significant changes depending on upcoming election results.

Rep. Steve Gottwalt (R-St. Cloud) said while earlier federal grants were accepted through the legislative process, this one does not need official approval because it comes when the Legislature is not in session. He accused Gov. Mark Dayton of wanting to “charge full-steam ahead” on a state-run health exchange, while federal exchange options are only in developmental stages. Mandated through a new law, it is up to each state to decide exchange implementation, be they state run or federal.

“We don’t know at all what the federal government is offering.  We don’t know what the options are going to be. If we build the so-called Minnesota exchange it will be the Obama exchange,” Gottwalt said.

According to a Minnesota Management & Budget proposal, the purpose of the grant is to continue Minnesota’s efforts in the design and development of a state exchange. The money would be used to support development of technical business infrastructure; as well as fund development of various rating systems, customer service programs and outreach and communication design. It would also fund 54 new full-time employees for four months.

Exchange Director April Todd-Malmlov said this federal grant would move the project forward until the first months of the 2013 legislative session. She said the state could expect two more grants next year, each at between $30 million to $40 million. The first would fund the first year (2014) of exchange implementation. After that, a sustainable funding source would need to be found. She said there are several options, including fees that could be considered.

MMB Commissioner Jim Schowalter said that going forward, the governor wants to work with the Legislature and not go-it-alone, although that could be an option.

“The question before the Legislature is does it want to implement a state-based exchange or a federal exchange?  … We have the responsibility to keep our options open. I want an option that will help Minnesota use its strengths. There is a great opportunity here and think about how this might work for Minnesota.”