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Minn. governor removes exchange creation from state insurance regulator

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In a remarkable power shift in Minnesota, the health care exchange has been removed by the governor from the insurance commissioner’s authority to that of the Minnesota Management and Budget (MMB). The removal came after an intense lobbying campaign by agents and brokers who no longer trusted Minnesota Department of Commerce Commissioner Mike Rothman’s efforts.

See also: Where states stand on implementing PPACA

Now, the MMB will have responsibility for all financial, human resource, contractual and development activities related to the exchange, not the state insurance regulator.

Gov. Mark Dayton cited conflict of interest issues between the State Insurance (Commerce) Department and the exchange as the reason in a letter to legislative leaders Sept. 18. Dayton raised the possibility that the discussion of removing insurance regulators from overseeing exchange management could occur in other states as well, especially concerning navigators — those who assist consumers in buying insurance coverage on the exchange and cannot get compensation from insurance companies under the Patient Protection and Affordable Care Act (PPACA).  

However, the CEO of the National Association of Health Underwriters (NAHU), Janet Trautwein, and others recently teamed up to address the concerns they had with Rothman’s oversight of the exchange in general. Trautwein herself travelled to St. Paul, Minn.

The move to MMB from the insurance regulatory arena “will address the concern that certain core functions of the exchange — providing health insurance options to individuals and small employers — are potentially in conflict with the Department of Commerce’s role in regulating insurance companies and the sale of health insurance products,” Dayton wrote. 

Dayton also said that MMB has the capacity and experience with financial oversight and human resources required for the next phase of designing and developing the exchange. Healthcare agents and brokers were very public in their displeasure with Rothman, with one health insurance agent representative noting that Rothman had spoken of envisioning a world (at least in regards to exchanges) without the need for agents. 

Rothman also let the Minnesota House and Senate know that a bill containing a provision to permit a market of nonqualified plans outside of the exchange would be vetoed if passed, according to the Minnesota Association of Health Underwriters (MAHU), which has been saying since early spring that the Commerce Department — and the Administration — have offered no transparency in creating an exchange. 

Rothman, in press statements, appeared to anticipate the survival of a private market system outside the exchange, though.

John Tyler, chair of the Offense Committee on the Legislative Committee for MAHU, said Rothman appeared to be squeezing out the agent community, and while the governor bowed to pressure to make a quick fix and move the exchange from Rothman’s authority, there is still an impasse in Minnesota.

The Republican legislature is at odds with the Democratic governor and has not passed enabling legislation for a health care exchange.

Rather, there has been a task force appointed by Rothman to advise on the creation of an exchange. 

Minnesota had already been awarded $28.5 million from the federal government for the design and development of an exchange and Dayton requested another $42.5 million in federal funds to continue exchange design and development prior to the January 2013 deadline for certification. 

See also: PPACA: Network to give 10 states setup help

This summer, Rothman announced the state had awarded a $41 million contract to Reston, Va.-based Maximus, a government outsourcing company, to help create its health care exchange. 

According to press reports, health insurance agents and brokers were concerned for months about the Health Exchange Task Force’s alleged lack of transparency, and its lack of response to a list of questions they had sent months earlier, with agent compensation being one of the concerns. Rothman has been questioned on the task force not having representation from Republicans, but Rothman has said he invited them. 

A recent meeting of the task force on Aug. 29, was listed as an open meeting with consumers, employers, health care providers, insurers, state legislators and other health care experts in attendance. 

Dayton made a point in his September letter making the organizational changes that he was attaching a summary of the planned meetings of the Health Insurance Exchange Advisory Task Force over the next two months and its proposed agenda items. The task force is expected to deliver recommendations to the legislature and governor by the end of December, which will be available for consideration in the 2013 legislative session.

Dayton wants to keep the exchange work humming along, but is delaying big implementation decisions until after the election. He plans to submit a blueprint by the Nov. 16 deadline established by the Department of Health and Human Services (HHS). 

“In January 2013, the new Legislature and I will be able to better assess the options for Minnesota and determine how we want to proceed. The Exchange Task Force, my department heads, and I stand ready to work with you at any time,” Dayton stated in an August letter to legislative leaders.

For its part, MMB will have responsibility for all financial, human resource, contractual and development activities related to the exchange. MMB Commissioner James Schowalter will work in close consultation with Rothman’s department, along with the state departments of human services and health, the governor stated.

See also:

PPACA: A History

What you might not know about PPACA

PPACA: What’s up with the multi-state plans?


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