Minnesota’s health insurance exchange — a landmark piece of state legislation — has drawn lobbyists and interest groups attempting to shape the far-reaching policy to the Capitol en masse this session.
Early last week, MinnPost spoke with Kate Johansen, a lobbyist with the Minnesota Chamber of Commerce, about the business group’s hopes and concerns regarding the exchange last week.
On Friday, we heard a different take when we sat down with Liz Doyle, associate director at TakeAction Minnesota, a progressive grass-roots group. She offers a consumer advocate’s perspective on the exchange — a key part of the federal health reform law.
Doyle focuses on health care issues for TakeAction and worked as policy director for the California Labor Federation, AFL-CIO, before joining the organization.
TakeAction has more than 14,000 individual members and encompasses 28 organizations, including unions and other social groups.
Here’s an edited transcript of the conversation.
MinnPost: What is TakeAction Minnesota’s position on the exchange in its current form?
Liz Doyle: We support the state-based health insurance exchange and have since the beginning, because we think we can design an exchange that’s unique for Minnesota. We’re supportive of the legislation that’s moving in the House and Senate and think that it is going to create an exchange that’s going to work well for consumers.
MP: Do you have any concerns with the legislation as it stands?
LD: I think the change in the financing structure in the Senate bill needs more consideration. We’re supportive of having the exchange financed through an assessment of some form on the health insurers.
The bill originally had — and still has on the House side — a 3.5 percent premium withhold, and our position is the health insurance exchange is supposed to be self-sustaining in how it’s financed. That’s clear under the federal law. It’s really intended to stand on its own two feet, and it’s not going to be able to do that if it’s tied to the general fund. Most of the other states around the country that are designing health insurance exchanges are asking insurers to contribute to the exchange. That’s how the federal government is going to do it, as well.
We want it to be both self-sustaining, and we want it to be equitable. So, the health insurance exchange is going to generate at least $3.3 billion in revenues into the insurance industry. It’s a substantial new book of business for the health carriers of Minnesota. It’s fair to ask the health insurance companies who are no longer going to have the degree of marketing and advertising expenses that they have now to contribute to the health insurance exchange, which is going to help them market and sell their products.
MP: So then, the counter piece, the Senate side, would be tobacco revenues. Can you talk a little bit about why that concerns you?
LD: It’s … not common sense to ask tobacco users in the state to finance the structure to market and sell health insurance products, so there’s a disconnect between who’s paying and who’s benefiting, and that connection should be stronger in the exchange.
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 talk about TakeAction’s position on that debate?
LD: We support an active purchaser, or smart purchaser, exchange for a couple of reasons.
First, Minnesota has a very strong tradition of leadership in health reform. The exchange is a huge opportunity for us to continue that leadership. We are well known and well regarded for getting better value out of our health care system. That’s the purpose of a smart-purchaser health insurance exchange. It’s an opportunity for us to ensure that Minnesotans are getting access to the best-quality, best-value products in the state.
Secondly, the smart purchaser [exchange] is about leveling the playing field for individuals and small businesses. Right now, large employers and large purchasers in the state have a lot more bargaining power to get a better deal from the health insurance companies. A smart purchaser exchange offers the same to small businesses and individuals, and that’s why the AARP poll has found that three-quarters of Minnesotans support a smart purchaser health insurance exchange.
There’s a lot of other positive benefits to it. It ensures that consumers have an apple-to-apples comparison of the products that are offered on the health insurance exchange. If you look around the country, a majority of states that are building health insurance exchanges are building smart-purchaser exchanges.
MP: That’s a slim majority, though, isn’t it?
LD: It is. Although, if you look at what among those states actually support the ACA, most of the states that are doing the clearinghouse model actually opposed the Affordable Care Act, so the states that support the Affordable Care Act, with the exception of one, are building smart-purchaser health insurance exchanges because they think individuals in their state should get a better deal. Minnesotans deserve the same thing, so we’re very supportive of the smart purchaser exchange. …
The alternative model is the clearinghouse exchange, as you know. That is essentially accepting the barebones federal minimum standard and saying, ‘We can’t do anything better.’ Essentially, that says if a product is not illegal, it should be sold on our health insurance exchange, and we think we can set a better standard for Minnesota.
MP: The state Chamber of Commerce has brought up concerns with the governance structure, the financing and accountability. Can you respond to some of those concerns?
LD: The exchange is going to have robust public accountability. It falls under the review of the legislative auditor’s office. All meetings are subject to Open Meetings Law. It falls under all of the accountability and oversight standards that apply to public agencies in the state. The exchange is no different from that.
The most important thing on the governance structure is the conflict-of-interest [provision]. The Senate and House bills both include conflict-of-interest standards that prevent those that are profiting off the health insurance exchange from also sitting on its governing board, and that’s a very common-sense idea. It has broad public support. We should not be allowing those who profit off the exchange to also oversee what products should be sold on the exchange, and so the integrity of the governance structure is one of our top priorities for a health insurance exchange. …
It’s important to remember that right now the health insurance industry has to invest substantially in marketing and selling health insurance products. In 2014, the health insurance exchange is going to take over a lot of the work of marketing and selling health insurance products, so it is natural — it is logical — for the health insurance carriers to contribute to the exchange, because of the savings they’re going to get from marketing expenses.
MP: Can you outline TakeAction’s work in the legislative process? What have you been doing so far?
LD: We have been educating the public on some of the key policy questions related to the health insurance exchange. We’ve been participating in committee hearings, testifying on consumer priorities within the exchange. We are working with more than two-dozen other organizations in the state that are interested in the well-being of consumers on the health exchange. Those are probably the main pieces. Talking to lawmakers about how to design an exchange that works well for Minnesotans.
MP: What does victory look like for TakeAction? What should this thing look like?
LD: We think Minnesota should have an exchange with smart-purchaser authority, an exchange that can negotiate on behalf of individuals and small businesses, an exchange that’s equitably financed, an exchange that operates free of conflict of interest and one that has a strong infrastructure of consumer assistance.
Those are our main priorities for the health exchange. A health exchange that embodies those will be very successful for small businesses, individuals and the health care industry in our state.
MP: What is it like managing expectations for so many stakeholders under one umbrella? How would you handle a scenario where the exchange isn’t palatable to one or more of those engaged?
LD: We have a common set of principles about how to design a consumer-friendly exchange, and I don’t expect those to change.
So, the strength of our coalition is the diversity of the constituencies that are part of it. AARP’s voice for older Minnesotans in the health insurance exchange is unique and important. Legal Aid’s attention to the well-being of low-income people is totally necessary.
So, we’re fortunate to have different organizations paying particular interest to different constituencies, but we do have a common set of priorities for the exchange, and I don’t expect that to change.
It’s always a process at the Legislature. I don’t think anyone involved in this thinks they’ll get every single detail that they’d like, but that’s how it works, so I don’t think the expectation is anything different than that.
MP: What has been the most interesting moment this session related to the exchange? What has surprised you the most?
LD: I don’t think this is surprising, but it’s been impressive to see how supportive small-business owners have been of a smart-purchaser exchange. Some of the best testimony at the Capitol on the exchange has come from individual small-business owners who are frustrated with the growth in their health care costs, and they know the large employers are getting a better rate deal. They know that’s not fair. They know the health insurance exchange can finally level the playing field, and that’s why they’ve been motivated to come to the Capitol and talk about why we need a health insurance exchange that can negotiate on their behalf. …
MP: What is it like being involved in crafting some of the most far-reaching legislation in the history of this state?
LD: I think it is both humbling and exciting. This health insurance exchange that we’re building now could be in place for decades, and there’s millions of Minnesotans that will use it to purchase their health insurance coverage.
It’s a huge investment for the people of this state, and I think it’s been a real learning curve for everyone because of the complexity of the issues. But it’s been exciting to be a part of building something that’s going to have such broad reach in Minnesota that will offer such broad benefits to the people of this state and that is the biggest piece of health care infrastructure that Minnesota has constructed in decades.
MP: TakeAction walked into this session with a friendlier climate at the Capitol. Has that been part of the political calculus moving forward, and what’s it like working with friendly lawmakers on such a huge project that’s the baby of everyone involved?
LD: We’re fortunate to have so many legislative champions at the Legislature. We’re fortunate to have so many health care champions at the Legislature.
I think a lot of lawmakers understand the health care crisis that Minnesotans are facing, and they want to figure out real solutions. That’s a real change from the last couple of years.
The health exchange is a good illustration of that. This stalled out for the last at least two years in a Legislature that was playing politics with this issue, and now we have a Legislature that wants to figure out real solutions to real problems Minnesotans are facing, and that’s very exciting.
This is an opportunity to build an exchange that this Legislature can be proud of and that Minnesota can be proud of, and that’s the opportunity before us in the next few weeks.
Buying power???
What surprises me is this belief that larger groups have more buying power than small groups. This just isn’t true. Health insurance is not like paper towels. A roll or paper towels is the same whether you buy one roll at a local convenience store or 60 rolls at Costco. Yes, Costco can buy them in bulk because the buy a lot more of them.
However, health insurance is different. Every group whether they are large or small has different risk. 3M is going to have a different risk than a similarly sized large group. They may in fact get a better rate than a small group, but they may also get a higher rate because their risk is different. It has nothing to do with their size and everything to do with their risk.
Also, an MRI costs the same whether you are employed by a small business or large business.
Bottom line, large groups do not get better rates simply because they are big. Their rates are determined by their health risk..
This article is a clear and valuable contribution to the discussion, particularly of the value to small businesses of the smart-purchaser provision on the exchange. Big companies routinely get better deals on healthcare rates than small businesses (and individuals) do, and small businesses are the ones we should believe. it’s the size of the pool, and one of the real beauties of Obamacare (the Prez likes the term and has appropriated it) is that our exchanges will provide a big pool for insuring individuals and small business employees.
Thanks for providing an interview with an informed enthusiast about these Obamacare health insurance exchanges! One who understands that Minnesota has a proud, progressive history to uphold in health care.
I disagree
Again, where are you getting your information that big companies get better deals on insurance? Employees of larger companies may pay less for their insurance but that’s because large employers typically pay a higher percentage of the insurance cost. The overall rate is independent of their size and based soley on their risk profile. A sick group of 500 could very well have higher rates than a healthy group of 2..
Also, individual plans typically have the lowest rates of all insurance, because here in Minnesota, individual plans are subject to underwriting and can be turned down for poor health. That means the individual pool has a higher percentage of healthy people in it meaning it is not used as much as group insurance. That makes the overall rates lower.
Starting in 2014, individual plans can no longer be underwriitten so insurance companied cannot turn anybody down. I’m not saying that it is a bad thing, but as a result you will likely see individual rates go up 60 – 80%
Why do the companies get to stop marketing and selling?
The exchanges might be used by 20% of Minnesotans. The companies would still need to promote their products to the other 80%. Eventually it is hoped that the exchanges cover more people as the ACA rules force more businesses and individuals into the exchanges but that may take awhile.
This idea of getting the money from those providing the help does fit with other recent healthcare improvements made by the government though. We are taxing the manufacturers of the medical devices that save lives and improve quality of life, we are reducing payments to the doctors that treat the patients, so it makes sense to withhold (tax) money from the insurers that provide government required health insurance that will help individuals lead healthier lives.
Large Employers Getting Better Deals?
One of the reasons that large employers are perceived to get better deals has to do with our current laws regarding how small employers groups are rated and priced. Currently in the small employer market insurance companies have to file rates for each of their products, from the rates they file they are allowed to deviate 25% on either side depending on the health risk of the group. This means that what “retails” for a $1 you can purchase for $.75 if you are healthy. If you are not health they are not able to turn you down but can charge you $1.25. Groups at the highest rating are paying 67% more than the groups at the lowest rating for the same product. The law of large numbers says that large employer groups will tend toward the community rate of $1 and would be getting a better deal than the higher rated groups. But this is due more to the stability of a large sample nearly as many employers are actually paying less than those paying more. When insurance companies are not allowed to adjust for risk in 2014 the healthiest group will by necessity see their rates go up by 33% plus trend while the unhealthiest groups will go down by 25% less trend. There are also more taxes and built into the premiums of small group plans the larger and quite often self funded groups do not have to pay.