State task force begins work on crafting health insurance exchange

You may have heard about health insurance exchanges. They're often likened to websites like Travelocity or Expedia -- places where consumers can compare and purchase competing products in the free market. But so far, there haven't been many details about how they'd work.

Now, members of Gov. Mark Dayton's insurance exchange task force met for the first time Tuesday in St. Paul to begin the job of shaping an exchange for Minnesota. The online marketplaces are a key part of the federal health care law that will allow individuals and small groups to comparison shop for health insurance starting in 2014.

At the meeting, task force officials such as the exchange's director, April Todd Malmlov, dove into some of the specifics of how consumers might use them.

"They would go to the exchange and be asked some very simple questions: for example, what is your age? Where do you live? Potentially what's your income? And what are your preferences for health insurance? And then the exchange would then use that information and come back and say, 'These are the choices that you have; these are what you may be eligible for; and this is the cost of those things,' " Malmlov said.

In addition to individuals, the exchange will also be open to small groups such as small businesses. What is unique about exchanges is that they will provide employers with more choices for their employees. Malmlov said.

"In the market today, generally a small employer picks one plan and all the employees enroll in that one plan," Malmlov said. "What an exchange does is says, 'You have the choice of offering your employees... a variety of different plans that you might want to enroll in; provide a specified dollar amount that they can use; and [they can] pick what plan is best for them.'"

While the concept is pretty straightforward, the advisory task force has to determine how to make it all work.

But as the meeting progressed, it became apparent that the complexity of an exchange is an enormous task and some members said they were overwhelmed. They will have help, however — plans call for finding another 100 to 180 people to serve on 10 technical working groups.

The sub-groups of 10 to 20 people will provide technical assistance on questions including:

• Who will govern the exchange — A non-profit? A state agency?
• Who will help consumers find policies on the exchange? Agents? Brokers? Social service agencies?
• How to encourage market competition and value.
• How will quality be measured?
• Who will help small employers and their employees navigate the exchange?

Members raised a few questions during the meeting. For example, how much clout did they, as an advisory task force, have in deciding the final shape of the exchange? Gov. Dayton has assigned the state Commerce Department, headed by Commissioner Michael Rothman, to develop and design the exchange. But it was unclear from the meeting who exactly would make the final decision.

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Others raised more technical questions, particularly about insurance markets. One of the legislative members, Rep. Tom Huntley, D-Duluth, said he was concerned about so-called adverse selection. He said the people who are likely to be inside the exchange are going to be lower income and probably have more illness than people outside the exchange.

"And if you have insurance companies that have to sell plans both places and charge the same, that premium on the outside for that identical plan seems to me is going to be more expensive than other plans outside the exchange. Somehow we're going to have to figure out how to deal with that," Huntley said.

By the meeting's end, it was clear the panel had many complex and thorny technical issues to deal with. And they have to sort through them in a highly charged political environment.

Many Republicans have opposed an exchange largely because it's part of President Barack Obama's health care overhaul. The Dayton administration had two seats reserved on the task force for Republican legislators. But no GOP lawmakers attended the first meeting.

Elizabeth Stawicki prepared this report as part of collaboration between MPR News, Kaiser Health News, and NPR.

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