MBP Letter: Senate File 1 – Minnesota Insurance Marketplace

TO:           Members of the Minnesota Senate
FROM:   Beth McMullen, Health Policy Director
DATE:     March 7, 2013
RE:            Senate File 1 – Minnesota Insurance Marketplace

The Minnesota Business Partnership does not support Senate File 1, the enacting legislation for the Minnesota Health Insurance Exchange, as currently drafted. While this bill has evolved through the committee process, it still contains a number of problematic provisions.

Active Purchaser
We oppose the concept of the active purchaser model as an unnecessary and perhaps harmful provision. The establishment of additional selection criteria by the Exchange Board is an unnecessary step that will limit consumer choice, inhibit plan participation and hinder healthy competition. There are substantial consumer protections in existing state and federal certification process for approval before sale of insurance products inside the Exchange.

Board of Directors/Operations
We still have concerns about the structure of the Exchange Board, which is small and excludes industry stakeholders from any participation. While federal guidelines say that a governing board should not be made up of a majority of representatives with a conflict of interest, they do contemplate, as do the Exchange Task Force recommendations, a board with some direct, current experience in health benefits administration, finance, and purchasing. We would prefer a larger board with an appropriate recusal process instead of the additional conflict of interest provision.

We also have continued concerns about the exemption of the Exchange from multiple oversights and standards applicable to other state agencies. While we appreciate that the Exchange is a new entity, which must adhere to new regulations and changing market forces, we believe that as a state agency, there should be strong legislative oversight and public accountability for all board actions and Exchange functions.

Budget/Financing
We still maintain that the overall cost of the Exchange in this bill is concerning. There should be very strong legislative oversight of the Exchange budget and functions.

We also opposed the original 3.5% premium “withhold,” and appreciate the change to the more broad-based funding mechanism in the Senate bill. The withhold, was essentially a new premium tax that would fall on individual and small business consumers in the fully-insured market.

The MBP continues our long-standing support for a Minnesota-based Exchange rather than defaulting to a Federal Exchange. However, we think this legislation needs additional work to address our concerns stated above.