It creates the Minnesota
Insurance Marketplace as a state health insurance exchange under the
federal Patient Protection and Affordable Care Act (ACA). The bill
must be passed by the end of March to meet federal timelines for
establishing an exchange. His bill has been heard by nine separate
committees and is currently awaiting a debate and vote on the Senate
floor.He said only one senator has not heard the bill in committee.
Lourey commented that the fact that his bill
is SF1 is "a statement by our leadership that it's our number one
priority as a caucus to have a state-based health insurance exchange
that will work for consumers and industry." He said he's trying to
listen to all voices so the exchange will have the right balance to
work for everyone. "SF1 represents the nuts and bolts of the
"The exchange is not true health care
reform," Lourey stated. "This is mostly insurance reform. Our goal is
to make sure everyone has access to affordable and valuable health
insurance. It will set a good foundation to build true, meaningful
health care reform. Right now we're rebuilding the insurance industry
to make sure people have access to the health care system. I'm a
health care guy at the end of the day."
The exchange gives individual consumers a
new way of comparing insurance products. "The value of the
exchange is that individual consumers can do, finally, an
apples-to-apples comparison of insurance products and understand how
they're going to meet their needs in a way that's never been available
before," Lourey said. "The exchange, to be viable, needs to be
competitive and attract individuals with and without subsidies and
small businesses to purchase products."
Insurance plans should compete on cost and
quality. When asked about competition, Lourey said, "I want
the plans to be competing on the quality and cost measures they're
able to provide. The prices are going to be set based on the actuarial
charts. The board is going to negotiate on the models we're looking
for and the criteria for participation. There will be a rate approval
process with the Department of Commerce and it'll need to be
Responding to a question about protecting
consumers, Lourey said, "We're going to empower consumers to have cost
and quality information they've never had before. We're going to trust
them to make good decisions. We're not going to guide them, but we're
going to make sure they have the unbiased information they need to
make good decisions, like consumers in other markets have, and we're
going to make sure the products available are in the interest of
consumers. There are products that are not really in the interest of
consumers and of our health care system."
"In Minnesota we have a very, very good
provider network, compared to the rest of the country, that operates
in a very narrow band of cost and quality," Lourey continued. "But
there's certainly work to be done in driving additional cost and
quality measures. We need to empower consumers and inspire providers
to do better. That's one of the most powerful tools: the pride and
Estimates show that 1.3 million Minnesotans
will seek coverage through the exchange by 2016. Lourey said
700,000 of those are from Medicaid programs. Another 200,000 are
estimated to come to the exchange simply because it's a good model,
even though those consumers aren't eligible for public subsidies and
are not required to use the exchange.
Lourey estimated that through the exchange
300,000 Minnesotans who are today uninsured will find a product for
themselves, along with the ability to access the care they need. That
figure does not include the federal Basic Health Plan (BHP), which
will be a new funding source for MinnesotaCare in 2015.
"That BHP option at the federal level is
incredibly important to us," Lourey said. "We'll be able to utilize
the BHP funding in 2015 to improve MinnesotaCare for our low-income,
working Minnesota families. That's a huge deal. We'll have a 12-month
bridge where we'll have to keep MinnesotaCare going with the current
funding. We're not going to dump MinnesotaCare families into the
exchange, because we know it will move them backwards in their access
to affordable coverage."
He said 500,000 people in Minnesota are
uninsured right now. It's estimated that 340,000 people will find
insurance through the exchange and the BHP. That will still leave
160,000 not covered.
SF1 creates the exchange as a seven-member
board in the executive branch. Six members will be appointed
by the governor and confirmed by the Senate:
- Three will represent consumer interests: one representing the
interests of individual consumers eligible for individual market
coverage; one representing individual consumers eligible for public
health care program coverage; and one member representing small
- Three will represent the health care industry: one representing
the areas of health administration, health care finance, health plan
purchasing and health care delivery systems; one representing the
areas of public health, health disparities, public health care
programs and the uninsured; and one representing health policy
issues related to the small group and individual markets.
The seventh member will be the state
commissioner of human services (currently Lucinda Jesson) or the
Conflict-of-interest rules are critical to
the exchange. "A core component of the bill is clear
conflict-of-interest rules to govern the exchange," Lourey said. "I
think it's critical to the functioning of the exchange, because it has
to attract individuals to come to the exchange to buy their insurance.
If we allow conflict of interest on the board, it goes directly
against consumer confidence in that board."
"We want expertise on this board and there
are experts who don't have a direct financial conflict of interest at
the time they're serving," Lourey continued. "The public is keenly
aware of these things and wants to know which hat an individual is
wearing when they're asked to make a decision about something that's
as important as what insurance products will be available."
The ability of the board to select only
health insurance plans that are in the interest of consumers is a core
component of the exchange. Lourey said there is a federal
requirement for a two-step process in order to be certified by the
exchange as a qualified health plan able to be sold on the exchange.
Step 1: Meet minimum federal and state
certification requirements; and,
Step 2: Be determined to be in the interest
He said the bill empowers the board to adopt
rules about additional criteria it wants the carriers to provide in
their plans to ensure they are in the interest of consumers. The rules
have to explain the measurement those criteria will be used against,
so that carriers, when they're designing their plans, can understand
the target they're trying to hit. "At the end of the day, the exchange
has the ability to select the plans that are in the interest of
consumers. I feel that's important to protecting the public and making
sure this exchange brings something of value to our system."
"I've been very, very protective of that
purchasing authority on behalf of the exchange," Lourey continued.
"That's a core component to making sure this exchange works and acts
as more than a website." He said six of the 10 states that have
exchange legislation have made selection a key part of their
exchanges, as well.
Insurance carriers are questioning the
conflict-of-interest and smart purchasing provisions. In
response to a question, Lourey said the bill is getting the most
pushback on the conflict-of-interest and purchasing provisions. He
said most of the pushback comes from insurance carriers, who say we'd
be stifling innovation if we prevent insurance products from being
brought on the market. The carriers say they are going to spend money
developing their products and having their plan reviews and rate
reviews done and then their developed plans could be barred from
access to the exchange. "They ask me, 'What's the incentive to develop
Responding to a follow-up question, Lourey
asserted that some products are not in the interest of consumers.
People are buying them because of low premiums, only to find that it's
a trap. "They have high deductibles that people can't meet," he said.
"The plan's structure is only good if you stay healthy."
"But," Lourey continued, "giving the board
the authority to select plans able to sell their products based on
value and in the interest of consumers is very different from the
exercise of that authority. Massachusetts has selection built into
theirs. They've used it to drive some value out of the market, but
they've never had to exercise it by excluding a plan from their
market. They've asked for a better product and they've gotten it. The
authority can be used to drive better value out of that market,
whether you ever exercise that authority or not."
The Department of Human Services has
demonstrated the importance of having tools to leverage value from the
exchange. He mentioned that for the last few years, the
Department of Human Services has used competitive bidding and profit
and growth caps on at least some managed care plans that run its
public programs. "They've used that leverage to drive value out of the
market," he said. "Use of those tools produced a $1 billion savings
for the upcoming biennium. It's a good demonstration of the need to
have some tools to leverage value."
Minnesota's earlier health insurance
exchange failed because of adverse selection. An interviewer
asserted that an earlier Minnesota attempt at something like an
exchange failed because of adverse selection - a situation in which
people at higher risk buy and use more insurance, thus raising the
cost of premiums, incenting lower risk enrollees to leave the market.
He said the bill provides clear tools for preventing adverse
selection. In SF1, the exchange is able to set certification
requirements inside the exchange to prevent adverse selection. "That's
a stopgap," he said. "The most effective tool that we just don't have
time to get past the Legislature by March is to adopt the same rules
inside and outside the exchange." "It is our intent to pass a bill,
which was recently introduced, to do just that," Lourey stated. "It
will be another difficult task to get it through the Legislature."
A Minnesota-based exchange will be superior
to a one-size-fits-all federally designed exchange. "We have
an opportunity to do it the Minnesota way," an interviewer commented.
"We want to inform consumers and give them incentives. They'll choose
on quality, but they won't choose on cost unless they have incentives.
Can we get that system up and going before the feds start to impede
us? They'll ignore us, if we don't have it running. It's just talk. If
the exchange is running, the whole country will come here to see this
thing that measures provider quality and cost. We have all the
measures we need. Right now Minnesota Community Measurement has a
measure to tell us what providers are costing."
Lourey replied, "We say in SF1 that we'll
use the best cost and quality measures that are available in
Minnesota. Maybe it'll be Minnesota Community Measurement for a
while." He also discussed the Provider Peer Grouping (PPG)
measurements, which he said are going through a second round of
improvements to give providers a better look at how they perform
He said some people are asking why Minnesota
is setting up its own exchange rather than letting the feds come in
with a federal exchange.
"Minnesota has been a national leader in
health care and health care reform for decades," he said. "We need to
have a Minnesota-based exchange. It's a lot less expensive. We can
build a better model for a lot less money."
The federal exchange, he continued, is a
one-size-fits-all system and is going to be expensive. He said the
Minnesota exchange would be financed at the start by holding back 3.5
percent from the premiums for products sold on the exchange. By the
end of 2016, it's estimated the holdback can be lowered to two percent
"With a Minnesota-based exchange," Lourey
said, "we'll have a better one that's built on Minnesota's history and
tradition of being a leader in health care. It's going to be
significantly less expensive and drive better value out of the
insurance marketplace than if we let the feds come in. In my book,
it's a no-brainer that we've got to get through this. It's hard work,
but it's important work."
The exchange will be one tool to address
health care problems in Greater Minnesota. An interviewer
asked if the exchange would work in Minnesota, a state that's divided
into urban and rural. She also asked if it's good that large health
systems are spreading out across the state.
"Making sure we have sufficient provider
networks to cover the whole state is really critical," Lourey said.
"The minimum certification requirements are why some of our Greater
Minnesota networks are not as robust as they should be. These are
going to be phenomenal tools to help address longstanding problems
we've had outside the metro area."
Care in greater Minnesota is hampered by
loss of primary care physicians because of the medical school debt
load on students, he continued. They're going into specialties instead
of primary care. "The exchange could be one of tools to try to combat
some of those dynamics that we're worried about."
People will be available to help consumers
use the exchange. In response to a question, Lourey said
there would be a new group of people paid to help consumers on the
exchange navigate the system to find the plan that best meets their
needs. He said insurance agents and brokers will operate both outside
and inside the exchange. The estimate is that 75 percent of small
businesses using the exchange will still be using an agent and a
broker. About one-third of individuals will use an agent or a broker.
But there's still a large population that
isn't going to have that, he continued. "The website is available.
There are call centers. There are assisters and navigators. Our
Community Action Partnership (CAP) agencies love the concept of being
able to be navigators. They can help people understand how to use the
tool in an efficient manner. The Urban League, many counties and the
Minnesota Aids Network have come forward and would like to engage in
that role. We estimate that about one-third of people not using a
broker would want to use a navigator or assister." He said the bill
sets aside $105 per enrollee to pay for the navigators and assisters.