A signature element of the Affordable Care Act (ACA) – “Obamacare” – is the establishment of state health care exchanges to provide coverage to citizens nationwide, as they will soon be required by law to have insurance. Many states have opted to not set up such an exchange, putting that responsibility back on the federal government, a move Congress did not anticipate (or pay for) when it passed the ACA a few years ago. Minnesota, however, will set up such an exchange at the cost of tens of millions each year. Its implications will be huge and unpredictable and its positive impact may be limited.
These exchanges are complicated entities hooked up to a sophisticated regulatory network that Minnesota doesn’t have the bandwidth to handle. Its for this reason, among others, that our neighbors in Wisconsin, Michigan, Iowa, North and South Dakota have all opted out of setting up such an exchange. There are not clear requirements for these exchanges from the U.S. Dept. of Health and Human Services (HHS) and funding is also questionable. Down the road, the exchange could cost MN taxpayers hundreds of millions if the new fees it will impose fall short.
Minnesota’s state health insurance exchange (HIX) will cost $54 million in 2015 to operate, according to Gov. Mark Dayton’s administration. The cost comes in at greater than earlier estimates of $30 to $40 million. The state would not have to find the money until 2015, when the state exchanges are required to be financially self-sustaining. But the cost rises to a projected $64 million in 2016. State officials are still weighing how the exchange will pay for itself. The exchange will create an insurance marketplace where consumers and small businesses can comparison shop for health insurance policies starting in October 2013. Coverage would take effect in 2014.
Governor Dayton has spearheaded the effort to set up the exchange and has utilized new DFL majorities in the legislature to move the bill forward. A new 3.5% fee will be charged of all Minnesota health insurance plans (whether or not you use the exchange) to pay for its existence. In short, the cost of health insurance for all Minnesotans with current coverage will increase. The opposite of what we’ve been told about Obamacare.
Even more concerning is the new super agency panel that the exchange will be governed by. Citing “independence” as a factor, designers are creating a seven-member board of directors appointed by political leaders in Minnesota to run the operation. These bureaucrats will be unaccountable and unelected, but will have complete authority over the exchange spending and the ability to levy new taxes on Minnesotans. This is similar to the Independent Payment Advisor Board (IPAB) that Obamacare set up on the federal level that has received heavy levels of fire from government watchdog groups and conservative thought leaders.
Unfortunately, before Obamacare, Minnesota had a decent operation for caring for Minnesotans that can’t afford insurance. We have one of the lowest rates for uninsured, and many of those are citizens that choose to not have health coverage for various personal reasons, not financial ones. Now, all Minnesotans will see their coverage change, get worse, get more expensive, or become less credible as a result of this new marketplace for the sake of a small fraction of consumers without coverage. The exchange encourages employers to drop coverage for their employees now so that each citizen can be forced into this exchange to select their new government coverage if they don’t have any.