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N.M. Insurance Exchange Stalls

By Colleen Heild, Albuquerque Journal, N.M.
McClatchy-Tribune Information Services

Feb. 26--Less than a year ago, New Mexico appeared ahead of the curve on setting up a state-run exchange to help tens of thousands of uninsured New Mexicans buy health insurance.

After securing a $34 million federal grant for the initial start-up, another $107 million infusion appeared within reach. Vendors were about to be selected; contracts were waiting to be signed.

Gov. Susana Martinez was to be among the few Republican governors in the country to create a state-run health insurance exchange -- a key provision of the controversial Affordable Care Act also known as "Obamacare."

An estimated 73,000 New Mexicans were predicted to sign up for a state exchange in 2014. About 250,000 could be eligible to use the exchange from 2014 to 2020.

But time is running out and now the process has been bogged down in a political dispute over how the exchange should work.

As of Monday, no contracts had been awarded and the state never applied for the $107 million. The state attorney general has ruled the administration's plan didn't conform to federal law.

And a Democratic legislative effort to quickly approve a state-run exchange with a different focus than proposed by the administration has stalled on the House floor.

Three weeks of private negotiations earlier in the legislative session between the administration and health care advocates on a compromise bill "basically broke down," Rep. Mimi Stewart, D-Albuquerque, said during a recent hearing before the House Judiciary Committee.

The Martinez administration favors an exchange that "would be more of an Amazon. com style approach to shopping for insurance ... purchase, click and buy," according to a legislative analysis.

But health care advocates and many Democrats back an exchange that would act on behalf of enrollees in selecting eligible insurance plans and offer more consumer outreach.

"It comes down to a free market exchange versus an active purchaser exchange," Human Services Department spokesman Matt Kennicott said. "We never came to agreement on that so we are where we are."

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Sen. Gerald Ortiz y Pino, D-Albuquerque, said New Mexicans would benefit to a greater extent from a more active purchaser exchange to help them choose the best plans for their needs and make the most of the premium credits provided by the federal law to eligible enrollees.

With the more minimalist approach favored by the administration, he said, "People would be buying policies they're unhappy with and the subsidies will be wasted."

The negotiations did lead to a compromise on the makeup of a governing board for an exchange.

Advocates sought to eliminate the influence of private insurance companies in the entity proposed by the Martinez administration to oversee the exchange.

They were backed by the office of Attorney General Gary King, who says he is running against Martinez for governor.

King's office in a December opinion said the dominance of the insurance industry on the proposed exchange board of directors violated the Affordable Care Act's provisions on conflict of interest.

The Martinez administration had turned over responsibility for operating the exchange to a little-known entity called the New Mexico Health Alliance, a quasi-governmental agency set up by the Legislature in 1994.

Members of the Alliance are by law "all insurance companies authorized to transact health insurance business in the state," according to the AG's opinion. State law establishes its governing board as a combination of insurance company representatives, small employers and their employees.

The makeup is such that the insurance industry could exercise majority control if some vacancies occur in the non-insurance-related seats, according to the AG opinion. That would violate the Affordable Care Act, it concluded.

If no exchange legislation is passed and signed by Martinez, the federal government would likely set up an exchange by default.

Ortiz y Pino said that while no one "wants a federally run exchange, there are groups who would prefer that to what they consider to be a poorly designed New Mexico exchange. At least they wouldn't be beholding to the insurance industry."

In both camps, nearly everyone seems to realize what's at stake.

"Of all the things we do this session, this might be the most important," said state Rep. Nate Gentry, R-Albuquerque.

Gentry was among the six Republicans on the House Judiciary Committee who voted against Stewart's state exchange bill -- which had been considered to have the best chance of winning legislative approval.

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Republican committee members voiced support for a competing bill sponsored by Rep. Tom Taylor, R-Farmington, that they saw as more "free market."

Neither Taylor's bill or proposed exchange legislation sponsored by Benny Shendo, D-Jemez Pueblo has much traction. Neither measure had been heard by a legislative committee by Monday.

"It is a once-in-our lifetime opportunity to get coverage for almost one in two New Mexicans who either have no coverage or marginal coverage," said Barbara Webber, executive director of Health Action New Mexico. "The moment is ours to lose."

Legislation needed

The AG's opinion said the Legislature needs to enact authorizing legislation for the insurance exchange to pass legal muster.

And some advocates say they will file a lawsuit if Martinez tries to move ahead on her own.

A total of 33 states have rejected state exchanges so far, according to the Center on Budget and Policy Priorities.

Of those intending to create state-based exchanges, 10 states and the District of Columbia, have enacted authorizing legislation. Three are relying on executive authority, and New Mexico is one of four where legislation establishing an exchange is pending, the center reported. Seven others are slated to enter partnerships with the federal government.

Meanwhile, the Alliance since last November has been gearing up to select a project manager and a firm for the sizeable information technology portion of the exchange project.

One of the finalists has hired former state Insurance Superintendent Morris "Mo" Chavez as a lobbyist for the legislative session. Chavez said last week he thought there would be an announcement several weeks ago on the winning vendor.

Vendors for the information technology portion and project management were supposed to be selected by Feb. 1, according to a legislative analysis. Stewart has said the administration put the contracting on hold during the negotiations.

Mixed messages

There have been mixed messages as to how quickly the state must act.

Stewart told the Judiciary Committee an exchange bill needed to be passed and signed by Martinez "in the first or second week of March."

All exchanges must be ready to begin enrolling consumers Oct. 1, and must be fully operational on Jan. 1, 2014.

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"These deadlines are not negotiable," a legislative analysis stated, adding that it will take up to six weeks for any new exchange to get approved to receive federal funding for implementation.

Yet, Kennicott of HSD wasn't sounding any alarms.

"I would say we're well ahead of where other states are at this point. The federal government has actually said that they would be flexible on meeting some of these deadlines. Part of it is we honestly don't think the feds are going to be ready on their end."

'Marketplaces'

Exchanges, also described as "marketplaces," are where individuals and small businesses will be able to shop for coverage.

Kennicott said a state excha nge, wh ich wou ld require no state tax subsidy, is the administration's preferred pathway.

"In a federal exchange you have health plans that are basically one size fits all. If you have your own state-based exchange, you have health plans that are basically here in the state and they're run by companies in the state and run by people who understand the needs of New Mexicans," Kennicott said.

The Robert Wood Johnson Foundation, which is tracking and monitoring health care reform efforts in New Mexico and nine other states, gave the state kudos for initially setting up a Health Care Reform office under the prior administration of Democratic Gov. Bill Richardson.

But the foundation in a report last year said the exchange implementation in New Mexico has been "difficult."

Last November, however, Martinez's administration conf irmed it would proceed with a state exchange. This came after she vetoed exchange legislation in 2011 and the Legislature failed to pass a bill to create an exchange in 2012.

Martinez's administration recruited Dr. Dan Derksen to head the state Office of Healthcare Reform earlier in 2011. Under Derksen, the state received more than $34 million in federal funds to help create the exchange.

Derksen was about to apply for another $107 million in federal assistance to continue implementation when HSD Secretary Sidonie Squier put on the brakes. Derksen resigned in March 2012.

At the time, Derksen said only that the administration decided to move in a different direction. Now working at the University of Arizona in Tucson, Derksen praised Martinez in an interview last week.

He said he admired her "courage to cover uninsured New Mexicans through expansion of Medicaid and through the proposed state health insurance marketplace."

Kennicott said the administration opted against seeking the additional federal money after Derksen left, preferring to take a "closer look" on how to proceed.

He said last week there are now plans to apply for an additional $8 million in federal funds for administrative costs.

"We wanted to make sure we were doing this in the right way. It's good to go and get money but at the same time you need to make sure you are getting it for the right purposes and it will be expended in the right way."

Ortiz y Pino lamented Derksen's departure, saying his work "would have put us months ahead of schedule, and he's a Republican."

Stewart's idea

Stewart's bill would set up a new exchange entity, with a 13-member governing board, but allow any exchange-related contracts enacted by the Alliance to transfer over.

Such an exchange wouldn't be required to account for its expenditures to the Legislature and would be exempt from state procurement rules and the state personnel act, according to a legislative analysis.

The operation will involve substantial revenue and expenditures that will occur outside of the oversight of the executive branch and the Legislature, the analysis noted.

Some other states have opted to operate exchanges within the executive branch or set up independent state agencies, the analysis added, "presumably with greater oversight and accountability by the Legislature and the public."

___

(c)2013 the Albuquerque Journal (Albuquerque, N.M.)

Visit the Albuquerque Journal (Albuquerque, N.M.) at www.abqjournal.com

Distributed by MCT Information Services

Wordcount:  1736


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