MNsure board should not exclude health plans from exchange: Obama administration health care fix reveals why

Today the board of MNsure, Minnesota’s health insurance exchange, is scheduled to vote on whether to move forward with an “active purchaser” approach that will allow MNsure to essentially pick and choose the health plans and choices offered on the exchange.  The new health care law already restricts health plan choices. This has the potential to add more restrictions and to further politicize health care in Minnesota.

The Obama administration’s latest “fix” to the new health care law offers a powerful lesson on why the MNsure board should not adopt an active purchaser approach.

Last week the administration announced steps to fix enrollment issues caused by the botched rollout of the insurance exchanges and the cancelation of millions of individual policies.

These steps include pushing back the enrollment deadline for exchanges to December 23, pushing back the deadline to make the first premium payment to December 31, and extending the operation of the federal high risk pool by a month.  In addition, and this is where the problem starts, the Obama administration is “encouraging” insurers to give consumers even more flexibility on when they can enroll and pay, and “strongly urging” insurers to cover more expensive out-of-network doctors and off-formulary prescription drugs in January.  Notably, insurers are being urged to cover people retroactively if they enroll after January 1.

The New York Times’ Robert Pear reports: “While these steps are voluntary, federal officials said they could consider an insurer’s response in deciding whether to allow the company to participate in the federal exchange in 2015.”

This possibility is specifically spelled out in the background to the regulatory fixes announced last week.  Here’s how it is communicated in the Federal Register.

We are considering factoring into the [qualified health plan] renewal process, as part of the determination regarding whether making a health plan available is in the interest of qualified individuals and qualified employers, whether consumers have up-to-date provider directories and how QHPs ensure continuity of care during transitions.

The message to insurers is clear: If you want your products to be included in the federal exchanges next year, then you’d better cooperate now.   As Manhattan Institute Senior Fellow and Forbes contributor Avik Roy put it, “this is kind of like the Mafia saying that it will ‘consider’ the amount of protection money you’ve paid in its decision as to whether or not it vandalizes your storefront.”

At the end the day (and just a couple weeks before new insurance plans are to go live), the Obama administration is demanding insurance companies adjust enrollment and benefits on a case-by-case basis under threat of expulsion from the market. 

So here we have the first example of an active purchaser in action.  Overt threats, unreasonable demands and strong arming, this is what active purchaser already looks like at the federal level.

The administration’s threats at least have the redeeming quality of being open and transparent, but don’t expect such openness in the future.  The only reason the administration is open now is to shift much of the blame for the inevitable coverage problems that will arise in January to insurers deemed uncooperative.  Without a political reason to be transparent, expect the public to be in the dark on future “negotiations.”    The administration has already pressured insurers to keep quiet in other instances.  After White House staffers contacted insurers over their criticism of the administration in late October, CNN reports how “multiple sources declined to speak publicly about the push back because they fear retribution.”  It’s safe to say the fear of retribution will move future active purchaser negotiations to the backroom. 

This is a glimpse of the future of MNsure if it takes an active purchaser approach.   To some degree or another, backroom negotiations, unreasonable demands, administrative overreach, expulsion threats, and political interests will all become part of the process.   

Even if nothing all that nefarious went on, the active purchaser approach still injects politics into the process because it sets the exchange up to make value judgments over which plenty of folks will disagree.  Instead, MNsure should allow health plans that want to offer policies on the exchange to do so without interference.

The last thing we need now is more politics in health care.  Fortunately, protecting consumers doesn’t need to be political.  The Minnesota Department of Commerce has long reviewed Minnesota’s health insurers on an even-handed basis without stirring up political hornet nests.

Hopefully the MNsure board sees all these things and concludes adopting an active purchaser approach is the wrong decision.  At the very least, they should see it’s the wrong time to consider it.  With all the ongoing problems—including the 1,000 users told to redo their applications, the risk of security breaches to private data, the inability of insurers to get info on enrollees, the call center wait times, the website downtime, and the resignation of the MNsure executive director—MNsure has far more important things to do.