Minn. could still get insurance study grants that Pawlenty nixed

Minnesota may have a second chance to get some of the health care money that Gov. Tim Pawlenty passed up recently.

Three weeks ago, Pawlenty ordered state agencies to stop applying for discretionary federal health care reform grants. That included million-dollar grants available to states to set up their health insurance exchanges, a key component of health reform.

Pawlenty opposes what he calls "Obamacare" and views it as an intrusive federal mandate on states. He's vowed to block what he can during his remaining months in office, but he may not have the last word on whether Minnesota gets the discretionary grant.

"I think the governor is pretty clear he doesn't want ... to make this application, [but] maybe a new governor would," said Joel Ario, a former Pennsylvania insurance regulator and St. Olaf grad President Obama recently named to head of the health insurance exchange system.

It is a possibility. All of Minnesota's major party candidates for governor have said they don't categorically oppose taking federal health reform dollars.

Ario wouldn't make any promises, but did point to a previous instance where the U.S. Department of Health and Human Services allowed states to apply for money even after it closed the review process.

"That would be a precedent under which Minnesota could argue, a new governor [could] say, why don't you reopen the exchange grants like you did like the rate review grants?'"

LOTS OF QUESTIONS TO SETTLE

An estimated 32 million more Americans will join the ranks of the newly-insured in 2014. They're expected to use state-based, virtual portals to buy their health care policies.

These exchanges will function a bit like online travel sites -- but instead of comparing hotel amenities or non-stop flights, individuals and small groups will compare health care benefits.

States must prove they can operate an exchange in a little more than two years. That may seem far off. But it's not, if you're part of the group trying to create one, said Lynn Blewett, one of the members of a Minnesota legislative working group charged with the task. Lots of questions are left to settle, she said.

"Should we have a single state exchange, or multiple exchanges throughout Minnesota? You'd want to know what the implications are of that," she said. "If we had three different kinds of exchanges in Minnesota, would we pool everybody together? In separate pools? And then how do we determine the premiums and what if the premiums are different?"

To answer those questions, Blewett, who's also a University of Minnesota health economist and researcher, said the group needs to gather comprehensive information on the state's different insurance markets.

The federal health care reform law provided funding for that kind of research and planning through grants for each state, but Pawlenty passed up that money last month when he issued his order barring state agencies from applying for any of the law's discretionary grants.

Click to see what a health insurance exchange might look like in Utah, in Washington, or in Massachusetts.

Blewett said Minnesota needs that funding.

"That money can be used to model how we set up our exchange in Minnesota and we currently don't have the capacity to do that kind of analysis," she said.

Next door, Wisconsin is well ahead of Minnesota. Wisconsin Department of Health Secretary Karen Timberlake said Wisconsin started analyzing insurance markets with an eye towards setting up an exchange for small businesses two years ago.

The research provided an important foundation for building an exchange, she said.

"It really painted a picture about inequities, or at least challenges, in finding affordable access to health insurance and that's what we believe the exchange can solve," she said.

Wisconsin did apply for the $1 million exchange grant. Timberlake said the state plans to use that money to launch another insurance study -- this time on individual and small group markets.