Criticism, contention mounts over health insurance exchanges

Republican lawmakers have taken Gov. Mark Dayton to task for using a $4 million federal grant to help lay a cornerstone of President Barack Obama's politically-divisive health care law.

But Dayton administration officials, backed by documents, say that the governor has authority not only to use the $4 million, but $28 million in total during the current two-year budget cycle.

The controversy surrounds state-based health insurance exchanges that will allow private businesses and individuals to compare and buy health insurance, in the same way someone can comparison shop for airline tickets. The program is set to start in 2014.

Partisan political battles over how and whether exchanges should move forward have erupted in several states, including Minnesota.

In August, State Commerce Commissioner Michael Rothman announced his department would receive $4.2 million in federal health care money to lay the groundwork for Minnesota's health insurance exchange. At the time, he said the money would be used for setting up a panel of community advisors, choosing a chief financial officer, and creating designs.

Days later, Republican state lawmakers held a news conference challenging the DFL governor's authority to move ahead on an exchange without consulting the GOP controlled state legislature.

But Rothman said state law gives the administration authority to spend federal grants if it follows required budgeting procedures.

"That's exactly how we did it in fact," he said.

Here's the process for spending federal grant money in cases like this:

First, the governor must include the estimated federal dollar amount to be spent in his formal budget request. In this case, the document included a line item in the commerce department's budget because it's the agency overseeing the exchange. And state budget documents show the administration sought authority to spend not only $4.2 million but $28 million for the exchange planning.

Once the request arrives at the Legislature, a panel of top lawmakers, the Legislative Advisory Commission has 20 days to formally object or seek review of the request. If no member objects, the request is authorized.

The Minnesota Management and Budget office, part of the administration and the agency that handles the budget requests and any objections, received no objections, said spokesman John Pollard.

"The way this particular process goes, it was forwarded to the Legislature and they had a 20-day window in which to formally object," he said. "None of the legislators involved in the process did file any formal objections."

Pollard said at that point, since there was no objection from lawmakers, the Dayton administration had authority to spend $28 million in federal grant funds and could move forward using that money for the exchange.

BUT GOP Rep. Steve Gottwalt of St. Cloud, who participated in the earlier news conference challenging the governor's authority, isn't convinced the governor has the right to go ahead.

Gottwalt believes the governor should have made a separate, formal spending request through the Legislative Advisory Commission's 20-day process.

"For them to assert, simply because the governor puts something in a proposal that was never approved means [that] he can spend money, is a little problematic to say the least," Gottwalt said.

State Sen. David Hann of Eden Prairie, another Republican who spoke at the earlier news conference also disputes the governor's power to spend the money.

"I think they're walking a fine line, I guess, in claiming authority to do these things," he said. "But they clearly don't want to have legislative input on this. That to me is the fundamental issue."

Last month in an interview, Rothman said he is not trying to shut the Legislature out of the process and has worked actively to keep lawmakers informed.

In the final analysis, it does appear that the Dayton Administration did follow procedures set out in Minnesota law. Bill Marx, the chief fiscal analyst for the Minnesota House, a veteran in that non-partisan role, says it is standard legislative process for federal spending requests to come to the Legislature as part of the governor's budget documents.

"There is really no requirement that something that's in the budget documents be submitted separately or that it have any specific notations with it. It just needs to be part of those budget documents," Marx said.

In the end, whether the federal grant money would have survived more legislative input is an open question. Rep. Gottwalt proposed the creation of a health exchange but other GOP lawmakers tried to block Minnesota from carrying out the federal health care law.