Window closing on state-run health exchange

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With her declaration last year that New Mexico would develop a cornerstone of President Obama’s federal health care law, Gov. Susana Martinez bucked many of her Republican colleagues across the nation.

New Mexico, she said, would set up its own state-run exchange, a one-stop shop for people hunting for health insurance that could lower the rate of uninsured in New Mexico, where one in five residents lacks coverage.

Now, several months later and with deadlines looming, the window for creating a state-based exchange in New Mexico is starting to close.

In May, the federal government will review how much progress states like New Mexico have made in setting up state-based exchanges. Washington could force a state that hasn’t progressed far enough into a partnership with the federal government or require a federal takeover of its exchange, according to Cheryl Smith, a director of Leavitt Partners, a Utah-based consulting firm the Martinez administration brought in last year to advise it on how to set up an exchange. Smith was speaking to members of an advisory task force last week.

How to run a state-based exchange is a divisive issue in Santa Fe, the state capital. But the quickest way to unify Republicans and Democrats, conservatives and liberals, consumer advocates and representatives of health insurance companies, who often square off on opposite sides of a state-run exchange, is to mention a federal takeover.

“That’s the last thing we want,” Rep. Nate Gentry, R-Albuquerque, said of a federal exchange Thursday on the floor of the House of Representatives as the chamber debated House Bill 168, sponsored by Rep. Mimi Stewart, D-Albuquerque. The Martinez administration and Democrats had tried to find common ground on the legislation with weeks of negotiations in the early part of the session, but those talks faltered. The House rejected the bill 30 to 39.

Have any lawmakers visited an Indian Health Service facility or a Veterans Administration hospital, Gentry asked his colleagues? “I wouldn’t want that kind of quality of care,” he said.

Roxane Bly, Director of the Bernalillo County Off-Reservation Native American Health Commission, feared a Washington takeover too – for a different reason. A federal exchange would mean a “significantly diminished experience” in health care for Native Americans, she said.

Some state officials and consumer advocates wonder if the window to set up and operate a state-run exchange for the first year of its existence – 2014 – already is closed, making the debate in Santa Fe about how the exchange will work in 2015 or later after the federal government steps in for the first year.

Martinez administration officials might be hard-pressed to make the case that New Mexico is on schedule to run a viable exchange by Oct. 1, when New Mexicans should be able to start enrolling in the virtual marketplace. Health coverage for New Mexicans enrolled in exchange would take effect Jan. 1, 2014.

As of last week, the state had spent only about $2 million of the $34 million federal grant New Mexico won in November 2011. Meanwhile, it has not hired a vendor to build the exchange’s computer framework or let a contract to hire a program manager who would oversee the vendor’s progress, said Matt Kennicott, a spokesman for the New Mexico Human Services Department.

Everything, in fact, is on hold as the administration tries to negotiate a deal with the Democratically controlled Legislature that would clarify how the New Mexico’s exchange would work. With two weeks to go in the session, no deal has surfaced.

The administration chose to try to negotiate a deal rather than go to court after a consumer advocacy organization threatened to sue the Martinez administration earlier this year, Kennicott and other administration officials said.

Hope remains there is enough time to strike a deal before March 16, the last day of the legislative session, to show Washington that New Mexico is progressing toward a state-run exchange.

If no legislative deal emerges in the next two weeks, the Martinez administration has said it would give the go-ahead to set up the exchange.

But that likely would send the issue to the courts. Consumer advocates, and their Democratic allies, including Attorney General Gary King, who has said he is a candidate for governor in 2014, insist the administration cannot set up the exchange without legislative approval and say a legal challenge likely would happen. The administration argues the governor has the authority to set up the exchange without legislative input.

A difference in philosophies

The biggest challenge to a deal on a state-run exchange is a fundamental disagreement the Martinez administration and consumer advocates and their Democratic allies have over the role of government in health care.

“It’s a policy difference. It’s not a political difference,” Rep. Thomas Taylor, R-Farmington and sponsor of another exchange bill, said during Thursday’s debate in the House of Representatives. “A free-market exchange versus an active exchange.”

The disagreement boils down to how much authority to give the board that oversees the exchange, according to Kennicott and Gail Evans, legal director for the New Mexico Center on Law and Poverty.

Kennicott and Evans met face-to-face a handful of times over the first few weeks of the legislative session to negotiate House Bill 168, supplemented by numerous e-mail exchanges and phone conversations, both said.

Kennicott and Evans said they were able to find compromise on many controversial points – how many members are to sit on the board, how many are representatives of health insurers, and how many are consumer advocates. They also agreed on how the members were to be appointed. The governor would appoint six; the Legislature would appoint five, according to a summary of the legislation.

Where the negotiations foundered was over the role of government.

Consumer advocates, and their Democratic allies, want language in legislation that would give the exchange board discretion to decide how to manage the virtual marketplace.

The language does not mandate how the board should run the exchange. But consumer advocates and their Democratic allies hope that, once in place, the board would take on wide-ranging powers that would help protect consumers. One example would be a board that could require a health insurer to offer one of its products statewide, including in rural areas, and not only in population centers such as Albuquerque, Santa Fe and Las Cruces.

In contrast, the Martinez administration wants language that expressly forbids giving the board that kind of discretion, saying New Mexico’s Division on Insurance, which regulates health insurers, already is required to make sure plans offer a basic set of benefits and that health insurers are financially viable.

The exchange the administration favors is often described as an open-market model, with minimal government regulations.

A way to think of the open-market exchange is as a “farmer’s market,” said Smith of Leavitt Partners. “We’ll give you a shed. Everyone gets a booth. You can come in and sell your wares.”

The administration’s stance toward the exchange is based on a belief in an individual’s ability to choose what is best for him or her, Kennicott said.

“Consumers are smart,” he said, adding that New Mexicans enrolling in the exchange will have access to workers who can help them sort through the competing plans.

But Evans of the New Mexico Center on Law and Poverty dismisses what she sees as the administration’s free-market rhetoric.

“This is not a free market,” Evans said. The federal health care law requires people to have health insurance, she said, adding, “I think it is ridiculous when they talk about a free market like people are going to McDonald’s.”

Evans and other consumer advocates, and their Democratic allies, doubt that many New Mexicans using the exchange would be able to navigate the exchange easily, noting that some state residents have little experience with the health care system.

New Mexicans who make more than 138 percent of the federal poverty level — around $15,000 for an individual and nearly $32,000 for a family of four — are eligible to use the exchange. New Mexicans making 138 percent of the federal poverty level or lower will qualify for Medicaid, the government’s low-income health insurance program.

State’s commitment to outreach questioned

A meeting of a task force advising the Martinez administration on the exchange last Wednesday exposed the passions surrounding the issue of outreach to Native Americans. Tribal leaders are worried the state won’t commit to vigorous outreach to their communities.

Representatives from the state’s tribal communities said they were concerned that plans to develop a Native American Service Center, which would be part of the exchange, were on hold. The center is essential to helping Native Americans navigate the exchange and its complexities, they said.

Health insurance “is an alien experience for the Native American consumer,” said Bly, who sits on the advisory task force for exchange issues.

More than 200,000 Native Americans live in New Mexico, or roughly one tenth of the state’s population. Many use the Indian Health Service for medical care, which operates more like a hospital or clinic than a managed care organization coordinating care.

“The tribal leaders are not going to back down on this,” Bly said.

To market the exchange, the state must find people who know how the exchange works, including all its intricacies, and can translate that clearly. These people also have to be familiar with the communities in which they would explain the exchange to their fellow New Mexicans, officials said. Given the state’s ethnic and racial diversity, these “navigators” also would need to speak the predominant language in their community. English, Spanish and several tribal languages are spoken in New Mexico.

“There is a concern that there will not be enough navigators for Native Americans,” Joyce Naseyowma Chalan of Taos Pueblo told the advisory task force.

Also of concern is how navigators will be paid, at least in the first year of the exchange’s operation.

Currently, federal funds can pay to train “navigators” but not their salaries.

Exchanges are supposed to pay navigators under the federal health care law. But because the exchanges aren’t set up yet, there is no money to pay navigators, state officials say.

So far, the Martinez administration has resisted the idea of using state dollars to pay “navigators.” Instead, federal dollars can pay salaries for “in-person assisters,” a category of temporary worker who can help individuals with the exchange during the transition period, said Milton Sanchez, director of Martinez’s Office of Health Care Reform, which is helping lead the effort to set up the exchange. But it is unclear how many “in-person” assisters New Mexico can hire with the federal dollars.

That is why organizations such as New Mexico Voices for Children want state policymakers to appropriate $2 million in the proposed state budget to pay navigators’ salaries.

Sanchez said the governor opposed using state dollars to pay the salaries of navigators and suggested that people could volunteer as navigators and forego salaries during the first year of the exchange’s operation.

“There should be a lot of volunteerism,” Sanchez told the advisory task force.

Paige Duhamel, staff attorney at the Southwest Women’s Law Center, took issue with that scenario.

“The idea that these people will volunteer to help people enroll in the exchange is a little idealistic,” Duhamel said.

This article is NMID’s first since its January six-part series examining Gov. Susana Martinez’s tenure. Written by Trip Jennings, NMID’s executive director, this story builds on the reporting Jennings did on the exchange as part of that series.

This article is also being published by several newspapers – the Las Cruces Sun-News, Santa Fe New Mexican, Farmington Daily Times, Alamogordo Daily News, Carlsbad Current-Argus, Deming Headlight, Silver City Sun-News and Ruidoso News.

One thought on “Window closing on state-run health exchange

  1. Gail Evans is correct, making what is perhaps the most important point in this whole argument: the health care exchanges are NOT a free market. It is a glaring failure of logic to apply free-market platitudes to the analysis. Joyce Naseyowma-Chalan also is correct. The Native American will not be adequately served unless their are specialized professionals serving as Navigators.

    Matt Kennicott is overly optimistic when he says, “Consumers are smart.” Keep in mind that 50% of the customers will have below-average intelligence. Furthermore, some of the persons needing insurance will be those with traumatic brain injuries, schizophrenia, ADHD, or other conditions that make it challenging for them to perform higher-order thinking. They will be asked to evaluate materials that were designed by a room full of marketing professionals who have had years to think about how to pitch their products. It is incumbent upon the State to level the playing field. We cannot realistically expect a handful of volunteers — no matter how well-intentioned they may be — to serve this function.

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