Last year, Randy Murray spent six months shopping for a health care provider. At 65, Murray was newly eligible for Medicare—and, as a former banker, he thought he was well-equipped for the challenge.

It didn't go so smoothly.

"The more I tried to figure out Medicare, the more confused I got," he says with frustration. "I had a file that was unbelievable. With my banking background and my accounting background, I thought I was pretty good about this. It really overwhelmed me."

Murray says health insurance providers gave him large pamphlets with repetitive information. At one point, he met a consultant who promised to help him find the best plan for a fee. He later found out she was working for an insurance company.

Short and burly, Murray, 66, isn't bitter about the process he went through; instead, he counts himself lucky to have coverage. But, he says, "There's got to be easier ways of comparing these things. It does have to be simplified—I don't think most people would get halfway where I got."

Murray may soon get his wish. By 2014, millions of Americans will begin shopping for coverage through health insurance exchanges—online marketplaces designed to let consumers easily compare and purchase competing health care plans. If the exchanges function correctly, they should reduce the maddeningly complex paperwork involved in choosing a health plan.

Last week, Gov. Susana Martinez announced that New Mexico would create its own exchange. But as the details gradually emerge, critics worry that New Mexico's exchange will do more for powerful health insurance companies than it will for consumers like Murray.

Exchanges are one of the central tenets of the Patient Protection and Affordable Care Act, better known as Obamacare. By 2014, all US residents must have health insurance or pay an annual fee of several hundred dollars. Exchanges provide the link, allowing consumers and small businesses to shop for a plan that suits them. States must either create their own exchanges or let the federal government do it for them.

Initially, Martinez' decision to build a state-run exchange won approval from both sides of the aisle. Many say New Mexico—which has the second-highest rate of uninsured residents in the nation, 21 percent—is in a better position than the federal government to address its unique health-care needs. This summer, New Mexico Human Services Department spokesman Matt Kennicott told SFR the exchange will be created "by New Mexicans, for New Mexicans."

But critics say the exact opposite is happening. Consumer advocates and state lawmakers say they've been left out of the process of crafting the exchange. Some consider the Health Insurance Alliance—which will run the exchange—too industry-friendly. Others suggest that Leavitt Partners, the Utah-based company with a $1.2 million state contract to help design New Mexico's exchange, may be too cozy with health insurers and brokers.

"It's clear to me that the exchange they're building in New Mexico is for insurers, by insurers, instead of for New Mexicans, by New Mexicans," says Kelsey Heilman, staff attorney for the New Mexico Center for Law and Poverty.

In 2011, the state Legislature passed a bill creating a health insurance exchange, but Martinez vetoed it. Now, lawmakers like outgoing state Sen. Dede Feldman, D-Bernalillo, who chairs the Legislative Health and Human Services Interim Committee, say the executive branch is proceeding without them.

"The committee has seen nothing," Feldman says. This week, she and other lawmakers asked New Mexico Attorney General Gary King to issue an opinion on the constitutionality of Martinez' decision to veto the Legislature's exchange and create her own.

"We're probably going to see some legislators—myself among them—looking at litigation as a way to deal with this," says state Sen. Gerald Ortiz y Pino, D-Bernalillo, who sits on the same committee. "You know—taking it to the Supreme Court. This is a system that's going to be in place for many years to come. And we have to do it right. We don't want to screw around and deal with something really problem-riddled."

Consumer advocates tell a similar story. Although HSD created a task force to solicit public input, task force members say  that, as of mid-November, they had yet to see any detailed plans—even though a specific plan is due to the federal government by Dec. 14.

In a recent letter to Milton Sánchez, HSD's director of health care reform, Heilman and 18 other public-interest groups express "deep concern over the lack of transparency around any specific plans" HSD has for the exchange, adding that "there has been no disclosure of any of the details, plans and documentation."

Other concerns center around the role of the Health Insurance Alliance, a nonprofit created in 1994 to help small businesses find affordable health-care plans. While HIA already somewhat resembles an exchange, it's also governed by an appointed board consisting chiefly of health insurers and brokers. That could be problematic, given that the exchange is supposed to help keep those very insurers in check.

"We talk about insurance carriers on the board being a problem because you wouldn't leave a fox in charge of the henhouse," Heilman says, recalling a discussion about HIA's role. "Whoever this was told me, 'This isn't the fox in charge of the henhouse. It's the fox in charge of the fox house—no chickens allowed.' And I think that's sort of what's going on."

Former Utah Gov. Michael O Leavitt—the founder of Leavitt Partners, the Utah-based consulting firm hired to help New Mexico build its exchange—also has experience on the brokerage side.

In 1984, Leavitt became the chief executive of the Leavitt Group, a family business that brokers various types of insurance, including health. After serving as Utah's governor from 1993-2003, Leavitt was appointed secretary of the US Health and Human Services Department by George W Bush in 2005.

Today, Leavitt Group Enterprises Inc. calls itself the third-largest privately held brokerage firm in the nation. Now run by Leavitt's two brothers, Eric and Dane, it has six office locations in New Mexico. (In 2005, the Mescalero Apache Tribe sued Leavitt Group, claiming an employee in its Albuquerque bilked the tribe out of $1 million by giving fictitious insurance quotes. Leavitt Group fired the employee and disputed some of the claims in court; the two parties entered into a confidential settlement.)

Meanwhile, Michael Leavitt has prospered. Based on his 2008 financial disclosure forms, the Center for Responsive Politics estimated his net worth at $4.5-$16.3 million. In 2009, he founded Leavitt Partners, a "health care intelligence business" that does consulting, public-relations and private equity work.

Randy Murray spent six months and countless hours looking for a health care plan.
Randy Murray spent six months and countless hours looking for a health care plan.

This spring, Leavitt Partners won a 12-month, $1.1 million consulting contract to help craft New Mexico’s health insurance exchange. Five companies submitted proposals; Leavitt Partners won out despite its competitors’ deep experience. (One actuarial and consulting firm, Missouri-based Milliman Inc., has more than 2,600 employees in 55 cities around the world; Boston, Ma.-based Public Consulting Group had already been selected to help 20 states and territories build exchanges and implement Obamacare, according to its proposal.) A three-member committee took less than a week to evaluate the complex proposals—most over 100 pages—and award the contract to Leavitt Partners.

Michael Chidester, Leavitt Group's general counsel, says no common ownership exists between Leavitt Partners and Leavitt Group. He adds that Leavitt Group's health insurance brokerage operations constitute "far less" than 25 percent of the company's revenue.

"Any tie between Gov. Leavitt and Leavitt Group was severed eight years ago under the direction of the US Office of Government Ethics," Leavitt Partners Vice-President Natalie Gochnour tells SFR.

Still, a 2008 financial disclosure report shows Leavitt received $439,690 in interest payments from a trust that holds Leavitt Group stock. Gochnour says Leavitt is "not a participant in any future profit or losses" by Leavitt Group, "but he certainly is able to hold onto what he had prior to 2005."

For health insurance brokers, how New Mexico's exchange shakes out is crucial. In the current model, brokers work for insurance companies, marketing their plans to consumers and businesses. When they sell a plan, they get a commission.

A consumer-oriented health insurance exchange—one that's easy to navigate and vets various plans—could significantly reduce the need for brokers. Even if brokers find work as exchange "navigators"—unbiased parties who help patients and businesses navigate the exchange—the business could be far less lucrative: Federal law prohibits navigators from accepting commissions from insurance companies.

Such a model exists in Massachusetts. There, insurers submit plans to a board of directors, which weighs them against each other and chooses only the best, most affordable plans to offer on the exchange.

On the other end of the spectrum is Utah, which allows any insurer that meets minimum standards to offer plans on its exchange. Proponents of the Utah model say it fosters competition and gives consumers more choices. Kennicott recently told the Albuquerque Journal that New Mexico's exchange will more closely resemble Utah's.

To Wendy Johnson, a program manager at La Familia Medical Center in Santa Fe, that may be cause for concern.

"You would have to have some kind of oversight—some screening process—to make sure the plans that got into the exchange are the most affordable and cover the reasonable services," Johnson tells SFR. "I would hope New Mexico goes into solutions that provide equitable choices for the people that are really suffering."

None of the stakeholders SFR interviewed, including Ortiz y Pino and Feldman, knew about Leavitt's past ties to Leavitt Group—which his family members still run.

"It just gets way too cozy," Ortiz y Pino said, upon being informed of the link. "The relationship between the consulting firm and the brokerage firm potentially is way too cozy to pass that smell test."

As the chief consultant on New Mexico's exchange, Leavitt Partners may have significant influence over how the model works—and whether insurers and brokers (including Leavitt Group) remain involved. When asked what type of work the company is doing in New Mexico, Gochnour referred SFR to the Martinez administration.

"We provide them with frequent reports…," she said, "and my guess is that they'll give you complete access to what you need."