Dave Heft knows how critical health insurance is. He is, after all, enrolling in Santa Fe Community College’s nursing program. That’s why he’s at Molina Medical Clinic, a local fee-for-service provider where 43 percent of patients pay with cash. Nursing students must obtain vaccinations so they can enter clinical settings, and he’s patiently sitting in the waiting room, contemplating his future as a nurse with health insurance. But that’s a long way off, and Heft has gone without it for the past year. As with many New Mexicans, health insurance is a luxury his $13-per-hour waiter position won’t support.
Heft, a single father with a 4-year-old daughter, says he’s in the age group where “medical problems usually don’t occur.”
“I know that’s never a guarantee,” he quickly adds. Like anyone without health insurance, he’s fought off occasional colds that dragged on because he avoided a visit to the doctor. “Nothing major.”
Heft is among the 424,000 New Mexicans without health insurance—approximately 21 percent of the state’s total population, and the second-highest uninsured rate in the nation. And now that most of the federal healthcare overhaul passed constitutional muster, New Mexico is plowing forward to offer coverage through a state-run health insurance exchange, an online marketplace where people like Heft are able to easily compare, calculate and purchase health insurance plans.
In creating the exchange, the state’s Human Services Department is stressing local engagement. On June 25, the department announced the formation of a 12-member task force that will make recommendations for the exchange. As HSD spokesman Matt Kennicott tells SFR, “We want to build an insurance exchange for New Mexicans, by New Mexicans.”
But, it’s a private, Utah-based and politically connected company that won the $1 million consulting contract to help the state build its exchange—and some say its goal is to bring Utah to New Mexico.
The firm is Salt Lake City-based Leavitt Partners, founded by the former Republican governor of Utah, Michael O Leavitt, after he left his post as the secretary of the US Department of Health and Human Services under President George W Bush.
Since then, Leavitt has been capitalizing on Obamacare, winning contracts to help craft health insurance exchanges in at least two other states. Republican presidential candidate Mitt Romney also recently appointed Leavitt to head his transition team.
Leavitt’s firm draws its expertise from Utah, which is one of two states in the nation that has implemented an exchange before the Affordable Care Act required it. (The other is Massachusetts, where Romney helped establish an exchange.) The ACA gives states some latitude in how aggressive their exchanges are. While the law says exchanges must act as marketplaces that allows consumers and employers to easily compare and purchase health plans, states can choose whether to further regulate prices and benefits and whether to set up the exchange as a nonprofit or governmental entity.
Utah’s exchange is often described as a bare-bones marketplace. It accepts most insurance plans, and currently only serves businesses and employees. To comply with ACA, Utah, like all states, must also create an exchange marketplace for individuals. By comparison, Massachusetts’ exchange already serves both businesses and individuals. The state requires that all residents purchase insurance and that insurers meet more rigorous pricing and benefits standards in order to participate in the exchange.
“What Utah did and what Massachusetts did are wildly different,” says Utah state Rep. Brad Daw, a Republican who co-authored legislation to establish Utah’s exchange, which he describes as “a little more of a free market…without coercion or mandates.”
Some say the Martinez administration seeks a similar model.
“The administration has been very keen on the Utah model for the exchange for some time now, so it’s not surprising that this was done,” state Sen. Dede Feldman, D-Bernalillo, the chairwoman of the Legislative Health and Human Services Committee, says. “[Leavitt] may have some good ideas. I’m not completely down on them. But it’s entirely predictable.”
Daw says it’s too early to say whether Utah’s exchange has been a success, in part because insurers and individuals are still warming up to the idea.
Of course, every state is different. About 13 percent of Utah’s population is uninsured, compared to the 21 percent in New Mexico. New Mexico also has more people below the poverty level, a higher percentage of people over 65 and more people who speak a language other than English, according to US Census statistics.
Last spring, citing legal challenges to ACA and costs associated with establishing an exchange, Martinez vetoed a bill, authored by Feldman, that would have created an exchange for individuals as a nonprofit public corporation with an 11-member board.
“I believe it is important that New Mexico maintain control over the design of a market-based exchange,” the veto message reads, “instead of allowing the federal government to define the process.” (If states don’t set up exchanges, ACA demands that the federal government do it for them.)
But in September, with the help of Dan Derksen, then-director of the New Mexico Office of Health Care Reform, New Mexico secured a $34 million federal grant to establish the framework of the exchange.
Yet five months later, Derksen resigned, citing the administration’s slow progress toward developing an exchange. It had stalled on bidding out $24 million of grant money slated for a massive computer network to host the exchange.
Around that time, the administration issued a request for proposal for a year-long exchange consulting contract. Five firms submitted proposals.
The state acted fast. After less than a week, it selected Leavitt Partners. Kennicott says Derksen’s departure left “a gigantic hole in the experience and leadership that we had on the exchange issue,” so the state needed to choose a consultant quickly. He says they still haven’t found a replacement for Derksen.
Leavitt’s $1 million contract gives the company a diverse range of duties. According to the contract, the firm will, among other things, “assist with the development of rules, regulations and policy governing the exchange.”
In the waiting room, Heft smiles when he’s talking about his daughter, who is on New MexiKids, a low-cost insurance plan for kids. But when the conversation turns to politics, he sheepishly admits that he hasn’t kept up with the news lately.
“Once I get into the field, I’m definitely going to get insurance for myself,” he says. With any luck, he’ll be able to use an exchange to do so.