Minnesota Facing Bigger Bill For State's Health Insurance Exchange

By Elizabeth Stawicki, Minnesota Public Radio News

Nov 25, 2012 - Kaiser Health News

ST. PAUL, Minn. — Minnesota's state health insurance exchange will cost $54 million in 2015 to operate, according to the Gov. Mark Dayton administration.

The cost comes in at greater than earlier estimates of $30 to $40 million. The state would not have to find the money until 2015, when the state exchanges are required to be financially self-sustaining. But the cost rises to a projected $64 million in 2016. State officials are still weighing how the exchange will pay for itself. Options include user fees, a sin tax, and selling ads.

The exchange, a cornerstone of the federal health care overhaul, will create an insurance marketplace where consumers and small businesses can comparison shop for health insurance policies starting in October of next year. Coverage would take effect in 2014.

The Dayton administration also announced it will seek an additional $39 million to fund development of the state's exchange. If the federal government approve the additional grant, Minnesota will have received a total of about $110 million from the feds.

The new financial details emerged earlier this month when the state submitted its application for the exchange to the federal government.

Many states are behind in their plans for exchanges, and the Obama administration has already agreed to a request by Republican governors for more time to decide whether they'll build their own state exchange or use the federal alternative. The federal government extended that deadline to Dec. 14.

This story is part of a reporting partnership that includes Minnesota Public Radio, NPR and Kaiser Health News.