MNsure,2015

Preparedby:JoelAlter
Reviewedby:

Index:IZ22
Date:12/12/14
Page1of4

InterviewSummary
Purpose:

ToheartheGovernorsperspectiveonthedevelopmentandimplementationof
Minnesotashealthinsuranceexchange

Date:

12/12/2014

Location:

GovernorsOffice,VeteransServiceBuilding

Participants:

OfficeoftheGovernor
GovernorMarkDayton
[AnaidetotheGovernortooknotes;wedidntcatchhername]
OfficeoftheLegislativeAuditor
Jim Nobles
Joel Alter

Note: We classified some comments by the Governor as not public because they related to personnel
issues. These items have been removed from this document.
This document represents a summary of our interview with the Governor, not a transcript. It is based
on notes taken by OLA staff and was not reviewed by the Governor or his staff.
First two years of exchange planning
Noting that the Governor initiated steps to create a state-based exchange in January 2011, we asked
whether executive branch staff at that time expressed any concerns about the time or technical
feasibility of launching the exchange in late 2013. Governor Dayton said that no concerns were
brought to his attention initially. He noted how exchange officials set up a statewide process for
involving stakeholders in planning for the exchange.
We noted that exchange officials took many actions over the next two years, such as entering into
contracts for development of the exchange software. We asked whether concerns about the timeline
or feasibility were voiced to the Governor during this time. The Governor said he recalls hearing no
concerns. He said he was not involved in decisions to select contractors. During this period, he
relied largely on Commerce Commissioner Rothman, MMB Commissioner Schowalter, and DHS
Commissioner Jesson to keep him apprised of any noteworthy developments. The Governor said
these officials were among my best people and were experienced administrators.
2013 legislation to create the exchange

MNsure,2015
Preparedby:JoelAlter
Reviewedby:

Index:IZ22
Date:12/12/14
Page2of4

Governor Dayton noted that there was support for creating a state-based exchange from a wide
variety of interest groups, ranging from business organizations to activist groups. These groups
and exchange officials had given thought to how an exchange should be structured, and the Governor
said he didnt feel sufficiently expert in the topic of health insurance exchanges to second guess most
of what they proposed. He said, in retrospect, he wishes the board had been created with more than
seven members.
We asked whether the Governor had favored creating a board, rather than having MNsure be an
agency governed by an administrator. The Governor said his preference was for MNsure to be
something different than a regular state agency so that it could act expeditiously. This seemed
especially necessary in 2013 as the launch date neared. The Governor likened the MNsure Board to
the model of the Minnesota Sports Facilities Authority, which he said has worked well.
The Governor said that a lesson he learned in the MNsure experience is that even if an agencys
governance structure is established without the Governor having direct authority to appoint its
administrative leader, the Governor is held accountable for its performance.
Preparation for launching the exchange
The Governor said that, through August 2013, he got most of his information about the exchange
from Schowalter and Jesson. He said there may have been one or two general updates from ToddMalmlov during this time. In mid-September, the Governor requested a meeting with exchange
officials to discuss readiness for the launch. He had recently heard some questions about whether the
exchange would be ready October 1, and Carolyn Parnell had expressed some concerns about
readiness from a security perspective. Up to that point, he had been under the impression that
exchange development was going well. The Governor said that when he heard in the meeting about
the concerns that remained regarding the exchange, it alarmed me and upset me.
From that point forward, there were discussions between the Governor and exchange officials every
day. Specifically, there were daily conference calls that involved the Governor, April ToddMalmlov, Cindy Jesson, and Carolyn Parnell. As October 1 approached, Todd-Malmlov gave
encouraging signs, and the decision of whether to launch the exchange was her call, the Governor
said. He said that administration officials were under the impression that the October 1 deadline set
by the federal government was a firm one. The Governor said he wanted the exchange to proceed,
but not if there were going to be serious malfunctions. He recalled a conference call on the Sunday
before October 1 in which Todd-Malmlov and Parnell gave a green light to launch the exchange.
We asked the Governor whether he though Jesson and Schowalter were as surprised by the midSeptember news of potential problems as the Governor was. The Governor said he did not want to
speak for them, but he thinks these officials would have conveyed concerns to the Governor in earlier
weeks or months if they had been aware of them.
After October 1
The Governor said that, at first, the exchange seemed to be working alright. Most of the problems
that arose seemed to involve the federal hub.

MNsure,2015
Preparedby:JoelAlter
Reviewedby:

Index:IZ22
Date:12/12/14
Page3of4

Exchange staff had been working around the clock to prepare for the launch and address issues after
the launch, so the Governor hosted an ice cream social for staff in mid-October as a way of saying
thanks. He noted that it had been a herculean effort to launch a full-blown, statewide exchange in a
single day, rather than starting with a test area.
The real problems did not become clear until mid-November, when attempts to fix existing problems
sometimes seemed to create new ones. It was like Whac-a-Mole, the Governor said.
The Governor said he wishes there had been a way to shut down the exchange for six weeks to fix all
the problems. It was hard to fix problems when the exchange was up and running.
The Governor said that, in hindsight, staff built the exchange with nothing but the best intentions and
the mistakes made were honest ones.
April Todd-Malmlov
[Some parts of this discussion were classified as not public and are not included here.]
We asked for the Governors impressions of the first MNsure executive director, April ToddMalmlov. The Governor noted that, when the exchange legislation passed, she reported to Jim
Schowalter, and the Governor said there is no better manager in state government than Schowalter.
The Governor noted that Todd-Malmlov did not have a full management team during much of the
period when the exchange was planned, and she did a lot of tasks herself.
MNsure call center
The Governor called the call center problems a serious management error. He said these problems
were really predictable, and the problems consumers encountered when they called were beyond
any acceptable measure.
The Governor recalled asking Todd-Malmlov on multiple occasions whether staff were being added
to the call center. She would say yes, but the situation didnt seem to be improving. The Governor
said Todd-Malmlov should have acted sooner to bring in reinforcements.
Appointment of CEO
We said that we were considering whether to recommend that the Governor be given authority to
appoint the MNsure CEO, and we asked for the Governors opinion. The Governor said the
collective wisdom at the time the legislation was drafted was to remove direct accountability of
MNsures administrative leadership to the Governor. In fact, he recalled, there didnt seem to be
much debate about this.
The Governor said that if he were made responsible for appointing the MNsure CEO, he would also
be responsible for ongoing oversight of MNsure. He said he would have to think some more about
whether this would be a good idea.
MNsure Board

MNsure,2015
Preparedby:JoelAlter
Reviewedby:

Index:IZ22
Date:12/12/14
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Nobles noted that it seemed to have been a good idea to put the DHS commissioner on the MNsure
Board. The Governor agreed with this, although he said it was not his idea.
The Governor said the MNsure Board had a staggering learning curve. Commissioner Jesson had
the most expertise at the time the board was appointed.
MN.IT exemption
We asked about the statutory exemption of MNsure from ongoing IT project oversight by the Office
of MN.IT Services, and we noted that we were considering a recommendation that would repeal this
exemption. The Governor said he thought all agencies should be subject to MN.ITs authority to
review projects. He said he thought the exchange would have worked better if MN.IT had been more
involved from the beginning of the planning.
The Governor noted that the Office of MN.IT Services was a bit of an unknown quantity in 2011,
having just been formed. For many, it remained to be seen whether this office would be an asset or a
hindrance.
Vendors
When we asked the Governor whether there were any other things he wishes would have happened
differently with the exchange, he said he wishes the state had selected different contractors. He said
IBM-Curam still cannot make its product perform as expected. The Governor said he questioned the
decision to extend contracts with the vendors in 2014 rather than terminating them.
The Governor said Todd-Malmlov had difficulty getting responses from IBM in 2013 when problems
were arising. Thats why the Governor pressed Todd-Malmlov to draft a letter that he could send to
IBM.
The Governor noted that Maryland had the same contractors as Minnesota and got into the same
mess.
Future concern
The Governor said the acid test for the exchange will come over the next five to ten years: will it
prove to be financially viable? He said it has been fortunate that Minnesota was able to build the
exchange without incurring debt for this large project.