DFL lawmakers in the state House pushed through a key provision of the federal health care overhaul by voting Monday, March 4, to create a health insurance exchange for Minnesota.
The 2010 federal law calls for the creation of state-level health exchanges where individuals and small businesses can buy coverage beginning in October.
The marketplaces are meant to make it easier for consumers to comparison shop for health insurance. Federal subsidies that will be available for many shopping on the exchange should fulfill the federal law’s goal of increasing the share of Americans with health insurance, according to proponents.
“Health insurance is a most vexing and daunting task for consumers,” said Rep. Joe Atkins, DFL-Inver Grove Heights, who sponsored the health exchange bill in the House. “Many of us think that there really is a need to create a health insurance marketplace where we can have robust competition.”
House Republicans opposed the bill, saying the health exchange would drive up costs, limit consumer choice and threaten privacy.
“We are in need of reform here in terms of the insurance industry,” argued Tara Mack, a Republican from Apple Valley. “But this is the wrong direction — this is a vast government overreach.”
The bill passed the DFL-controlled House on a 72-58 vote. One Republican voted for it; one Democrat voted against it.
The Senate is scheduled to vote Thursday on its version of the bill, which differs in how it funds the ongoing operations of the marketplace.
The Senate bill also would give the health exchange’s board of directors more power to limit health plan options — an issue that proved divisive Monday among House DFLers.
The federal health law requires almost everyone in the United States to have health insurance coverage beginning in 2014 or pay a tax penalty. The health exchange will be a key mechanism for people who now lack coverage to buy health insurance.
Democratic-Farmer-Labor Gov. Mark Dayton has been planning for Minnesota’s health exchange for more than a year by tapping $110 million in federal grants.
The exchange will consist of a website and call center for consumers to learn about health insurance options. Some 1.3 million Minnesotans, including many covered through public health insurance programs, are expected to obtain coverage through the exchange by 2016.
If Minnesota doesn’t create a health insurance exchange, Atkins said, the state would be forced to adopt a marketplace designed by the federal government. Wisconsin, for example, is one of more than 20 states that will adopt a federal model.
Keeping control in Minnesota means customer service would be provided closer to home, Atkins said, adding that state officials believe Minnesota’s marketplace will be less costly.
The state expects to spend about $60 million per year to operate the exchange once it is fully enrolled. In the bill passed by the House on Monday, those costs would be covered by withholding up to 3.5 percent from the value of health insurance premiums sold on the health exchange.
“This is the most significant health insurance reform in Minnesota in the past 50 years,” Atkins said.
Republicans questioned whether the bill lacks privacy protections. They also criticized conflict-of-interest standards that would limit the ability of insurance company executives to serve on the exchange’s board of directors.
“This is a socialist-style medical bureaucracy, and it will not work,” said Rep. Jim Newberger, a Republican from Becker.
Rep. Joe McDonald, R-Delano, said: “This bill actually makes me sick to my stomach.”
Even so, Atkins and Republicans found common ground on a few amendments. One change offered by Republicans, for example, blocked the exchange from disseminating a person’s history of tobacco use or gun ownership to anyone outside the marketplace.
Meanwhile, Atkins opposed an amendment sponsored by Rep. Patti Fritz, DFL-Faribault, that would ban health plans on the exchange from covering abortions. It passed 71-58, with support of 12 DFLers.
Democrats have a 73-61 majority in the House, and therefore had the votes to push forward the legislation. But floor debate suggested tension within the party on whether the health exchange board should have the power of an “active purchaser.”
As originally introduced, Atkins’ bill would have let the health exchange board exclude products from the marketplace that it deemed poor values for consumers.
Insurance companies objected, saying they could spend millions to prepare products for the health exchange only to be shut out from the competition.
Last week, Atkins amended his bill so that insurance companies would be guaranteed a chance to sell a minimum of two products before the board could use its active purchaser powers. The move was intended to lure insurance companies into the market, Atkins said, and make sure consumers would have plenty of choices.
But Rep. Tina Liebling, DFL-Rochester, called for going back to the original language as the bill likely moves to a conference committee between House and Senate leaders.
“I believe that it’s really removed from the bill one of its most important features, and that is the power of the board to select plans,” Liebling said.
Christopher Snowbeck can be reached at 651-228-5479. Follow him at twitter.com/ chrissnowbeck.