Minnesota Senate, following House, passes health insurance exchange bill

The Minnesota Senate on Thursday night passed legislation creating an online health insurance marketplace that's slated to be up and running by October.

A legislative conference committee will meet in coming days to resolve differences between the Senate and House bills enacting a cornerstone of the federal health care overhaul. The House passed its version of the bill earlier this week.

More than one million Minnesotans are projected to find health coverage through the exchange website. Minnesota lawmakers are working on a federal deadline to have exchange legislation passed and signed by Gov. Mark Dayton by the end of March, looking toward an Oct. 1 start to enrollment.

In addition to aiming to provide coverage for 300,000 uninsured people, the health exchange could cover another 600,000 now on government coverage plans and another several hundred thousand people who work for small businesses that it's hoped can get better deals on insurance in the exchange.

Backers have said the website would be similar to airline ticket clearinghouses like Expedia, will be governed by a seven-member board appointed by the governor and subject to approval by the House and Senate. It's projected to cost $60 million to year to operate.

"This is a website that will allow for the first time real apples-to-apples comparisons between insurance plans," said Sen. Tony Lourey, DFL-Kerrick, the bill's chief Senate sponsor.

The 37 to 28 vote came after more than 12 hours of debate. The longest and most contentious battles centered on the small but powerful seven-person board of directors that will govern the exchange's operations.

Sen. Paul Gazelka, R-Nisswa, wanted to eliminate a provision that disqualified anyone on the payroll of a health care organization or insurer from serving on the board. He said it would be difficult to find experts who are not currently working in health care.

"In this particular industry, like a lot of industries, your expertise, if you're out of it for a year, yeah you still have a lot of wisdom and expertise, but you are missing whatever is currently changing both technology and otherwise," he said.

Sen. David Osmek, R-Mound, who's employed by the nation's largest health insurer, UnitedHealth Group, agreed.

"UnitedHealth Group, they're into the millions of people, they are the largest in this nation. And that we would not use that level of expertise, that level of knowledge leverage our health system to be the best that it is, is an abomination," he said.

Lourey defended the restrictions.

"You don't have to get a check from industry to be an expert on know how the industry works," he said. "We are not trying to exclude the experience or the perspective; we're trying to exclude the direct financial conflict of interest."

Like most amendments Republicans offered, the proposal failed to win a majority in the DFL controlled Senate.

The board's power to exclude certain plans from selling on the exchange was also an issue, as it has been for legislation that's otherwise moved swiftly through previous committees. Last week, the chief author of the House bill secured an amendment allowing companies to sell at least two products on the exchange.

Last night, Republicans including Sen. Michelle Benson, R-Ham Lake, asked to go further -- to allow any plan that meets state requirements to be available on the exchange.

"If the board decides that there are only two plans of value at each level in this state, the consumers get no more say in the exchange; end of discussion," she said.

Senate Minority leader David Hann, R-Eden Prairie, said allowing the board to exclude plans is giving too much power to the government.

"This is what we're doing here people: We're saying we're going to limit your choices for your own good because we know better than you how to spend your money. That's what Sen. Lourey and this bill and the Democrats -- and the Democrats in Washington -- that's what they're saying," he said.

Lourey countered that the board's power to choose plans would make sure that the coverage offered on the exchange serves the public interest.

"The question before us is whether that value in the competition is driven better by having more plans or by having better plans on the exchange. This is about getting plans that are in the interest of consumers," he said.

The amendment to strip the board's power to deny certified plans ultimately failed. Several GOP amendments beefing up privacy protections passed. One provides that state law will prevail when Minnesota provides greater privacy protection than federal law. Another successful amendment requires the exchange to have a list and descriptions of its data-sharing agreements on its website.

The Senate also agreed to require all legislators to buy their health coverage on the exchange.

During debate, Republicans frequently recalled Gov. Mark Dayton's recent comment that the exchange is a gamble. Dayton, a supporter of a single payer system, clarified Thursday that he didn't want to get the public's hopes up that the exchange would work smoothly on its first day.

"There are going to be some glitches initially," he said. "It will take some time to iron that out."

A conference committee will have to iron out several material differences between the House and Senate bills, abortion coverage among them. The House version forbids health plans to cover abortions except to save the life of the woman or if the pregnancy results from rape or incest. The chambers also differ on how to fund the exchange's operations: The House bill would impose a user tax of up to 3.5 percent of the premiums on plans sold on the exchange, while the Senate would use an existing tobacco tax.

If lawmakers fail to pass exchange legislation by March 31, the federal government will play a much stronger role in how an exchange will run in Minnesota.

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MPR's Tim Pugmire, and The Associated Press, contributed to this report.

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