Health exchange bill passes Minn. Senate; heads to Dayton's desk

Health exchange
Sen. Tony Lourey, DFL-Kerrick, left, smiles as his health insurance exchange bill passes the Senate Monday, Mar. 18, 2013 and moves on for Gov. Dayton's signature at the State Capitol. At right is Sen. Scott Dibble, DFL-Minneapolis.
MPR Photo/Jennifer Simonson

Historic and controversial legislation creating a new way for a fifth of Minnesota's population to obtain health insurance is now on its way to Gov. Dayton's desk. And he has promised to sign it.

Early Monday afternoon, the DFL-controlled Senate followed the House and passed a final bill creating the new Web-based insurance marketplace known as an "exchange." The tally was a 39-28 vote along party lines.

Minnesota will now become one of at least 17 states that develop and run their own exchanges. Those states that do not develop an exchange will instead rely on one run by the federal government.

The landmark insurance legislation is a cornerstone of President Barack Obama's health care law and will provide an online gateway for more than a million Minnesotans to obtain health insurance starting in October. Among them are more than 300,000 Minnesotans who currently lack insurance.

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Supporters of the exchange describe it as a hybrid, for example, of Travelocity and TurboTax -- meaning it will allow apples-to-apples comparisons of products that are as complex as a tax return.

Bill sponsor, state Sen. Tony Lourey, DFL-Kerrick, said the final bill will move Minnesota forward in a manner "...That can meet the broad goals of making it a health insurance exchange that can work for industry and at the end of the day, has the backs of the people of Minnesota as well."

Final passage of Minnesota's exchange legislation tops off three years of bitter debate that has divided the state's lawmakers largely along party lines. That divide was evident in Monday's debate.

"I've had them throw rocks at everything that's been proposed and they have concerns with everything, but I have yet to see exactly what marketplace they would support."

Republican state Sen. Paul Gazelka, an insurance broker from Nisswa, reminded Lourey that when the bill was introduced the Minnesota Chamber of Commerce wanted a state-based exchange.

"They felt like that was the best direction to go. And yet, now none of them support the Minnesota exchange that you have crafted here," Gazelka said. And I just want to know if that concerns you?"

Lourey responded that he wished the bill had more support from business groups. He questioned if whether some businesses groups did actually want an exchange, given that they did not support any of the proposals.

"At some point you have to ask: how much do they really want a Minnesota-based exchange," Lourey said. "I've had them throw rocks at everything that's been proposed and they have concerns with everything, but I have yet to see exactly what marketplace they would support."

Senate Minority leader David Hann from Eden Prairie has led the Senate GOP attack on the exchange. He did not mince words Monday in voicing his distaste for the legislation.

"This bill is a disgrace. And I'm really confused about the way this bill's progressed," Hann said. "Because we heard a lot of rhetoric in the last few months from the party on the other side of the aisle on how important is it that we work together."

Hann said there was no support for the bill beyond the DFL caucus. His comments launched a volley with state Sen. Barb Goodwin, DFLer-Columbia Heights. Goodwin was on the conference committee that ironed out the differences between the House and Senate legislation. Goodwin reminded Hann that he was chairman of the Minnesota Senat's Health and Human Services Committee in the previous two years when Republicans controlled the Legislature and blocked exchange legislation.

"And I know that Sen. Lourey asked you several times to start hearing this issue in your committee, and I know that was refused," Goodwin said. "So if you're so concerned that this isn't the right kind of bill, why weren't you willing to work with Democrats in the last two years to start working on this bill?"

"We did have a hearing on a bill that Sen. Lourey said came from the health care exchange task force; we did hear that bill in our committee," Hann said. "It seems clear that given the direction this bill has taken that the Democrats and the governor had in mind a version of an exchange that was simply the bill that we have in front of us."

Goodwin said the sky wasn't falling and asked members to give the bill a chance to work.

When the Republicans controlled Minnesota's Legislature, some GOP members including Hann thought that the federal health care law would disappear -- either the U.S. Supreme Court would strike it down or a Republican win of the White House would lead to the law's repeal. Neither occurred.

State Sen. Terri Bonoff, a DFLer from Minnetonka switched from a "no" vote last week to a "yes" vote for the final bill.

Initially, she shared a concern common among Republican lawmakers.

The legislation gave the exchange's seven-member board the authority to exclude a health plan from being offered on the exchange even if it had met state and federal requirements. Lourey had wanted the board to have that power to ensure the plans sold on the exchange provided consumers with good value. The conference committee compromised and said that provision would not go into effect until the exchange's second year of operation, in 2015. In the first year, any plan that meets state and federal guidelines would be guaranteed a place on the exchange.

The bill isn't perfect but is workable, Bonoff said.

"I believe we have tackled a sweeping piece of legislation and that it's all right to come back at it if we think certain provisions we pass don't work," Bonoff said.

Under the final bill, the Minnesota exchange is estimated to cost between $50 million and $60 million a year, to be funded through a kind of user fee on plans sold on the exchange. In the first year, 2014, the exchange can withhold 1.5 percent of premiums; in 2015, up to 3.5 percent of premiums.

Supporters of the exchange say it will spare businesses $150 million in taxes that fund the state's safety net insurance program for high-risk Minnesotans as well as prevent $150 million in uncompensated care.

Dayton recently referred to the exchange as a gamble, but a spokesman said the governor plans to sign the bill into law this week. Insurers that want to sell on the exchange must submit their plans to the state for approval by May 17. The exchange must be ready to enroll people in plans starting Oct. 1 for coverage that takes effect in January.