Minn. House debates, passes insurance exchange bill

11:59 PM, Mar 4, 2013   |    comments
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ST. PAUL, Minn. -- The Minnesota House Monday evening passed a bill that would set up a health insurance exchange in Minnesota, in an effort to conform with the federal Affordable Care Act.

The bill passed by a 72 to 58 vote margin, following more than five hours of debate on the House floor.

If House File 5 eventually becomes law in Minnesota it would serve as a virtual marketplace, existing mostly online, where an estimated 1.3 million Minnesotans could buy coverage from health insurance companies.

Supporters of the bill predict 300,000 uninsured Minnesotans, plus 600,000 who now receive coverage through public programs will purchase plans through the exchange.

A majority of those consumers would qualify for subsidies available through federal reform law, making the plans more affordable. Businesses would also be able to utilize the program to offer coverage to their employees.

There's no such entity in the state at this point, so backers invariably describe the exchange by comparing it to existing Internet markets.

"Literally, you'll sit down at your computer and you'll be able to have a competitive, vibrant market place where these folks are competing online for your business" Rep. Joe Atkins, the South St. Paul Democrat who chairs the House Commerce Committee, told reporters.

"It would be no different from a Travelocity or a Kayak.com-type website," he added, while acknowledging that purchasing insurance is always a more involved process than booking a hotel or buying something online.

Atkins and other supporters say that health care premiums will be pushed down by competition and that taxpayers will save tens of millions of dollars because the uninsured tap into coverage instead of relying on hospital emergency rooms.

"We all know those uncompensated costs are just passed along to taxpayers in an indirect fashion," he explained.

Critics have labeled the exchange, and federal reform itself, as a government takeover of the private insurance industry.  They've argued that it's improper to call it a "market place" because, in their view, it will undermine the private market.

"This is a Soviet-style health care system, an enormous bureaucracy," Rep. Jim Newberger, a Republican from Becker, told his colleagues during the floor debate Monday evening.

But Atkins, who shepherded the bill through many different committees in the House on its way to the floor, disagreed with that assessment.

"This is capitalism at its best," he asserted.

"This is competition right on your computer screen between health insurance carriers having to fight for your business in a way that they've never had to fight for it before."

The state faces a March 31 deadline to establish a state exchange.  If one isn't set up by then, Minnesota consumers would rely on a nationwide exchange operated by the U.S. government.

"The people running the exchange are over in the Golden Rule Building in downtown St. Paul," Atkins explained.

"The call center will be here in Minnesota. The people who are running it will be here in Minnesota, so you won't be having to deal with a federal bureaucrat to get questions answered."

He said that Internet Technology or IT will be responsible for much of the $160 million start-up cost and the $60 million annual operating cost.

In order to run an exchange, the state would need to build file servers that can store huge volumes of data and interact with the computer networks of the insurance companies and federal government.

The other part of the expense will go toward paying for "navigators" -- people throughout the health system who help consumers and employers connect to the exchange and determine their eligibility for federal subsidies and tax credits.

Republicans in the legislature say they worry about data privacy, as the state exchange double checks federal records to determine income eligibility and Minnesota residency.

"We're concerned about Minnesota's data leaving Minnesota," Sen. Michelle Benson, a Ham Lake Republican, told reporters Monday.

"We have the best data privacy laws in the country and once it leaves our borders we lose control of it."

Benson also objects to the fact that a seven-member board will oversee the decisions about which health insurance and health plans qualify to participate.

She said she's concerned people with doctors outside of those plans will have to choose between getting the subsidy or sticking with their own physicians.

"The government steps in, chooses who they subsidize, chooses who can participate, and I don't see how that increases competition," Benson remarked. 

Rep. Joe McDonald attacked the plan as being too costly, compared to a much less expensive version created by the state of Michigan.

"The bill makes me sick to my stomach!" he declared during the floor debate.

"We are number one in health care and you're willing to throw it all away with this exchange! Mr. Atkins you're a good man and a decent man, but your bill is not!"

The Senate will take up its own version of the bill on Thursday. That bill differs from the House version principally in how the annual operating cost of the exchange would be financed.

The Senate version would use cigarette tax revenues that otherwise would go to the state's general fund and pay for a variety of other state programs. 

The House version, on the other hand, would finance the exchange by assessing a fee on users.

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