Exchange bill clears first committee hurdle

Legislation to establish an insurance marketplace for an estimated 1.3 million state residents cleared its first hurdle on Wednesday. The health care exchange bill passed out of the Senate Committee on State and Local Government on a 7-5 party-line vote.

The legislation, sponsored by Sen. Tony Lourey, DFL-Kerrick, chair of the Health and Human Services Finance Division, is expected to make a total of seven committee stops in both legislative chambers. Its next stop in the Senate is the Judiciary Committee, where the bill’s data practice provisions will be scrutinized. It’s expected to get its initial committee vetting in the House during the coming week.

Under the federal Affordable Care Act, the state is required to enact legislation setting up an exchange by the end of March if it wants to govern its operation. Otherwise the federal government would impose such an exchange. The marketplace must be open for enrollment by October 2013 and fully operational by 2014.

At the start of the hearing, Lourey offered an amendment tweaking the details of the bill. But it would still be overseen by a seven-member board and the administrative costs paid for by a fee of up to 3.5 percent on premiums purchased through the marketplace. The governor would be tasked with selecting the members of the board.

“There is something for everyone to love in this bill,” Lourey said at the hearing. “There is something for everyone to hate as well.”

Republicans raised numerous concerns about the details of the exchange. In particular, they questioned whether the exchange would have sufficient legislative oversight. They also raised doubts about the appropriateness of a conflict-of-interest clause that prevents individuals with financial ties to the insurance industry from serving on the oversight board of the exchange. “This seems to be eliminating a class of people, and why would we do that?” asked Sen. Dave Thompson, R-Lakeville.

Testifiers were split on the conflict-of-interest language. Representatives of the Legal Services Advocacy Project, AARP Minnesota and TakeAction Minnesota praised the language. But concerns were voiced by business-aligned groups, including the Minnesota Chamber of Commerce, the Minnesota Council of Health Plans and the National Federation of Independent Businesses.

Republicans also questioned whether the proposal was being pushed forward too quickly. But Sen. Jeff Hayden, DFL-Minneapolis, pointed out that Republicans refused to tackle the issue when they were in control of the Legislature. “We had opportunity last year to do it, and we didn’t do it,” Hayden said.
Sen. Sandy Pappas, DFL-St. Paul, chair of the Committee on State and Local Government, offered an amendment to pay members of the board an annual salary of roughly $30,000, comparable to the chair of the Metropolitan Airports Commission. “I think we can always come back and revisit this,” Pappas said. “I do think this is a very huge responsibility.” Lourey didn’t object to the amendment, which passed on a voice vote.

Legislation establishing a health care exchange has been enacted in 10 other states. A total of 18 states have indicated that they intend to set up their own marketplaces.