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January is generally not the time of year for four-hour committee hearings at the Capitol. But Wednesday’s gathering of the House Commerce and Consumer Protection Finance and Policy Committee nearly reached that dubious mark.

Exchange advances despite controversy

Rep. Joe Atkins, DFL-Inver Grove Heights, the exchange bill’s lead author in the House, has repeatedly indicated that he’s open to changes. (Staff photo: Peter Bartz-Gallagher)

Battles over administration of health care marketplace play out in committee

January is generally not the time of year for four-hour committee hearings at the Capitol. But Wednesday’s gathering of the House Commerce and Consumer Protection Finance and Policy Committee nearly reached that dubious mark.

For more than two hours Republicans grilled Rep. Joe Atkins, DFL-Inver Grove Heights, about the details of his bill establishing an online marketplace where individuals and businesses will be able to shop for health insurance. They raised concerns about adequately protecting users’ data, sufficient oversight of the exchange, and the cost of setting up the insurance marketplace. “The money in Washington isn’t free,” said Rep. Kurt Zellers, R-Maple Grove. “That’s still our money.”
But ultimately the legislation cleared the committee on a 12-7, party-line vote.

As evidenced by Wednesday’s vote, legislation establishing a health care exchange is making steady progress at the Capitol. The bill was rolled out at a press conference on the second day of the legislative session with a show of bipartisan support. While most legislation introduced this year has yet to get a hearing, the health care exchange bill has already cleared three committees and has hearings scheduled in two more next week.

The speedy advancement is not surprising. The state only has until the end of March to enact legislation or risk the federal imposition of a Washington-designed version of the program, which is expected to serve 1.3 million individuals. With the Easter/Passover break set for the last week of March, and the likelihood that the bill will have to go through a conference committee, that probably means it needs to clear the House and Senate by mid-March.

The timetable is designed to allow enough time for the exchange to be in place in October when individuals and businesses are scheduled to begin enrolling. The federal Affordable Care Act, which mandates such an online marketplace, is set to be fully implemented in 2014.

“The deadline the federal government has placed on the state for having this thing established in law is real,” said Geoff Bartsh, vice president for public policy and government relations at Medica, one of the state’s largest health insurance providers. “They have a real timeline.”

But the steady progress should not be taken to suggest that there is widespread agreement on the details of the House and Senate bills. Business-aligned groups — including the Minnesota Chamber of Commerce, the Minnesota Council of Health Plans and the National Federation of Independent Business — have repeatedly expressed misgivings about the details of the online marketplace.
“We would not support the bill in its current form,” said Kate Johansen, the Chamber’s primary lobbyist on health care issues. “But we are heartened that both of the authors have stated that this is a starting point and not an ending point.”

Specifically, health insurance plans and their allies are concerned about the rules governing which products can be sold through the exchange. As currently drafted, Bartsh points out, the legislation would leave those decisions to a seven-member board appointed by the governor to oversee the exchange. “The legislation currently gives this board of directors this broad authority to pick and choose carriers and products on behalf of consumers, and there’s really no transparency or accountability for how that process works,” Bartsh said.

Business interests are also upset about the conflict-of-interest language in the bill. Currently any individual with financial ties to a health insurance firm or medical care provider within the last year is prohibited from serving on the board of the exchange.

“We’d like to throw it out,” said Mike Hickey, state director for the National Federation of Independent Business. “They need people who know about insurance on this board, or they could really do some cockeyed things.”

Another area of concern involves the cost and funding sources of the exchange as currently constituted. The cost of running the exchange, estimated at $50 million per year, would be paid by a fee of up to 3.5 percent on premiums purchased through the exchange. Many business lobbyists believe that should be pared down.

Atkins open to changes

Rep. Joe Atkins, DFL-Inver Grove Heights, the lead author in the House, has repeatedly indicated that he’s open to changes in the bill. He’s already made one significant change to placate the health plans: Insurance brokers will be paid directly by the plans, rather than receiving compensation through the exchange as originally conceived.

“I still recognize that we’re very early in the committee process,” Atkins said. “I’m not just blowing smoke. … I genuinely want to see what the committee process yields and what thoughts legislators and testifiers and other stakeholders have.”

But consumer advocacy groups and labor unions are generally much more bullish on the legislation in its current form. A coalition of such groups — including TakeAction Minnesota, the AARP and several unions — have been working collectively to ensure that the bill reflects what they believe will be best for consumers. In particular, they want the exchange to have the authority to negotiate prices for insurance plans offered in the online marketplace.

“I don’t know why people feel like it’s so negative to have the power to negotiate for plans,” said Mary Jo George, AARP’s associate director of advocacy for health and long-term care. “We just think it’s in the best interest of the individual and small-group markets. They’ve been so disadvantaged in being able to buy products that have been affordable.”

George points to the experience with the Medicare prescription drug benefit as evidence that an unfettered marketplace will not serve consumers well. When that was rolled out in 2003, seniors had more than 100 plans to choose from for their prescription drug coverage. “That was very confusing,” George said. “Seniors were signing up for programs one year and then they weren’t there the next year.”

George and her allies are also reasonably happy with the conflict of interest language currently in the bill. If anything, they’d like to see it strengthened to preclude anyone with a financial interest from making decisions on the operations of the exchange.

“We want consumers to get unbiased information about which plan is the best for them,” said Liz Doyle, TakeAction’s associate director. “We can’t expect an individual who is selling products on the exchange to make an unbiased judgment about which products are in the best interests of consumers.”

Hope for bipartisan support evaporates

Initial indications that the health exchange bill might garner bipartisan support have diminished considerably since the bill’s rollout. While Reps. Greg Davids, R-Preston, and Jim Abeler, R-Anoka, initially signed on as co-sponsors of the bill, there’s little indication that they intend to vote for it or encourage their colleagues to back it. In fact, Abeler and Davids both acknowledged that signing on to the bill — even if their intention was just to have a voice in the discussion — has caused them grief within their caucus. In all three committees that have heard the bills, Republicans have voted unanimously against passage.

“This was written by someone who was in dreamland thinking that they were taking over the world,” said Davids. “You look at that bill and you shake your head and you say, ‘You’ve got to be kidding.’”

At Wednesday’s hearing before the House Commerce and Consumer Protection Finance and Policy Committee, GOP legislators grilled Atkins for two hours on details of the bill. Rep. Glenn Gruenhagen, R-Glencoe, who does not sit on the committee, showed up for the hearing anyway. He’s been among the most vocal Republicans in advocating against the establishment of any state exchange.

Gruenhagen points out that while the United States Supreme Court upheld the Affordable Care Act, it struck down the repercussions for failing to implement the law (i.e. loss of Medicaid funds). “It’s a law without consequence,” Gruenhagen argued. “So we don’t have to set this exchange up. If the feds impose something on us, we don’t have to connect our health care system to it. It can simply sit out there as a dead bureaucracy.”

But that point of view is increasingly marginalized with DFLers in control of the House and Senate. Atkins insists that he welcomes the rigorous scrutiny from Republicans and lobbyists as the bill moves forward. The Senate and House bills are expected to pass through at least 11 more committees before they can be voted on by the two chambers. “I was very appreciative of their input,” he said of Wednesday’s hearing. “I think it’s going just fine. No surprises, just kind of moving through the process in a deliberative way.”

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