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On Thursday night the Minnesota House of Representatives gave final passage to the bill establishing a state-run health-insurance marketplace, leaving the long-disputed measure just a Senate vote away from reaching the governor’s desk.

HIX bill nears Dayton’s desk

Legislation sponsor Rep. Joe Atkins, DFL-Inver Grove Heights, points out that the exchange will be subject to annual performance reviews by the Office of the Legislative Auditor and that members of the board must be approved by the House and Senate. (Staff photo: Peter Bartz-Gallagher)

Final version flouts pressure from health plans, state chamber

On Thursday night the Minnesota House of Representatives gave final passage to the bill establishing a state-run health-insurance marketplace, leaving the long-disputed measure just a Senate vote away from reaching the governor’s desk.

When the conference committee charged with hashing out differences between the Senate and House versions of the bill gathered 24 hours earlier, there were still two major issues left to resolve.
The bills differed on how to pay for the exchange and whether the seven-member board that will oversee it should have the authority to determine which insurance products can be sold in the marketplace.

The lead sponsors of the legislation — Sen. Tony Lourey, DFL-Kerrick, and Rep. Joe Atkins, DFL-Inver Grove Heights — went through the motions of defending the positions of their chambers. But it quickly became clear that a deal had been precooked between the bill authors.

The House would prevail on its financing mechanism, a tax of up to 3.5 percent on premiums purchased through the exchange. In the initial year of the exchange’s operation, however, that withhold on premiums would only be 1.5 percent.

The Senate would largely get its way on what’s known as the “active selector” language. Basically that means that the exchange board will have the authority to pick and choose which insurance products are sold in the marketplace. The only concession to the House position was to delay implementation of the active selector provision until 2015.

With that deal in place, the conference committee quickly approved the revamped bill and paved the way for final passage. The lone dissenting vote came from Rep. Jim Abeler, R-Anoka the only Republican on the panel. The vote capped more than two months of intensive legislative work on the bills. The proposals cleared 16 House and Senate committees and were subjected to hours of debate. But despite that laborious process, the most significant details of the proposal changed little along the way.

Tough conflict-of-interest language

That means that business and insurance interests — most notably the Minnesota Chamber of Commerce and the Minnesota Council of Health Plans — remain staunchly opposed to the exchange bill. “The conference committee report is disappointing,” said Kate Johansen, the chamber’s top lobbyist on health care issues. “The state had an opportunity to build an exchange that was reasonable and could have worked effectively for consumers.”

In addition to the active selector and financing mechanism, business groups take issue with conflict-of-interest language that precludes anyone with a financial tie to a health insurance firm or a medical provider from serving on the board. One exception to this restriction — for health care experts employed by academic institutions — was added during conference committee.

Ultimately Johansen argues that the provisions adopted will drive up costs and limit consumer choices when shopping for insurance coverage. “Not getting it right the first time because we were overly ambitious is detrimental,” Johansen said. “I wish that the state had taken a practical approach that was respectful of actually translating stakeholder input into policy and had been more reflective of Minnesota’s tradition of working together instead of, frankly, shooting the moon.”
But consumer advocacy groups and labor unions are largely pleased with the bill that emerged. They argue that the active selector provision will allow the board to negotiate on behalf of consumers in order to get better insurance products into the marketplace. “Ideally we would have liked it to start immediately,” said Liz Doyle, associate director of TakeAction Minnesota, which worked closely with AARP Minnesota and the Legal Services Advocacy Project, among others, in lobbying for the exchange. “But it’s there for the long term, and that was our top priority.”

Doyle also praises the 3.5 percent tax as a stable funding source and the conflict-of-interest language as well-crafted to ensure that the board looks out for the interests of individuals who will be purchasing insurance through the marketplace. “Keeping people off the board that are actually directly profiting from the products was our number one [concern],” Doyle said.

Abortion controversy

The House took up the bill on Thursday evening and debated it until past midnight. It eventually passed on a 72-61 vote. DFL freshman Rep. Laurie Halverson was the lone dissenter in what was otherwise a party-line vote.

Republicans lambasted the proposal for granting extraordinary authority to the seven-member board, costing too much, lacking adequate privacy protections and excluding individuals with relevant expertise from serving on the board. “This is disaster coming at us, and I think we can all see it coming,” said Rep. Greg Davids, R-Preston.

But Atkins chafed at such characterizations. He pointed out that the exchange will be subject to annual performance reviews by the Office of the Legislative Auditor and that members of the board must be approved by the House and Senate. Atkins argued that no other entity in the state will have greater oversight and accountability.

“I honestly don’t know what more we could do,” he said.

The only minor drama in the House surrounded the votes of anti-abortion DFLers. During the initial floor vote on the House bill, they successfully added an amendment prohibiting coverage of abortion on plans sold through the exchange, except in cases of rape, incest or where the mother’s life is at risk. A dozen DFLers joined all Republicans in voting for the measure. But that language got dropped during the conference committee.

That meant that Minnesota Citizens Concerned for Life, the influential anti-abortion group, was opposed to the legislation and would include it on its legislative scorecard. But on an early procedural vote, just four of the anti-abortion DFLers — Reps. David Dill of Crane Lake, Patti Fritz of Faribault, Mary Murphy of Hermantown and John Ward of Baxter — voted against their party’s position, indicating that the measure had the votes to pass.

The bill is expected to be passed by the Senate on Monday. That will allow it to be on the governor’s desk prior to the Easter/Passover break and meet a March 31 federal deadline for enacting exchange legislation. The exchange is expected to be utilized by nearly 1.3 million individuals seeking health insurance when fully implemented, including 300,000 who currently lack coverage. Annual administration costs are expected to be roughly $60 million.

Passage of the bill won’t mark the end of discussions around the federal Affordable Care Act and the exchange. There is separate legislation establishing rules for how the marketplace will work that needs to be passed this legislative session. In addition, there’s a proposal to create what’s known as a Basic Health Plan under the federal health care legislation. It basically would become the replacement program for MinnesotaCare, which currently provides health care coverage to more than 120,000 lower income individuals who earn too much to qualify for Medicaid.

Gov. Mark Dayton is required to select the members of the exchange board by the end of April. Health insurance firms that want to offer products on the marketplace must submit them by May 17. Enrollment through the exchange is slated to begin in October.

“We live in a country where we promote competition,” Atkins said. “It drives quality up; it drives prices down. I believe in that model … I hope and I pray that it works with respect to this health insurance marketplace that we’re establishing.”

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