House passes online health insurance marketplace

ST. PAUL, Minn. (AP) -- The Minnesota House passed a bill early Friday creating an online health insurance marketplace that aims to provide a new way for at least 1.3 million Minnesotans to purchase coverage, a key element of the new federal health care law.

The bill now faces a final test in the Senate before heading to Gov. Mark Dayton, who has promised to sign it. It establishes a new state office, overseen by seven people appointed by the governor, to manage a website where insurance companies can offer their plans for sale.

The House passed the bill on a vote of 72 to 61, with most Democrats supporting it and most Republicans opposed. Several Democrats sided with Republicans, a split stemming from the absence of an earlier House provision that would have barred insurance sold over the exchange from covering abortions.

The exchanges are a centerpiece of implementing President Barack Obama's federal health care changes. States had the option of creating their own exchanges or letting the federal government do it.

In Minnesota, Democratic lawmakers opted to make it a homegrown project and crafted the complex bill in recent weeks through dozens of committee hearings and many hours of testimony. They have been working to meet an end-of-March federal deadline for creating state exchanges, ahead of a hoped-for start of enrollment in October.

Projections call for about 1.3 million Minnesotans to get coverage from the exchange by 2016, including 300,000 people who currently don't have health insurance. Another roughly 500,000 participants are currently eligible for government health coverage.

The rest are expected to be small-business owners, families and individuals who could get a better deal than their current insurance. None of those people would be required to buy insurance through the exchange, but those who do could be eligible for federal tax credits depending on their income.

The bill's House author, Rep. Joe Atkins, said the average Minnesota family should save $490 a year in health insurance costs by purchasing through the exchange. He said families with higher incomes would save little or no money.

"This is additional competition — the health care insurers will be competing for our business, rather than feeling like you never have any leverage to negotiate with a child health insurance company," Atkins said.

Initial estimates put the yearly cost of operating the exchange at $60 million. The legislation covers that with a tax on premiums sold through the exchange of 1.5 percent in 2014, and up to 3.5 percent in 2015 and after.

Opponents of the current bill include the Minnesota Council of Health Plans, which represents nonprofit insurers, and the Minnesota Chamber of Council. Julie Brunner, executive director of the Council of Health Plans, said the premium tax is too high and would likely result in pressure on insurers to raise insurance rates across the board.

"We are in support of a state-based exchange, and we want this to be successful," Brunner said. "But we think this is a huge missed opportunity."

Under the bill, all insurance companies would be eligible to sell their products on the exchange in 2014. Starting in 2015, the exchange's governing board selects which companies can keep participating based on criteria that include affordability and value, quality, promotion of prevention and wellness, and other markers.

"It's quite broad and it leaves a lot of questions," Brunner said.

Republicans argued that the seven-member board that would oversee the exchange, to be appointed by the governor and confirmed by the Legislature, has too much power and not enough accountability to taxpayers.

Rep. Jim Abeler, R-Anoka — the lone Republican on the conference committee — pushed to give lawmakers more direct involvement in the budget of the exchange, but he said a provision creating a legislative panel to keep an eye on the exchange still lacked teeth.

"It's a blank check," Abeler said. "That's a lot of money we're spending every year with nobody scrutinizing it, nobody approving it. Nobody in the Legislature can say, 'No, you can't spend that.'"