Showdown coming in Minn. over health exchanges

Minnesota appears headed toward a showdown over health insurance exchanges, one of the pillars of the federal health care overhaul.

Under the law, Minnesota, like all states, will eventually have an exchange -- an online marketplace where consumers and small businesses can compare and buy health plans. But there's a battle shaping up over who will design and run it.

Consumers and small businesses won't be able to use the exchanges until January 2014. But because they're so complicated and require so much planning to set up, states must show the federal government they can operate one by 2013 -- less than a year and a half from now.

DFL Gov. Mark Dayton has secured millions in federal dollars to design a Minnesota health insurance exchange. But whether the Dayton administration has the authority to turn those designs into reality is an open question.

The federal health care law is vague as to whether a governor may unilaterally create an exchange. So in Minnesota, leading lawmakers of both parties say that most likely means it's up to the Republican-controlled Legislature to approve an exchange.

But opposition to the federal health law, and the exchange idea, runs deep among many GOP lawmakers.

"I think it's unnecessary," said State Sen. David Hann, R-Eden Prairie, who is among the more vocal and powerful opponents of the law.

Hann, who chairs the Senate Health and Human Services committee, maintains the law is unconstitutional and should be repealed. He's no fan of the exchange idea either.

"It's a governmental or bureaucratic arm defining what quality means, what prices are, what are the terms of the transactions to be made," Hann said. "So it's a huge interference into a marketplace that is unnecessary if you really want to get efficiencies."

But there are important Republican constituents, including the Minnesota Chamber of Commerce -- the state's largest business group -- who say Minnesota needs to establish an exchange. The chamber's Tom Hesse says the state has a good track record enacting health reforms, and is in a good position to develop an exchange.

"The idea of an exchange should be a good thing that everybody can support," said Hesse. "It provides great information to businesses and consumers on the quality and cost of health insurance products, and that could facilitate more individuals or small businesses providing either coverage or funds toward coverage -- and that's good."

Rep. Steve Gottwalt, R-St. Cloud, tried to accommodate that view. Gottwalt chairs the House Health and Human Services Reform committee. Last session, he authored legislation to create an exchange in Minnesota, but the bill didn't get very far -- even though his own party controls the Legislature.

"Many people still remain concerned that any exchange will be a path to a federal takeover of health care," said Gottwalt.

But here's the twist. If Republicans block a state-run exchange, the federal government will step in and operate one.

Some Republicans consider that prospect worse than the federal health care law itself. GOP-dominated Indiana, for example, is moving to create an exchange even though many lawmakers there want the health care law repealed.

"The nation will be best served by the repeal of this expensive and unworkable law, or by its judicial overturn," said Indiana Gov. Mitch Daniels. "But for now, there seems no alternative but to prepare for the possibility that Indiana will try to operate an exchange of some kind."

As of July, about half the states had yet to pass legislation or take some formal action to authorize their own exchanges.

The feds say those states will have only so long to do so. "We can't wait until the last moment for a state to decide," said U.S. Health and Human Service Secretary Kathleen Sebelius. "So there'll be some benchmarks that Minnesota will decide to meet or decide to cede to us, and that's going to be laid out with more specificity this fall."

The Dayton administration is continuing to plan for an exchange, and research its options for establishing one.

Meanwhile, State Rep. Tom Huntley, DFL-Duluth, doubts the Legislature will authorize an exchange.

"If this session was any idea of what's going to happen, it doesn't have a snowball's chance in you know where," he said.

If not, lawmakers opposed to what they consider a government takeover of health care may have to face the possibility of giving the federal government control of a critical part of the health system.

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