The Senate bill passed on a mostly party line vote of 37 to 28 after more than 12 hours of debate.Ìý The longest and most contentious battles centered on the small but powerful seven-person board of directors that will govern the exchange’s operations.Ìý Republican Sen. Paul Gazelka from Nisswa wanted to eliminate a provision disqualifying anyone on the payroll of a health care organization or insurer.Ìý He said it would be difficult to find experts who aren’t currently working in health care.

“In this particular industry, like a lot of industries, your expertise, if you’re out of it for a year, yeah, you still have a lot of wisdom and expertise, but you are missing whatever is currently changing both technology and otherwise,” said Gazelka.

Mound Republican David Osmek, who’s employed by the nation’s largest health insurer, UnitedHealth Group, agreed.

“UnitedHealth Group, they’re into the millions of people, they are the largest in this nation,” said Osmek.Ìý“And that we would not use that level of expertise, that level of knowledge leverage our health system to be the best that it is, is an abomination.”

The Senate bill’s chief author, Tony Lourey, a Democrat from Kerrick, defended the restrictions.

“You don’t have to get a check from industry to be an expert on know how the industry works,” Lourey said. “We are not trying to exclude the experience or the perspective. We’re trying to exclude the direct financial conflict of interest.”

Like most amendments the GOP offered, the proposal failed to win a majority in the Demcratic majority Senate.

The board’s power to exclude plans from selling on the exchange also was an issue. This topic has been a speed bump for legislation that’s otherwise moved swiftly through previous committees.ÌýLast week, the chief author of the bill secured an amendment allowing companies to sell at least two products on the exchange.

Senate Republicans, including Michelle Benson from Ham Lake, asked to go further: to allow any plan that meets state requirements to be available on the exchange.Ìý Otherwise, she said, the board is limiting consumer choice.

“If the board decides that there are only two plans of value at each level in this state, the consumers get no more say in the exchange; end of discussion,” Benson said.

Senate Minority Leader David Hann from Eden Prairie said allowing the board to exclude plans is giving too much power to the government.

“This is what we’re doing here, people,” Hann said. “We’re saying we’re going to limit your choices for your own good, because we know better than you how to spend your money. That’s what Sen. Lourey and this bill and the Democrats and the Democrats in Washington– that’s what they’re saying.”

Chief author Tony Lourey said the board’s power to choose plans would make sure that the coverage offered on the exchange serves the public interest.

“The question before us is whether that value in the competition is driven better by having more plans or by having better plans on the exchange.ÌýThis is about getting plans that are in the interest of consumers,” Lourey said.

The amendment to strip the board’s power to deny certified plans ultimately failed.Ìý

Several GOP amendments beefing up privacy protections passed. One provides that state law will prevail when Minnesota lawÌýprovides greater privacy protection than federal law. Another successful amendmentÌý requires the exchange to have a list and descriptions of its data-sharing agreements on its website.Ìý

And the Senate agreed to require all stateÌýlegislators to buy their health coverage on the exchange.

During debate, Republicans frequently recalled Gov. Mark Dayton’s recent comment that the exchange is a gamble. Dayton, a supporter of a single payer system, clarified Thursday that he didn’t want to get the public’s hopes up that the exchange would work smoothly from day one.

“There are going to be some glitches initially, and it will take some time to iron that out,” Dayton said.

A conference committee will have toÌýreconcile several material differences between the House and Senate bills, abortion coverage among them. The House version forbids health plans to cover abortions, except to save the life of the woman or if the pregnancy results from rape or incest.Ìý The chambers also differ on how to fund the exchange’s operations: The House bill would impose a user tax of up to 3.5 percent of the premiums on plans sold on the exchange; the Senate would use an existing tobacco tax.ÌýÌý

If lawmakers fail to pass exchange legislation by March 31, the federal government will play a much stronger role in how an exchange will run in Minnesota.

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The full Senate takes up its exchange bill on Thursday. from the federal Department of Health and Human Service to have a state-based exchange in December, but actually setting up the new marketplace requires enabling legislation.

It initially looked like the House debate would last for eight hours or more and stretch into the early morning hours, with nearly 100 amendments offered. But most were eventually withdrawn, and only a fraction of those remaining passed. One that did pass said no health plans sold on the exchange could provide coverage for abortion. It was introduced by Rep. Patti Fritz, a Democrat from Faribault, and did include exceptions if the procedure was needed to prevent the death of the mother or in cases of rape or incest. The amendment specifies that the rape must be reported to police within 48 hours for the exception to apply.

The chief author of the exchange bill in the House, Joe Atkins, a Democrat from Inver Grove Heights, did not support the amendment. Atkins suggested the change could discriminate against women who can’t afford to pay for abortion services themselves.

“The outcome of this would be that we would treat — for purposes of a medical procedure –poor women differently from rich women. And regardless of how you feel about abortion, I don’t think anybody in the [House] feels that poor women ought to be treated different from rich folks when it comes to any sort of medical care,” Atkins said.

If the abortion restrictions make it into the final version of the legislation, they might draw a veto from Dayton. An administration spokeswoman said that, “The governor has a long record of supporting a woman’s right to choose. We look forward to seeing the final version of the exchange bill.”

The federal health care law and at least 17 states have enacted legislation .

Other successful amendments beefed up data privacy. One said the exchange can’t disclose a person’s use of tobacco or gun ownership outside the exchange. But some Republicans, including Kelby Woodard from Belle Plaine, said those safeguards are too weak to protect Minnesotans’ privacy.

“Between us sharing information with the federal government and the federal agencies who we know can’t handle privacy, who we know have a difficult time with how big this will be,” Woodard said. “You ought to be scared.”

Another Republican, Jim Newberger, of Becker, called the legislation “socialist.”

“I have been to the former Soviet Union eight times. I’ve been to Russia, I’ve been to Romania, and I can tell you right now this is a socialist-style medical bureaucracy, and it will not work,” he said.

Despite such dire warnings, the House approved the bill largely on a party line vote with one Republican voting in favor (Jim Abeler, of Anoka) and a Democrat (Laurie Halverson, of Eagan) voting against it.

Right now, the House and Senate bills differ in a couple of major areas, including how the marketplace will be funded. The exchange’s operation is expected to cost the state somewhere in the neighborhood of $60 million starting in 2016. The House bill would fund it with a user tax by withholding a fraction of premiums up to 3.5 percent for plans sold on the exchange. The Senate bill would use an existing tobacco tax to fund the program.

Another difference is in the power of the exchange’s governing board to select which health plans could be offered on the exchange. The Senate version calls for the board to be a gatekeeper for each product, whereas the House version would allow approved insurance carriers more leeway to sell at least two products on the exchange. Chief House author Joe Atkins sought that change late last week to ensure there would be plans offered for sale. But during the floor debate, Tina Liebling, a Democrat from Rochester, said that change removed one of the biggest consumer protections.

“This board needs to give Minnesotans the opportunity to select in much the same way that large employers are able to select plans that meet their needs. Without that I’m not really sure if it’s worthwhile to have a Minnesota exchange,” she said.

Differences between the House and Senate bills would have to be reconciled by a conference committee. If lawmakers fail to approve exchange legislation by March 31, the state would have to accept one operated at least in part by the federal government.

This story is part of a collaboration that includes , and Kaiser Health News.

ºÚÁϳԹÏÍø News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about .

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University of Minnesota law professor Amy Monahan looks through the federal health care reform law in this 2010 file photo. (MPR Photo/Elizabeth Stawicki)

They say the loophole could have dire consequences for the financial health of the exchanges, which are a key part of President Barack Obama’s health care law. The online marketplaces are intended to make it easier to comparison shop for health plans and also to expand access to coverage for the uninsured.

One of the key questions in the health care overhaul is whether this new option for securing health coverage will convince employers to stop offering insurance altogether, knowing employees can resort to the exchanges.

“We didn’t think it would be as simple as that,” said Amy Monahan, a U of M expert on health law.

Monahan and her colleague Dan Schwarcz, an expert on insurance regulation, tried to anticipate how companies would respond to the law given the harsh economic environment and soaring health insurance costs.

They discovered the law gives many large employers an opportunity to squeeze the most expensive workers out of their health plans. The loophole applies to companies that self-insure; that is, design and cover the cost of their own plans. Those companies who get insurance through work.

Monahan doubts that many large companies would stop insuring their employees entirely because they’d face a penalty under the health care law.

But self-insured employers “can exclude things and essentially structure their plans to be attractive to low-risk, healthy employees and not attractive to people who are going to have significant health needs,” Monahan said.

She said self-insured employers could design coverage that would discourage sicker workers from remaining on the company plan and make it more attractive for them to seek coverage through the public insurance exchange.

Monahan and Schwarcz said there are several approaches companies could use to encourage higher-cost workers to voluntarily leave the employer’s plan:

• Limit the number of specialists in a provider network. The exchange could be more attractive to someone who needs a specialist for an expensive chronic condition.

• Couple high premiums with discounts for participating in wellness programs. Employees who are not in the best of health may not want or be able to participate in wellness discounts, such as going to the gym three days a week.

• Raise deductibles and co-pays. Substantial co-pays or deductibles are unattractive for someone who frequently sees a doctor for a chronic condition. High co-pays don’t matter as much for those who see a doctor infrequently.

Carolyn Pare, president of the Minnesota Buyers Health Care Action Group, doubts that large employers would engage in what the professors termed “target dumping” of their sicker workers.

Pare represents about 40 businesses; about half are large employers based in the Twin Cities, such as 3M, General Mills, and Medtronic.

She said companies must balance their financial bottom lines against the cost of harming their reputations. And from a public relations perspective, dumping workers is a bad idea.

“I don’t see the financial benefit to just dumping your sicker patients into a public program or a health insurance exchange,” Pare said. “And I really don’t see the savings as great enough to incent them to do that.”

But one benefits consultant does. Dave Delahanty at Towers Watson in Chicago said businesses have watched their health care costs soar year after year. Employers might pursue such strategies because it’s so important to rein in health care costs, he said.

“Employers would prefer to think of it as ‘maximizing their health care spend,’ not trying to dump their bad risks on the market,” Delahanty said. “But they are trying to take their health care dollars and spend them as wisely as they possibly can.”

Health law expert Amy Monahan said there are several solutions — the simplest among them is to follow the lead of Massachusetts, where workers who have access to employer insurance are not eligible for policies on the state exchange.

ºÚÁϳԹÏÍø News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about .

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