States grapple with health insurance exchanges

ST. PAUL, Minn. — State Rep. Steve Gottwalt, a three-term Republican with 10 years’ experience in the health-care industry, is no fan of the health-care law — or its requirement that states set up insurance exchanges.

But as chairman of the Health and Human Services Reform Committee, he decided he needed to weigh in. Unfortunately, from his standpoint, all the choices are bad.

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He is not alone. Although health-care reform may have cost the Democrats control of the House in the midterm elections last year, it is the Republicans in statehouses around the country who are feeling the heat in 2011, and insurance exchanges are at the heart of the controversy. It is up to state legislatures across the country to implement the health-care act. And the split between traditional Republicans and the more conservative tea party movement is making the issue even more heated in places like Minnesota.

Insurance exchanges, enabling individuals and small businesses to shop for medical coverage in much the same way that travelers troll the Web looking for bargain airfares, are a cornerstone of last year’s federal health-care law.

Republicans, however, regard it as a likely first step down the road to a government-controlled insurance system.

The law describes in some detail how the exchanges are to be set up, but leaves states considerable leeway in how to structure them. States must have their plans ready by 2013 so the exchanges can begin operation on Jan. 1, 2014. If states do not have their own plans, the federal government will set one up for them.

Gottwalt, who used to negotiate health coverage contracts for provider networks, felt responsible to deal with exchanges. He could have taken the approach recommended by tea party conservatives: repudiate the law, refuse to implement an insurance exchange, hope the Supreme Court rules it unconstitutional or that the Democrats lose the White House and the Senate next year so the Republicans can repeal the law. This strategy is relatively easy to promote in states where legislatures and statehouses are both in Republican hands.

But Minnesota is a divided state. Conservatives played a prominent role in toppling the Democrats’ majority in the legislature last year, but Democrat Mark Dayton, who supports President Obama, won the governorship, succeeding Gov. Tim Pawlenty, now a Republican presidential candidate. Paw­lenty opposed the health-care law. Dayton has embraced it.

If the Supreme Court leaves the health law in place, Dayton might offer his own insurance exchange proposal, or, failing that, Minnesota would get the one-size-fits-all federal template.

Gottwalt finds this last possibility particularly abhorrent, so he chose a third option. He wrote a Republican exchange bill that tries to temper the government’s role. He said he hoped the bill would be taken seriously by Dayton and not used as “the beginning of Obamacare.” Minnesota “should implement an exchange and define it for ourselves,” he said. “I could not absolve myself if I did nothing.”