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Minnesota legislators share health care goals, but disagree on how to achieve them

Gov. Tim Walz on Thursday, March 28, 2019, said he would negotiate with Republicans about his budget proposal but wouldn't bend on extending a tax on medical providers that funds health care for low-income people. Dana Ferguson / Forum News Service

ST. PAUL — If you take Minnesota political leaders at their word, they’re committed to making health care more accessible and affordable.

Here’s a recent sampling:

  • Minnesota Gov. Tim Walz: “We cannot let ideology get in the way of stopping this state from providing basic health care to all its citizens.”
  • Republican Senate Majority Leader Paul Gazelka: “I want Minnesota to be the state that actually solves health care.”
  • Democratic House Speaker Melissa Hortman: “We are ready to make health care more affordable and we look forward to working with Republicans to get a deal we can all support at the end of session.”

But the political reality is much more complicated.

Lawmakers spent the past week detailing their various health care policy and spending proposals as they moved through committees and floor votes. And when it comes to the way Republicans and Democrats want to make health care more accessible and affordable, they remain far apart.

Here’s a look at the most contentious debates they need to resolve:

The provider tax

Issue: A 2% provider tax that raises about $700 million a year for the health care access fund.

Stakes: The provider tax is set to expire at the end of the year, leaving a budget gap for programs that help keep health care more accessible and affordable. The health care access fund supports a number of programs including medical assistance, MinnesotaCare and the state’s reinsurance program that helps cover the cost of the sickest patients.

Those programs are also funded by federal sources, but there’s been near constant volatility in Washington, D.C., around health care policy and spending, and state leaders worry the money could dry up. State officials say they already expect to lose more than $300 million in federal funding over the next five years.

Debate: Republicans want to let the provider tax lapse. They characterize it as a “sick tax” and say the funding could be replaced by cutting costs and relying on federal support.

Democrats say continuing the tax is essential to keeping state health care programs stable. They say that the federal government is not a reliable funding source and that without dedicated state revenues, health care for the most vulnerable citizens would be at risk.

Insurers and hospitals both support keeping the tax. A bipartisan replacement to tax insurance claims instead has less support.

MinnesotaCare buy-in

Issue: Creating the ONECare health insurance program that would allow residents to “buy in” to MinnesotaCare, the state’s coverage for the working poor.

Stakes: Buying insurance on the individual market is too costly for many Minnesotans. Offering them the option of buying into a state-run plan could be cheaper because of the government’s purchasing power and economies of scale.

Debate: Democrats back this idea that was initially proposed by former Gov. Mark Dayton because it would essentially create a public health care option. They say it will help reduce the number of uninsured by offering plans more people can afford.

Republicans say Democrats have presented little evidence that offering the option to buy in to MinnesotaCare would be affordable. They also have criticized Democrats for offering few details about how the program would work and how much it would cost taxpayers.

There’s also concern about how increasing the number of people on public insurance will affect rural hospitals. Public programs like MinnesotaCare and Medicaid typically negotiate lower reimbursement rates for services than traditional insurance plans.

Reinsurance program

Issue: A reinsurance program that helps insurers shoulder the cost of the sickest patients.

Stakes: To deal with skyrocketing premiums on the individual insurance market, lawmakers approved $542 million in state spending in 2017 to help insurers cover some of the cost of their most expensive customers. The result was an average of a 20 percent decline in premiums over the two years the program was in place; it is now set to expire.

Debate: Republicans want to extend the reinsurance program. They say lower premiums prove it is working and all the money initially set aside hasn’t been spent.

Democrats have called reinsurance a giveaway to insurance companies. They argue recent news of insurers earning $500 million last year is evidence the organizations are doing fine financially.

Instead, Democrats want to give rebates directly to consumers to keep insurance costs down. Republicans say that won’t have the same impact as the reinsurance pool.

Another caveat is some Democrats in Minnesota’s congressional delegation are backing a federal reinsurance program. Such a move would be funded in the federal budget.

Lowering drug prices

Issue: Lowering prescription drug prices and improving transparency for the cost of medical procedures.

Stakes: The cost of some life-saving medicines, such as epinephrine pens and insulin, have increased dramatically in recent years. Repeated studies of what hospitals charge for medical procedures have shown large differences in what patients pay depending on their insurance.

Lawmakers hope new regulations and other changes will lower prices and help consumers find the most affordable way to receive care.

Debate: The Republican-led Senate advanced several bills last week including new rules for pharmacy benefit managers and requirements for new transparency in hospital charges and billing.

Republican leaders said they were “major reforms,” but Democrats criticized them as small changes. They have pushed for legislation prohibiting price gouging, increasing transparency around the cost of prescriptions and requiring insulin makers to help patients afford their medicine.

Despite their differences, incremental changes like these may have the best chance of becoming law this session. But those are far from the sweeping reforms both parties say they want.

Next steps

Lawmakers in both chambers will spend much of the next month debating and passing policy and budget bills. Then they have to sit down and hash out their differences and find a middle ground that Gov. Walz supports.

They’ve promised to do it in a more transparent way and to finish by the May 20 deadline. So far, evidence of any grand compromises has been elusive.

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