The 2012 Legislature convenes Tuesday facing a contentious battle over consumer health initiatives that could thrust Minnesota into the national spotlight and determine whether the state is a leader or a follower in the national wave of health care innovation.

One key debate will determine whether Republican opposition to federal "Obamacare" is so intense that the GOP-led Legislature will block a Republican-authored bill to create a statewide health insurance exchange, a one-stop marketplace where more than 1 million Minnesotans could be shopping for coverage in two years.

That's what happened in the Legislature last year, leaving Minnesota in gridlock while many other states began implementing various provisions of the 2010 Affordable Care Act, President Obama's signature health care proposal.

A dozen states have already approved laws to shape their own health insurance exchanges, which are required under federal law for all states by January 2014.

"Uncharacteristically, Minnesota seems to be slipping behind in an area -- health care -- where it traditionally is a national leader," University of Minnesota political scientist Larry Jacobs observed recently at a U forum.

Under the 2010 federal law, which remains hotly debated, the federal government will put its own exchange in place in 2014 if Minnesota doesn't act.

That is likely to occur in Florida, Louisiana, South Dakota and perhaps a dozen other states, including Wisconsin, where Gov. Scott Walker announced last week that he will return $38 million in federal planning money and quit work on an exchange.

Twenty-eight states have filed suit to stop elements of the federal law, an issue now before the U.S. Supreme Court.

At the same time, however, three of them have also begun to set up insurance exchanges. A White House report last week said 28 states, including Minnesota, are "on their way toward establishing" exchanges.

In Minnesota's legislative session last year, a bill to create an exchange drew only anti-Obama speeches from Republicans when it was proposed by their own colleague, Rep. Steve Gottwalt, R-St. Cloud, chairman of the House Health and Human Services Reform Committee.

"Governor Dayton is already moving ahead, without consulting us, on the kind of exchange he wants to see," Gottwalt said last week. "We shouldn't settle for that, or for a federal one-size-fits-all model. I don't like the Obamacare law, but I do think we can do something here that benefits Minnesota, so let's do it."

A task force appointed by Dayton will soon recommend details of how an insurance exchange should be organized and governed -- areas in which the federal law offers states wide latitude.

A clue that the Legislature might approve an exchange came recently from Sen. David Hann, R-Eden Prairie, who heads the Senate Health and Human Services Committee and has been one of the most vocal legislative opponents of the federal law.

Last year, he and other Republican legislators threatened to sue to stop Dayton from establishing an insurance exchange. But 10 days ago, Hann said he won't sue but likely will draft legislation to set limits on an exchange.

Not just politics

Republicans don't necessarily oppose the idea of an insurance exchange -- first proposed a decade ago by conservative-leaning think tanks in Washington, along with the notion of requiring universal health insurance coverage.

What they oppose is Obama, and election-year politicking has Republicans speaking against any administration initiative.

But they also have fiscal and philosophical concerns about the exchanges becoming too restrictive, too bureaucratic, too expensive or a potential doorway to a government entitlement plan like Medicare for the aged and disabled or a single-payer national health plan like those in many other developed countries.

"Nobody was really in the mood to talk about the real issues last year," said Rep. Jim Abeler, R-Anoka, who heads the House Health and Human Services Finance Committee. "I hope we can have a good discussion this year, a good debate, but I honestly don't know what the will of the [Republican] members is right now."

The federal law requires that, in two years, nearly all Americans have health insurance through employers, government programs or by buying it directly. Health plans will be required to accept all applicants, and millions of people who can't afford it will get tax credits to help pay premiums. Those who don't buy insurance will face penalties.

To make it work, the state must figure out a way to regulate the insurance risk, so that one insurer doesn't get saddled with most of the sickest and most expensive patients.

"That means we need to change some laws," said Rep. Tom Huntley, DFL-Duluth. "We can't wait. We've got a lot to do that should have gotten done last year," he said.

Fraud, care and newborns

Although a dominant topic, the insurance exchange will be just one health and human service issue legislators take on.

Legislators, advocates and the Dayton administration are considering a raft of programs, but await a February budget forecast to tell them if the state's modest projected surplus will grow or shrink.

Among the issues:

• Emergency Medical Assistance: Abeler will offer legislation to convert the stripped-down program to a managed-care plan, perhaps with lump-sum payments for each patient in the program who is cared for by community clinics. The program last year provided emergency and other expensive care to 3,647 people at a cost of $45 million, half paid by the state. After a $14 million cut in state funding, 262 people have appealed state notification that their benefits might be reduced or stopped.

• Unwanted babies: After the bodies of two babies were found in the Mississippi River in southeastern Minnesota, Human Services Commissioner Lucinda Jesson proposed to expand the state's Safe Haven Law, allowing mothers to give up unwanted infants with no questions asked. Mothers could drop off babies up to 7 days old instead of 3 days, and at police or fire stations as well as hospitals.

• Fighting fraud: Jesson will seek broader authority for her department's new inspector general to go after fraud, waste and abuse in health and human service programs.

• Personal care attendants: Jesson and some Republican legislators are looking for ways to restore some or all of the 20-percent cut in pay to about 7,000 family members who act as care attendants. A Ramsey County District judge granted a temporary restraining order after some care providers challenged the law as unfair and unconstitutional, and a final decision is expected soon.

Warren Wolfe • 612-673-7253