The Minnesota Senate is grinding through hour after hour of debate on sweeping changes to the state's health insurance system.

“This is a gargantuan undertaking,” Gov. Mark Dayton said Thursday, legislation that will create the new Minnesota Health Insurance Exchange headed to the Senate floor. “I’m mindful that the expectations are very high so people will probably be disappointed.”

The exchange is expected to be a user-friendly online marketplace where an estimated 1.3 million Minnesotans and small businesses will be able to shop for health insurance, starting next year.

“We have a bill that will work for industry in Minnesota and also importantly will work for consumers in the state of Minnesota,” said Sen. Tony Lourey, DFL-Kerrick, who has shepherded the exchange bill through nine committees and 27 hours of debate over the past two months.

The exchange, Lourey said, will have a “profound impact” on Minnesota’s economy. Not only will 300,000 uninsured Minnesotans have access to health coverage, he said, the state’s health care providers will no longer have to shoulder $150 million in uncompensated costs from treating people without health insurance.

For opponents, the expectations are more dire. Opponents see the exchange as an expensive, intrusive government overreach into private health decisions. Critics worry about how the exchange will safeguard consumer privacy; about how its $60 million annual budget will be financed; and about the power its seven-member board will have to include or exclude health plans from the online marketplace.

“I’m very concerned,” said Sen. Julie Rosen, R-Fairmont, who made the first attempt to amend the bill. “We are creating the most powerful board in the state of Minnesota and if we don’t have measures to keep them accountable going forward, we will be back.”

By next year, health insurance will be mandatory in this country, and these state-based exchanges are a cornerstone of the federal Affordable Care Act healthcare reforms. Minnesota has until the end of this month to set up its own exchange, or use one developed by, and run out of, Washington, D.C. The Minnesota House passed its exchange bill Monday.

But before the Senate can vote on the bill, it has to deal with a stack of more than 150 amendments, many of which are authored by Republicans staunchly opposed to the exchange.

“Everybody is jockeying for position so everybody is promising catastrophe if they don’t get this or get that,” Dayton said. “There are going to be some glitches initially and it will take some time to iron that out.”

The state has already spent millions, mostly subsidized by federal grants, to set up the technology infrastructure for the system. If it works as plan, consumers will be able to log on and choose among health plans the way they can currently shop online for plane fares and hotel rates.

Even if the Legislature rejected the exchange bill, Minnesotans would still get a health exchange next year – just not one of its own design, Dayton said.

“We had two choices. One is to set up this health exchange ourselves and employ the best minds we could find in Minnesota, which is a lot,” he said. “Or let the federal government (create a) one-size-fits-all… We decided early on that we’d be better if Minnesota decided its own plan."

Minnesota’s private health insurers have been working in the dark for much of the past year as they try to develop new benefit plans to sell on the exchange.

The plans are barreling toward their own May 17 deadline to submit their premium rates to the Commerce Department for review.

In February, the federal government provided more clarity over the basic benefits each plan will need to offer to be compliant with the Affordable Care Act, including such elements as mental health coverage and free preventive care, which helped ease some of the uncertainty.

But until the Legislature hammers out more details, the plans remain somewhat in a wait-and-see mode.

“We’re closely monitoring legislative activity,” Andrea Walsh, chief marketing officer at HealthPartners, said of working amid the uncertainty. “We frankly know there will be very tight timelines to be ready.”

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