politics

Gov. Tim Pawlenty proposed a health care plan Thursday that he said would lower costs, emphasize quality, streamline paperwork and extend coverage to more Minnesotans.

The plan, called Healthy Connections, would allow individuals without employer coverage to buy their own policies with pre-tax dollars.

The plan also would divide MinnesotaCare, the state's subsidized insurance plan, into two parts. Under MinnesotaCare II, those with slightly higher incomes would be steered toward individual policies with high deductibles and some co-pays, but lower premiums.

MinnesotaCare Classic would feature new premiums for children that are a third of current levels and would cover children up to age 21 for families of four making less than $60,000.

Adult premiums would remain the same for the traditional plan. Adults in MinnesotaCare II would receive lower premiums, but no subsidy.

Pawlenty said the plan would extend coverage to 23,000 more Minnesotans, including 13,000 children, and would assist another 35,000 who purchase private market policies.

That's a far cry from Pawlenty's initial call to "cover all kids," which would have meant covering 80,000 uninsured children, but he said that goal "can't be reached overnight."

While access might be less than some had hoped, he said, "I won't have a fixation on access to a system that is broken."

The proposal, introduced a day after an ambitious Senate DFL package that would cap premiums for all and extend subsidized coverage to about 40,000, sets up one of the major debates of the legislative session.

The clashing started shortly after Pawlenty made his pitch.

Sen. Linda Berglin, DFL-Minneapolis, who's sponsoring the Senate proposal, said that Pawlenty's plan would favor those with existing policies by allowing them to offset costs with pre-tax dollars.

"It's another way to subsidize higher-income people," she said. "There are too many people who won't be helped. We can do better."

Plan's key piece: the Exchange

The administration estimates the plan's cost at $88 million over two years.

At the heart of Pawlenty's plan is the creation of a private entity called the Minnesota Health Insurance Exchange.

The Exchange would allow employers who don't offer health coverage to set up pre-tax accounts for employees, who in turn would buy policies through the Exchange.

Not only would all insurers offer their products through the Exchange, but the state would prohibit individual policies from being sold outside the Exchange.

The Exchange would administer the pre-tax accounts, relieving employers of a major burden, and would ensure that policies met certain standards of quality care that Pawlenty says are needed to change the system.