The budget proposal Gov. Mark Dayton released Tuesday would increase state taxpayer money for MNsure to compensate for lower-than-expected enrollment in private insurance policies through the state's health exchange.

The extra $11.7 million would come to MNsure by way of the state Department of Human Services over a two-year period starting in July.

DHS sends money to MNsure because people use the exchange to enroll in the department's Medicaid and MinnesotaCare public health insurance programs. MNsure also funds its operations by withholding 3.5 percent of premiums from commercial policies sold through the online marketplace.

Enrollment in public health insurance programs has come at expected levels since MNsure launched in late 2013, but enrollment in private plans has fallen short of projections, said Lucinda ­Jesson, the human services commissioner, in an interview.

"We have a much bigger piece of the enrollment than anticipated," Jesson said. "The original budget assumptions assumed a higher enrollment on the [private] side."

Republicans were critical of the proposal.

"The budget admits that MNsure is not the self-sustaining operation that we were told and promised it would be," said Rep. Tara Mack, R-Apple Valley.

Sen. Michelle Benson, R-Ham Lake, said, "The governor is investing in a system that continues to stumble, instead of showing leadership and changing the way we do things in Minnesota."

Sen. Tony Lourey, the DFLer who crafted legislation in 2013 to create MNsure, said his Senate committee would give the proposal a hearing. Lourey said the increasing cost for the department leads to the question: "What is DHS getting for the funding of MNsure in terms of serving our public program enrollees?" But, he added: "It's very important that we have a functioning MNsure."

Due to the lack of commercial enrollment, the share of MNsure costs being allocated to the Department of Human Services would jump from 29 percent to about 65 percent, according to budget documents released Tuesday.

Most of the extra money in Dayton's proposal would go toward improvements to the troubled MNsure information technology system, including $6.5 million in state funds to draw down federal funding related to Medicaid. With the state funds, the federal government would provide another $58.5 million for development of the MNsure IT system.

Jesson said the Medicaid funding was triggered by a $34 million increase in federal grants for MNsure that the exchange announced earlier this month. The extra grant money included $21 million for MNsure IT fixes.

Between the federal grant money, the Medicaid funding and Dayton's budget request, MNsure is poised to receive another $85 million for its IT system, Jesson said.

"It leverages a lot of federal dollars," she said of the budget proposal.

Jesson would not comment on why sign-ups for private coverage have fallen short. The exchange suffered from a troubled rollout that frustrated thousands. In September, the most popular private insurer on the exchange announced it was dropping out.

Dayton and the DFL-controlled Legislature passed legislation in 2013 to create the MNsure exchange to implement the federal Affordable Care Act, which called for the creation of exchange marketplaces for all 50 states. Republicans opposed the legislation at the time.

With control of the state House this year, Republicans have introduced legislation that would help insurance shoppers bypass MNsure. Lourey and leaders in the DFL-controlled Senate, meanwhile, have introduced a bill that would eliminate MNsure's board of directors, and place the agency more directly under the control of the governor and Legislature.

The governor's budget also would cut about $65.5 million in state spending on the MinnesotaCare program, which covers about 85,000 people. To make up the funds, program enrollees would pay higher premiums and share more of the costs for health care.

Twitter: @chrissnowbeck