Photo: MNHS.org

Photo: MNHS.org

The Minnesota Health Plan Act, a bill that would make the state the sole health insurance provider, had its first hearing in the House on Thursday, but the outcome wasn’t what supporters would have liked.

HF 135 was introduced by Rep. David Bly, DFL-Northfield, with a whopping 33 co-authors, all DFLers, and was heard in the Health Care and Human Services Policy and Oversight Committee, where the vote was tabled for lack of support.

The Minnesota Health Plan would essentially make the state into a health insurer, with premiums based on individuals’ ability to pay. Supporters say the bill would reduce costs, cover everyone and eliminate gaps in care when people are laid off.

At today’s hearing, health insurance industry representatives, Republicans and a few DFLers hammered on bill supporters, despite physicians and small business owners signaling the urgency of the issue.

Rep. Laura Brod, R-New Prague, started in on the bill with concerns that the oversight functions would violate providers’ privacy.

“I’m concerned about opening up somebody’s records just because they happen to be with the plan,” she said. She also had concerns with creating a health board that would set the standards for which treatments are medically necessary. “This board determines what [providers] would pay for.” It doesn’t take a big leap, she said, to say it could deny treatments to individuals.

Bly responded that the board wouldn’t review individual cases but would be responsible for setting policy for the plan. “I don’t think what you are worried about, this plan would do,” he said.

After those initial disagreements, supporters testified for the bill. Dr. Ed Ellinger of the University of Minnesota’s Boynton Health Service said that after 40 years of practicing medicine, he sees the need for change.

“Year after year, we call for reform, yet access to care has not changed,” he said. “After four decades of effort, what have we achieved?”

He said the clinic employs 20 people to handle just the insurance administration, which costs upwards of $250,000 a year.

“A national health system would be ideal, but Minnesotans cannot afford to wait for that to happen,” he said.

Dr. Mike Thorstenson, who took vacation time to testify as a constituent, said, “The Minnesota Health Plan is the only plan addressing the structural dysfunction of our health care system.”

He documented his struggle, his wife’s struggle, and the struggles of family friends when they were diagnosed with cancer and tried to navigate the insurance system to make sure treatments were covered — sometimes in mid-treatment.

He noted the plan’s mandate for all Minnesotans to have a primary physician to coordinate their health care. “There needs to be a system of care,” he said.

But Rep. Steve Gottwalt, R-St. Cloud, wasn’t buying it. He said the plan wouldn’t necessarily fix the issues Thorstenson addressed. “I’m part of a system, and I have been taken care of very well,” said Gottwalt, a remark that was met with boos and hisses from the packed hearing room.

Bob Sarnia, a publishing company owner from Northfield, spoke of how his company of five employees was stifled by health care costs. It costs him $60,000 a year to cover his employees and their families, he said.

“One of the reasons I am reluctant to hire new employees is that it might easily cost $15,000 a year or more [per employee]. My company’s health care premiums are the primary reason preventing me from hiring,” he said. “Small companies are being strangled by the costs.”

Elaine Torpet of Fertile, Minn., moved to the state from Canada when she married her husband. “I’ve tried for 47 years to gain back the kind of health insurance I gave up when I got married,” she said. “We are still where Canada was in 1867.”

Katherine Kmit of the Minnesota Council of Health Plans repeated her organization’s mantra: “Health care is not expensive because of insurance. Insurance is expensive because of health care,” she said. “Approaches like this bill are fundamentally flawed because it assumes health plans are the problem.”

She pointed to legislation and industry efforts to bring down administrative costs such as electronic record-keeping and administrative efficiency, all issues that the committee had addressed in the past.

But it was her final comment that sent the hearing room into a tizzy. To Bly she said she was sorry he wasn’t a member of the committee. “Maybe next year you can be on the health care committee and learn about those things that are happening.”

Kmit’s statement was met with gasps and boos from the audience.

Beth McMullen of the Minnesota Business Partnership spoke against the bill and in favor of a “market-based, patient-centered system.”

McMullen expressed concern over the business taxes contained in the bill. The Minnesota Business Partnership represents some of Minnesota’s largest corporations, and McMullen pointed to the fact that her clients have health insurance coverage for people in many states. She said she worried about how those corporations would navigate a drastic policy change in Minnesota.

But Rep. Tina Liebling, DFL-Rochester, got to the heart of the matter: Large corporations enjoy a competitive advantage over small businesses that would disappear under the health plan. She asked McMullen whether those corporations’ ability to provide comprehensive health care as a part of employment was an advantage.

“Yes, I do believe that recruitment and retention are helped by offering competitive health insurance to employees,” said McMullen.

Said Liebling: “I just want to make a point that I think there is a competitive disadvantage to those [businesses that can't afford comprehensive coverage] and I think it hurts small businesses in our state.”

While Republicans hammered supporters, many were glad to have the discussion. Rep. Jim Abeler, R-Anoka, told Bly, “I’ll give you credit for a great heart and good intent. But it’s a really hard topic and we are all looking for a model that could work. For people in the audience who are so eager to fix this … it can’t be free!”

Gottwalt told Bly, “I appreciate the effort. I don’t agree with it but I commend you for it. But this is a massive expansion of state government.”

In the end the bill was tabled and no vote was taken. Speculation was that not enough DFLers were sold on the bill, and that all Republicans would vote against it.

Rep. Julie Bunn, DFL-Lake Elmo, was one such member. She said she had concerns and wasn’t ready to support it.

“But we definitely share your commitment to fixing health care,” she told Bly.

Because the bill has been tabled, it will either be heard again in the same committee or be rolled into an omnibus bill later in the session.