With zeal, excitement and a meticulous attention to detail, the administration of Gov. Mark Dayton is trying to expand health insurance coverage and remake Minnesota’s insurance market along the lines envisioned by President Obama.
In setting up a marketplace where people can shop for insurance, the state has sought advice from consumer groups, labor unions, doctors and hospitals, employers, insurance companies, agents and brokers, and American Indian tribes.
But one notable group has been missing from the process: Republicans, who control both houses of the State Legislature.
Mr. Dayton, a Democrat, and the Republicans find themselves in an icy standoff. The situation is a case study of the politics found in state capitols around the country as officials grapple with a crucial element of the new federal health care law.
A similar confrontation has stalled action in New Hampshire. In New York, Gov. Andrew M. Cuomo, a Democrat, recently established an insurance exchange by executive order after Republicans in the State Senate blocked legislation. In Minnesota, many Republicans want nothing to do with what they call Obamacare, even though the federal government will operate an insurance exchange here if the state fails to create one.
“There is a very toxic atmosphere between Republican legislators and the Dayton administration on this issue,” said Kate Johansen, manager of health policy at the Minnesota Chamber of Commerce, which wants the state to establish its own exchange.
In an interview, Mr. Dayton said that while some moderate Republicans would like to work with him, the Republican caucus in the Legislature had balked because it was dominated by “extreme right-wingers.”
“For reasons of ideology and politics, they want to bash our effort to establish an exchange, rather than join it,” Mr. Dayton said, lamenting the power of “vitriolic antigovernment, anti-Obama” forces.
State Representative Mary D. Franson, a conservative freshman Republican, said: “We have an ultraliberal governor who thinks he can do things by executive order like President Obama.”
Ms. Franson said that if Mr. Dayton tried to establish an exchange without legislative approval, “he will have a fight on his hands because I’m like a mama bear; I’ll protect our citizens from the overreach of government.”
The federal divide over health care is reflected at the state level, even in Minnesota, which has a progressive tradition and a long history of innovation and bipartisan cooperation on health policy.
The exchange is the centerpiece of the new health care system envisioned by Mr. Obama. In the exchange, people who do not have insurance from employers will be able to get comparative information on health plans, insurers will compete on price and benefits, and the federal government will offer subsidies to lower- and middle-income people buying insurance.
Mr. Dayton and his team are trying to carry out the new federal law over objections from Republicans, who control both houses of the Legislature for the first time in 38 years.
“Health care reform is going ahead full speed in this state,” said Lawrence R. Jacobs, a political scientist at the University of Minnesota.
Mr. Jacobs said the governor was relying on an expansive concept of executive power to circumvent Republican opposition and apparently saw no need to compromise because he was confident that the Democrats would regain control of the Legislature in the November elections.
Minnesota starts from an enviable position, with 91 percent of its population having health insurance — more than all but three or four states.
For decades, Minnesota has been a health care innovator. The nonprofit Mayo Clinic, which traces its roots to 1864, pioneered the team-based approach to medical care now espoused by many health policy experts. A Minnesota doctor, Paul M. Ellwood Jr., was an early proponent of managed care and coined the term “health maintenance organization.” Minnesota expanded Medicaid eligibility and was already covering most low-income children before Congress created the Children’s Health Insurance Program in 1997.
The state’s top insurance regulator, Commerce Commissioner Michael Rothman, said the exchange would simplify the purchase of insurance for consumers and pool their purchasing power so they could get better prices.
Minnesota has spent $1.4 million in federal money planning an exchange through which one-fifth of state residents — more than one million people — are expected to obtain coverage. That includes 450,000 people who will get subsidized private insurance and 600,000 who will enroll in Medicaid or other public insurance programs.
State officials who speak fluently about arcane technical details of the insurance exchange — like risk adjustment, adverse selection and actuarial value — seem nonplused but undeterred by the Republicans’ resistance.
When asked what was lost as a result of the Republicans’ absence, Mr. Rothman fell silent for a minute, then said, “We would like to keep an open dialogue with Republicans and all stakeholders.”
Republicans object to both what is being done and how the governor is doing it.
State Senator David W. Hann, a Republican who is chairman of the Senate Health and Human Services Committee, said the exchange would “absolutely not create a true insurance marketplace” because it would control what products could be offered and might have a say over prices.
“The exchange centralizes power in the hands of bureaucrats and is a step to single-payer health care that has been the dream of the political left for decades,” Mr. Hann said.
Moreover, Mr. Hann said, Republicans are irked because “the governor has shown a propensity to act by executive order, as if he could establish an exchange by some kind of fiat or diktat.”
Officials in the Dayton administration decline to say how far they can go in setting up an exchange without authority from the Legislature.
Time is running out. Legislative leaders hope to adjourn the 2012 session this week. Federal officials must decide by Jan. 1 whether the state is able to run its own exchange.
Republican legislators declined an invitation to participate in a Dayton administration task force guiding the development of the exchange. Twila Brase, president of the Citizens’ Council for Health Freedom, a free-market group mobilizing opposition to the exchange in Minnesota, sees little difference between one established by the state and one run by the federal government.
“All exchanges must follow the Obamacare law and the Obamacare regulations,” Ms. Brase said.
In his first official act after taking office in January 2011, Mr. Dayton issued an executive order expanding Medicaid to cover 95,000 low-income adults who would not otherwise have qualified until 2014.
The reaction was a portent of things to come. Supporters cheered the governor’s action, while protesters packed the signing ceremony to denounce the new federal health care law as costly and unconstitutional.
Minnesota takes pride in its culture of collaboration, fostered by civic-minded employers like General Mills and Target, which have worked together for more than two decades to improve health care and limit its cost.
When Tim Pawlenty, a Republican, was governor, he liked the idea of an exchange. “We will reduce costs by creating the Minnesota Health Insurance Exchange, to allow uninsured individuals access to health insurance that will lower premium costs by roughly 30 percent,” Mr. Pawlenty said in his State of the State address in 2007.
But State Representative Douglas G. Wardlow, a freshman Republican, said the creation of an exchange “in the context of Obamacare is an entirely different question.” The new law, he said, imposes so many requirements that it “turns the state into an instrumentality of the federal government and limits our ability to innovate.”
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