Health insurance exchange amendment causes controversy in Minnesota

Health Insurance

Health InsuranceLegislators at odds over health insurance exchange amendment

Minnesota is among several states in the U.S. that is currently considering building and operating its own health insurance exchange. State officials have yet to make any decision on the matter, but several approaches to the exchange effort have already been discussed in the Legislature. Plans for a state-run health insurance exchange have already hit a snag with the Democratic-Farmer-Labor Party, which holds the majority of the state’s political power. Late last week, the Minnesota Senate Tax Committee approved an amendment to the state’s existing health insurance exchange legislation that could have significant implications for certain taxpayers.

Amendment aims to redirect funds collected through existing tax

According to the amendment, the operating costs associated with a state-run health insurance exchange would come from existing fees t hat are tied to cigarettes. Currently, these fees are collected and funneled into Minnesota’s general fund. The amendment has caused a stir within the Democratic-Farmer-Labor Party, with some lawmakers suggesting that using the funds collected through the existing tax on tobacco products is unfair to the state’s citizens. These legislators claims that the health insurance companies that would participate in the exchange should cover the system’s operational costs.

Some legislators argue that the amendment is unfair

Supporters of the amendment claim that it will ensure that health insurance premiums remain reasonable for consumers. If insurers are forced to cover the costs associated with the operation of the state’s exchange system, they will likely increase premiums in order to recoup any losses they could see. In the end, consumers would end up paying more for their health insurance coverage, which is something that the state is eager to avoid.

Amendment does not actually introduce new tax

The tax in question has been in place since 2005. The funds collected through this tax are pooled into the state’s general fund, which is frequently tapped for a wide range of projects and initiatives throughout Minnesota. Some opponents of the amendment to the state’s health insurance exchange legislation claim that a new tax will be instituted. The amendment, however, does not establish a new tax on tobacco products, only redirecting where the funds from the existing tax are sent.

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