HELENA — On a straight party-line vote, the Republican-controlled state Senate on Saturday endorsed a bill forbidding Montana to set up a health insurance “exchange” as required under the federal health reform law.

Sen. Jason Priest, R-Red Lodge, the sponsor of Senate Bill 228, said the measure is about the state asserting “local control” over how it would design a health insurance exchange, which is an Internet clearinghouse for selling insurance policies.

“What is more fundamental to local control than deciding whether or not you even want to do it?” he asked. “What is more fundamental to local control than deciding if what you did meets your standards?

“None of those things is permissible under the federal health law. There is no local control.”

Democrats, however, said it's foolish for the state to halt all work on the exchange and return federal money funding the effort, as required by Priest's bill.

“It's really not a good idea to shut down our options right now at this period of the beginning of health care reform,” said Sen. Christine Kaufmann, D-Helena. “It's just a bad idea to turn away our tax dollars from the federal government ... and say we're not even going to study the idea of how we can have control of our health care in the future.”

The Senate endorsed SB228 on a 28-21 vote, with all of the chamber's Republicans in favor. All Democrats voted against it, except Sen. Anders Blewett, D-Great Falls, who was absent Saturday.

Health insurance exchanges are a key component of the federal health reform law, which requires states to set up the exchanges by 2014, to sell private policies that meet certain minimum requirements.

Citizens would be required to have or purchase insurance in 2014, but wouldn't have to buy policies off the exchange. Other policies would be available in the market, as well as employer-offered insurance.

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If a state doesn't design its own exchange, the federal government would do it for them.

State Auditor Monica Lindeen, a Democrat whose office regulates insurance in Montana, has received a $1 million grant to begin work on the exchange. Lindeen also is behind House Bill 124, which would set up the framework for a Montana exchange.

HB124 is sitting in the House Business and Labor Committee, awaiting action. The panel's chair, Rep. Elsie Arntzen, R-Billings, said last week that the panel would like to work on a “Montana solution” for the exchange, but didn't elaborate.

Priest suggested Saturday that entities other than the state could set up an insurance exchange in Montana, and that his bill wouldn't prevent that from occurring.

Senate Democrats said it's unrealistic to think that anyone besides the state would have the resources to create an exchange.

Sen. Dave Wanzenried, D-Missoula, said even those states that are challenging the federal health reform law as unconstitutional are going ahead with their work on the exchanges.

“Most of them have decided they need a made-in-(their)-state system,” he said. “If they're wrong (about the law being unconstitutional), they don't want to have a design sent to them from Washington, D.C. They want to have control.”

Sen. Tom Facey, D-Missoula, also said that while Republicans want to block any effort to implement federal health reform, they're not coming up with any realistic alternatives that would provide health coverage or reduce health care costs.

“What concerns me is, where's the beef?” he said. “Where's the alternative? Where are the bills to say, health care is out of control, maybe we can do something better? I don't see them. We still have soaring costs of increased health care.”

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