Minnesota House Democrats approved late Thursday a sweeping health and human services budget that would reshape the state's insurance and prescription drug markets, setting the stage for an end-of-session clash with Senate Republicans over the future of health care in Minnesota.

The House majority's spending proposal, which would funnel $15 billion to health and human services programs over two years, is a vehicle for some of the biggest policy debates looming over the nation's only divided Legislature. It includes a proposal from Democratic Gov. Tim Walz to allow all Minnesotans to buy into a public option on the state insurance marketplace and ends a private insurer subsidy program that lowered premiums on the individual market, replacing it with direct consumer discounts. A 2% tax on providers set to sunset later this year would be extended to pay for key health programs.

"We're working to provide affordable and accessible health care to all Minnesotans, and Minnesotans know health care isn't free," Speaker Melissa Hortman, D-Brooklyn Park, said. "And so we have to pay for it. Our budget honestly pays for what we're doing."

The DFL plan, which passed after a full day of debate, faces stiff opposition from Senate Republicans, whose support will be needed to reach a final budget deal. Republicans in both chambers criticized Democrats' spending as excessive and argued that the proposal will raise costs for Minnesotans.

"We think this bill falls woefully short of what we could and should be doing to take care of Minnesotans in this state given our financial position," said Rep. Kurt Daudt, the GOP leader in the lower chamber. "Frankly, we think this should go back to the drawing board and start over."

In addition to the funding and tax mandates, the 1,043-page bill is peppered with contentious policy changes. The DFL plan would raise the minimum age for buying cigarettes to 21, establish new rules for for-profit health plans and guarantee insurance coverage for birth control.

It seeks to tackle rising drug costs by banning "unconscionable" increases for essential prescriptions, leveraging the state's purchasing power to negotiate for lower prices and allowing people with diabetes to access emergency insulin if they can't afford the medicine. Supporters of those proposals, which face staunch opposition from the pharmaceutical industry, rallied outside the House chamber Wednesday, distributing empty pill bottles with messages to lawmakers.

"We are here today begging for our lives," said Nicole Smith-Holt, a Richfield resident whose son Alec died at 26 after rationing insulin he could no longer afford. "We need action. We need affordable prescription medications. Without it, we die."

House Republicans planned to take aim at some of those plans during a floor debate that was originally expected to begin late Wednesday. Members filed more than 100 amendments proposing changes to the DFL plan.

Late Wednesday, DFL leaders decided to adjourn for the night and postpone the debate until Thursday.

In addition to costs, House Republicans voiced concerns about provisions they said would cut $68 million in funding from nursing homes and criticized DFL proposals to address reports of fraud in the state Child Care Assistance Program. GOP leaders say the DFL measures fall short of key recommendations made by the legislative auditor.

"Democrats do not and will not take this issue seriously," said Republican Rep. Mary Franson, a caucus leader on early childhood issues.

Senate Republicans plan to take up their own health and human services budget in the next week. Unlike the DFL plan, their proposal does not include a renewal of the 2% provider tax. Continuing the subsidy program for insurers, known as reinsurance, remains a top GOP priority.

The Republican legislation also includes polarizing policy proposals, such as language to ban most abortions at 20 weeks post-fertilization. DFL lawmakers criticized the GOP plan as out of touch and unsustainable for meeting Minnesotans' health care needs.

Senate GOP Majority Leader Paul Gazelka said while reaching an agreement will be a "great challenge," he is committed to funding services without raising taxes. "We're far apart, but it's my job to make the case that the resources that we have are what we need to live within," the Nisswa Republican said.

Both chambers are holding marathon floor sessions this week as legislators work toward a May 1 deadline for passing budget bills ahead of negotiations on crafting the two-year spending plan.

The DFL-led House also approved a wide-ranging jobs and energy bill Wednesday, while the Senate passed measures on higher education and public safety later in the evening.

While vast spending and policy differences remain between Democrats and Republicans in many areas, leaders in both chambers said they are optimistic they can finish by the May 20 session deadline.

Torey Van Oot • 651-925-5049