BOISE - Idaho Gov. Butch Otter and two of his top state agency officials told lawmakers today that Idaho stands to lose big if it doesn’t apply for a $40 million federal grant by Sept. 30 to set up a state-run health insurance exchange; if it doesn’t get going with an exchange, the feds will step in and do it for the state, Otter warned.
Idaho is “at a crossroads,” the governor told members of the Legislature’s joint health care task force, which is meeting at the state Capitol today. “The date of Sept. 30 is coming at us at a rapid rate.”
Otter doesn’t need the lawmakers’ OK to apply for the grant, but after hearing from him and the heads of the state departments of Insurance and Health and Welfare, lawmakers from both parties said they support applying for the grant — even some who are leery of any participation in national health care reforms.
“We can go forward and establish our own exchange, and I think we should,” said Rep. Janice McGeachin, R-Idaho Falls, the House Health and Welfare Committee chairwoman. “It’s my sense that we probably should consider applying for the grant.”
However, McGeachin said, she’s still not convinced that Idaho couldn’t later decide not to spend the federal money, and fund an exchange with state funds; she said she wonders if it couldn’t be done for less. “Our country’s going broke,” McGeachin said. “We just need to be sure no matter where the money’s coming from, that we’re spending it appropriately. Those questions for me need to be answered.”
Otter assured the legislators that Idaho could apply for and receive the grant, and then — as Kansas and Oklahoma already have done — decide to return part of it rather than comply with regulations attached to the money, without having to pay back any portion already spent.
Idaho Department of Insurance Director Bill Deal said Idaho is one of 12 states that have had no legislative action to date to establish a health insurance exchange. Meanwhile, 13 states have enacted such legislation, including Washington, Oregon, Nevada, Utah, California, Colorado and California. There’s a January 2014 deadline to have the exchange up and running and certified, Deal said.
If the federal government designs Idaho’s exchange, Deal warned that it would use national firms, not Idaho firms, and as many as 2,500 Idaho insurance agents who are licensed only for health and life insurance could go out of business. “I think there would be no question that agents would probably not be needed in the exchange, using the federal concept,” Deal told lawmakers. “I think it would be a definite economic disaster from the standpoint of more unemployment,” he said.
Plus, he said, “If a federal exchange would come in, likely there would be a national carrier involved in that.” Idaho companies would lose market share, he said, “which would result in a loss of premium tax.”
As far as how much it’ll cost to set up an exchange, Deal said the state of Washington estimates it’ll cost $99 million from 2011 to 2013; Kansas estimates $62 million over two years; and Wisconsin estimates $49.5 million from 2010 to 2013.
“We should not be wasting any time,” said Sen. Joe Stegner, R-Lewiston.
“There’s no risk,” said Sen. Dean Cameron, R-Rupert. “The risk is in not applying, and then turning the individual and small group market over to the federal government.”
Stegner added, “We’re going to be extremely short-sighted if we let this opportunity pass.”
Idaho lawmakers this year passed legislation aimed at opting the state out of complying with portions of the national health care reform legislation, after first considering several measures aimed at attempting to “nullify” the federal law. Otter vetoed the bill but imposed an executive order instead banning Idaho from accepting any federal money under the federal health care reform law unless he personally approves a waiver.
So far, he said, he’s approved 10 of the 13 waivers state agencies have requested, mostly for grant programs unrelated to health care reform whose funding now falls under the bill; he needs only issue another waiver to approve the grant application before the Sept. 30 deadline.
House Minority Leader John Rusche, D-Lewiston, said, “To me it’s a no-brainer.” He added, “It’s unfortunate that the Legislature kind of painted itself into a corner by not only saying ‘no,’ but ‘hell, no.’ Now they’re going to have to, I hope, look at what’s best for the citizens of Idaho, not only for political posturing.”
Sen. John Goedde, R-Coeur d’Alene, said, “I think I could support … the use of the federal money to design an Idaho exchange. What I’ve not understood yet are what kinds of strings are attached to that decision. When we’re having a tough time finding money to pay our part of Medicaid claims, I think $40 million is unrealistic in state money for development of the exchange. The key is if there are more strings we haven’t heard about to the federal money.”
Otter said Idaho has been working on the idea of a health insurance exchange since 2007, and “That idea I believe was co-opted by Obamacare.” In fact, the governor said, “We find that many of the things we were doing in Medicare, many of the things we were doing in health care services for children and adults, from Medicaid services to dentistry, have been co-opted by the Affordable Health Care Act.”
Idaho Health and Welfare Director Dick Armstrong said, “As the governor mentioned, is not a new idea. It was first a product of the Reagan administration. It’s been around.” The idea, he said, is “to allow businesses to pool together, like large self-insurance customers have done for years, because from a risk standpoint, the more people that are insured the better the risk and the more stable the rates will be. … You actually are able to spread the fixed costs over more citizens in Idaho.”
In Idaho in 2010, 31 percent of people age 18 to 34 had no health insurance, Armstrong told lawmakers this morning. Overall, 17 percent of Idahoans lack insurance, but years of rising costs have pushed the healthiest population — the 18-to-34-year-olds — to drop insurance. The number now, he said, is “strikingly high.”
That means, Armstrong said, “An individual without insurance then has limited access to health care services, which results in a diminished quality of life.” Plus, as insurance increasingly covers only the sickest people, costs rise. “We all know the current system is unsustainable,” he said.
Deal said if Idaho doesn’t demonstrate it’s ready to run a health insurance exchange, the federal government will “impose and run an exchange in Idaho.” He said, “My personal view of this … it’s going to be very disruptive to the Idaho marketplace and particularly with our domestic insurance companies and our agents, and that’s a big issue. And also, the other part that is just as concerning to me, that the regulation of the health insurance industry in Idaho will not be state-based but without question the federal government’s going to dictate the policies that are followed here in Idaho with health insurance.”