[post_thumbnail] Rep. Kelley Packer, R-McCammon, said funds transferred to the Idaho state health insurance exchange were federal funds, not state funds.

Gov. Butch Otter’s state health insurance exchange board of directors met Friday to review plans for integrating the exchange with the U.S. Department of Health and Human Services (HHS), and discussed several benchmark dates that the exchange must meet in order to remain in compliance with the federal Affordable Care Act (Obamacare) law.

However, in the midst of the exchange’s fast-paced development, concerns have emerged about both the exchange’s structure and its financing in light of the state law that established it.

“There are a number of dates that we have to meet,” said Richard Armstrong, director of the Idaho Department of Health and Welfare (DHW) after Friday’s board meeting that was conducted mostly in a private, executive session. “There are funding dates and there are operational dates and we have to meet them all to remain in compliance with the federal law. The real heavy lifting begins in January because that is when people will begin buying insurance from us, so we’ll want to begin testing this process in November and December,” he told IdahoReporter.com. Armstrong serves in an advisory capacity on the board, but is not a voting member.

But questions have arisen among some members of the Legislature as to whether the state law that established the creation of the exchange is actually being followed as the exchange evolves. One concern pertains to the federal government’s direct involvement in the exchange, which became apparent back on May 23 when it was announced that HHS will provide technical infrastructure and data collection services for the exchange.

In December, when Otter announced his intention for the creation of a state insurance exchange, he drew a distinction between an exchange that would be “state based” and one that would be federally operated. “There will be a health insurance exchange in Idaho,” he said in a press release, “the only question is who will build it.”

Similarly, legislators who debated in favor of the exchange earlier this year argued that the creation of the state exchange would allow Idahoans to maintain control over their health insurance affairs while failure to create it would pave the way for federal government intrusion into such matters.

Armstrong on Friday told IdahoReporter.com that federal involvement in Idaho’s state insurance exchange was always a part of the plan. “We always knew that we were going to use certain services from federal vendors,” he stated, “but we weren’t going to use all of them.”

“The law certainly does allow Idaho to use outside vendors for the exchange,” Rep. Grant Burgoyne, D-Boise, said to IdahoReporter.com. “But I think we also recognize that the U.S. federal government is not merely just another vendor. For this reason, I will expect the federal government to respect Idaho’s preference for a state exchange and to not force HHS’s involvement beyond the temporary arrangement that has been made.” HHS’s integration in the state exchange is intended to last only one year.

Another area of concern involves recent decisions about the financing of the exchange. Otter’s staff estimated earlier this year that there would be $20 million in grants given by the federal government for the launch of the exchange and that the exchange would not be financed with Idaho state tax dollars or by other state agencies.

With none of the federal grants having been received to date, and with the exchange’s operational costs continuing to add up, earlier this month Armstrong chose to transfer $385,000 out of the Department of Health and Welfare to the exchange’s back account as a means of providing working capital.

“I, along with other legislators, am certainly asking questions about this,” Sen. Dean Cameron, R-Rupert, told IdahoReporter.com at that time. “I am personally not extremely concerned about this, but it has nonetheless raised questions.”

“DHW believes that it acted appropriately in doing this,” Rep. Kelley Packer, R-McCammon, a member of the exchange board, told IdahoReporter.com Friday. “The funds that DHW transferred to the exchange actually were federal funds, not state funds. However, others believe that it was not appropriate for DHW to do this. Our board has requested a legal opinion on this from the attorney general to determine if what DHW did was within the law. I will reserve judgment until the attorney general weighs in,” she said.

Stephen Weeg, chairman of the board for the exchange, told IdahoReporter.com that the board has made no such request of the attorney general. “I have heard that a legislator asked the attorney general for a legal opinion on this and it was a legislator who does not sit on our board. But our board has not requested the attorney general’s legal opinion on this issue.”

At the conclusion of Friday’s insurance exchange board meeting, Sen. Jim Rice, R-Caldwell, announced that the costs to Idaho for HHS’s role in the exchange will be less than was originally anticipated, noting that the federal agency had agreed to waive a 3 percent surcharge on the costs of its services.

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