Gov. Butch Otter has received his recommendation: Build a state-based health insurance exchange. But how it would be built and how it would be funded remain unclear.

And the governor’s health care exchange task force is an advisory committee only; the governor can accept, reject or modify the recommendation. Or come up with something of his own.

Last week members of the group voted 11-2 in favor of recommending to the governor that Idaho construct a state-based health insurance exchange. According to the federal Affordable Care Act, commonly referred to as Obamacare, Otter must notify the U.S. Department of Health and Human Services by Nov. 16 whether Idaho will choose to create its own state-based exchange, allow the federal government to create it or pursue a “hybrid” exchange created with both federal and state resources.

“It’s important to note that this is a non-binding recommendation,” Otter spokesperson Jon Hanian told IdahoReporter.com on Monday. “The governor appreciates the work of the group, and he can now act on it, or reject it or pursue a different course. He has made no decisions about this as yet.”

Hanian declined to speculate on when the governor will choose which course to pursue.

One of the four private consulting firms presenting their insurance exchange setup services to the task force was Leavitt Partners of Salt Lake City, a company established and named after former Utah Gov. Michael Leavitt.

Firm spokesperson Brett Graham made it a point to explain that, while Leavitt does not like the federal mandates of the Obamacare law, he nonetheless operates with a belief that individual states are better off cooperating with the federal government rather than resisting.

“He (Gov. Leavitt) thinks it is better to stand inside the circle with the feds, rather than being outside the circle,” Graham said, noting that Leavitt developed this philosophy during his own service as a governor.

Theresa Brandorff, spokesperson for the Cognosante consulting firm, told the task force that undertaking a state-run insurance exchange would not be “merely an I.T. (information technology) project,” but rather would be “starting up a whole new organization,” noting that Idaho will incur “major costs, no matter which course you choose.”

Among the four presenting firms, Leavitt Partners estimated the cost of a state-run exchange to range from $30 million to $70 million in setup costs, with an annual cost of $10 million to operate. Cognosante provided no specifics on the costs of its exchange setup services, nor did Mercer or Maximus, the other two presenting firms.

Following last week’s vote, two members of the Legislature wondered how a state-run exchange would be funded.

“The Legislature would have to appropriate funds for this, if the governor actually pushed for it,” Rep. Erik Simpson, R-Idaho Falls, told Idaho Reporter.com, noting that he does not believe the governor will attempt to fund the program without legislative input.

Rep. Grant Burgoyne, D-Boise, concurred with Simpson. “I doubt a governor could lawfully find some $70 million to start up an insurance exchange without the matter coming before the Legislature.” However, Burgoyne notes that funding bills are often vaguely worded, and added that “the ability to use money in creative ways certainly exists.”

Hanian acknowledged that there is still a lot that is unknown about how an exchange is to be funded. “Will there be federal money to fund this, or will the state have to do this? It remains unclear what the federal law says about this, and the governor is sorting it out,” he said.

Simpson added that “If the insurance industry thinks this is a good idea, they should fund the exchange themselves and not leave it to the taxpayers. In the end it is the insurance industry that benefits from this proposal, and certainly not the individual citizen.”

Note: IdahoReporter.com is published by the Idaho Freedom Foundation. Wayne Hoffman is executive director of the organization. He served on the task force and voted against the recommendation to the governor.

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