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Insurance director estimates $20 million cost to the state for health insurance exchange

Insurance director estimates $20 million cost to the state for health insurance exchange

Idaho Freedom Foundation staff
February 18, 2013
[post_thumbnail] Bill Deal, Idaho Department of Insurance, testifies Monday in front of the Joint Finance Appropriations Committee.

As the Idaho Legislature debates the creation of a state-based health insurance exchange, the director of the Idaho Department of Insurance, when pushed by members of the Joint Finance-Appropriations Committee (JFAC) to estimate the cost to the state, said he believes it will be $20 million.

Speaking before JFAC Monday, Bill Deal, head of the Idaho Department of Insurance, outlined present and projected future expenses for his division, yet included nothing in his presentation about a health insurance exchange.

“I find it interesting that the director had nothing at all to tell us about the matter,” Sen. Cliff Bayer, R-Boise, a member of the JFAC committee, told IdahoReporter.com after the committee hearing.

In a detailed 30-minute presentation, Deal provided the senators and representatives of JFAC an overview of his department’s activities and budgetary arrangements for both the current and recent fiscal years, and offered some projections on possible expansions in the coming fiscal year.

“Does this budget include the cost of an insurance exchange?” asked Sen. Steve Vick, R-Dalton Gardens.

“It does not,” Deal responded, noting that “we’re waiting to see what the Legislature does.” A bill to authorize the creation of an insurance exchange is currently before the Senate. Deal also told committee members that funding of an insurance exchange would emerge through the Idaho Department of Health and Welfare, and not from his department.

Sen. Dean Mortimer, R-Idaho Falls, asked Deal for an estimate of the cost of building a state-based insurance exchange, to which Deal replied “we believe the costs will be about $20 million, and we believe there will be federal grants to pay for it.” That figure is consistent with what David Hensley, chief of staff to Gov. Butch Otter, has said about the price of an insurance exchange, but it is considerably less than other estimates that have been cited.

On Tuesday, Feb. 5, Hensley testified before the Senate Commerce Committee that Otter’s estimate for an insurance exchange put the price at $20 million, and stated that there are “federal funds available” to cover these costs.

However, last year Otter’s insurance exchange task force heard testimony from multiple private companies that estimated the costs of building an insurance exchange for Idaho to be in the realm of $70-$80 million.

For example, on Oct. 29 of last year, Leavitt Partners, a consulting firm from Utah, presented a plan to build an insurance exchange, estimating a price tag of $70 million. On Oct. 9 of 2012, the KPMG global consulting firm proposed to the governor’s task force a price tag of $77 million for the same insurance exchange project.

And last week, on Feb. 12, cost estimates for an insurance exchange changed yet again as Sen. John Tippets, R-Montpelier, amended language in Senate Bill 1042 (the bill to authorize the creation of an insurance exchange) and put the price at $30 million.

“Two legislative sessions ago, the Legislature rejected director Deal’s proposal for $2.5 million to fund an insurance exchange,” Bayer told IdahoReporter.com. “Now, the way the current bill is written, an insurance exchange would be set up as a quasi-governmental entity with no oversight from the Legislature, and funds would just simply be provided to it.”

Vick concurs with Bayer. “We shouldn’t have federal funds simply being sent from Washington to this independent nonprofit entity (the insurance exchange) with no legislative oversight,” he told IdahoReporter.com. “Whether it happens through the Department of Insurance, or through the Department of Health and Welfare, funding for an insurance exchange should be administered through the appropriations process, and those of us in the Legislature should be able to vote on it.”

The full Senate is expected to take up discussions on Senate Bill 1042 later this week.

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