Gov. Butch Otter announced Tuesday that he supports the creation of a state-based health insurance exchange as a means of bringing Idaho in compliance with federal Obamacare health insurance mandates.

“This is not a battle of my choosing,” Otter said in a written announcement issued late Tuesday afternoon. “Despite our best efforts, the law remains in place, and almost certainly will for the foreseeable future,” he said, in announcing his decision for how Idaho will comply with the law.

“It’s obvious the governor didn’t want to make this decision,” House Minority Leader John Rusche, D-Lewiston, told IdahoReporter.com. “But I think it’s the better decision, and I’m glad he has made it.”

Idaho’s state government has been in limbo over how to respond to the federal mandates, which require each state to either establish a health insurance exchange on its own, leave it to the federal government to set it up, or pursue a “hybrid” approach where state and federal agencies collaborate to create one.

“There will be a health insurance exchange in Idaho, the only question is who will build it,” Otter said in his statement.

“That is all quite debatable,” Rep. Lynn Luker, R-Boise, told IdahoReporter.com in response to the governor’s announcement. “I appreciate the governor’s need to make a decision, but there are many viewpoints at stake here. The Legislature will have its say on the matter.”

Otter’s announcement noted that the state-based insurance exchange is subject to legislative approval.

One key point of disagreement among Idaho policymakers and advocates has been whether creation of a state-based insurance exchange will allow Idahoans to have more control over insurance costs, and over the types of insurance policies sold in Idaho.

Last week the Idaho Farm Bureau Federation officially announced its opposition to a state-based insurance exchange, stating that “we support a joint resolution of the State House of Representatives and Senate to the federal government stating that the state of Idaho will not comply.” The bureau also called for more “free market based solutions” to counter rising health insurance costs.

Alex LaBeau, president of the Idaho Association of Commerce and Industry, sees it differently. “There are plenty of things we don’t like about the federal health care law,” he told IdahoReporter.com, “but the creation of a state-based exchange is the best way we have of mitigating those things we don’t like.”

In his statement, Otter noted that he has consulted with many “national experts” and many of his fellow governors on the issue.

Wayne Hoffman, executive director of the Idaho Freedom Foundation, notes that more than 20 states have said no to a state exchange, and believes that they have good reason to do so. “They're doing so because they know that a state exchange affords states almost no flexibility, and makes states co-owners of the looming disaster in medicine: higher insurance premiums, more expensive medical care, reduced accessibility and worse patient outcomes,” he said in a written statement. “Gov. Otter's decision makes the national effort of resistance much more difficult and more likely the law will remain in place, at great cost to Idaho families, businesses and our nation's economic vitality.”

Rusche, however, disagrees. “My big concern through all of this has been the fact that health insurance in Idaho is less expensive than it is in other states,” he said. “This approach (the state-based exchange) prevents us from being lumped in to a national pool.”

Luker notes that the Legislature will have to approve any expenditure of Idaho tax revenues before they can be spent on an exchange. "The federal law requires either a state agency, or state authorized entity, to administer a state exchange,” he said, “and the Legislature will have to approve funding for this.”

Both Luker and Rusche served on Otter’s advisory task force on insurance exchanges, as did LaBeau and Hoffman. Hoffman and Luker advised Otter against it, while LeBeau and Rusche recommended it.

At least one state legislator is predicting a very robust debate over insurance exchanges. “This issue will define the 2013 Legislature, but potentially Idaho’s long-term economic future,” Sen. Russ Fulcher, R-Meridian, told IdahoReporter.com. “Health care is one-sixth of the entire U.S. economy, and that’s true in Idaho as well. This is a high stakes debate, indeed.”

One Democrat senator, Michelle Stennett from Ketchum, foresees debate as well. While she favors a state health care plan, she says she will need to see details from the governor before making a final decision. "I would support a state care health plan," she says, "but I need to know more details. I have not seen specifics of what Gov. Otter is proposing."

Note: IdahoReporter.com is published by the Idaho Freedom Foundation.