During his annual State of the State address Monday, Gov. Butch Otter reiterated his support for Idaho’s government-run health insurance exchange, despite growing criticism that the operation lacks accountability and is ultimately controlled by the U.S. federal government. The program was adopted last year by Otter and the Legislature as a means of complying with the federal Affordable Care Act law.

During a question-and-answer session following the address, Otter acknowledged that the Idaho exchange is not solely controlled by Idahoans, but rather by the federal government, adding that he feels the Idaho exchange will shed itself of federal involvement by the end of the year.

“While we work aggressively toward achieving our own Idaho goals, we also are responsible for ensuring Idaho’s voice and values are reflected in how national policies are implemented here in our state,” Otter announced from the chamber of the House of Representatives as he spoke to members of both the House and the Senate. “Please accept my thanks once again for enabling us to at least be the project managers, if not the architects of our own destiny in establishing a state-based health insurance exchange last year.”

Otter’s remarks reflect a more modest tone on the issue, compared to his pledges about a state-based exchange that he articulated a year ago. “We can still build our own exchange, or let the feds impose their version on us. I want Idahoans to be in charge, not the feds,” Otter stated in early 2013 in a radio commercial advocating for the exchange’s creation, broadcast statewide and funded by the Idaho Association of Commerce and Industry (IACI). “We can keep the feds out of Idaho,” he claimed.

“I know the public debate will continue,” Otter said Monday, “but let me reassure you that we are far better off engaged than we would be on the sidelines.”

Despite Otter’s continued confidence with the agenda, some members of the Legislature expressed concern about the exchange’s operations. “I understand the need we had to create a state-based exchange, but I am concerned,” said Rep. Jeff Thompson, R-Idaho Falls. “I am concerned about the board of directors (of the exchange). They are not accountable to anybody.”

Thompson added that “the fact that a former board member can step down and then be awarded a contract in excess of $300,000 without an open bidding process, that’s a problem,” a reference to the scandal involving the exchange’s executive director Amy Dowd and former board member Frank Chan from last October.

“The executive director was obviously under the impression that it was OK, but it wasn’t OK,” said Thompson. “And then there was an outside audit conducted on that deal, but there was nothing to audit, yet that was another $15,000 ‘kiss’ to an outside law firm. Most other state agencies have direct oversight by the Legislature as to what they are doing and how they spend taxpayer money. There are discussions under way as to why the state insurance exchange is set up without that type of oversight.”

Thompson declined to elaborate on what sort of legislative proposals may emerge that would seek to fix the exchange, yet reiterated that “there are serious discussions under way. We all need accountability, we all need checks and balances. That applies to the insurance exchange as well.”

Sen. Fred Martin, R-Boise, who along with Thompson voted in favor of creating the exchange, also has concerns. “Idahoans need to be able to get reliable insurance information and not have to use the federal exchange,” he told IdahoReporter.com in November. “The board needs to get off the federal system. The legislation we passed calls for a state-based insurance exchange and what we’ve got is not what I was expecting.”

At Otter’s post-speech press briefing Monday, IdahoReporter.com asked if he believed he had fulfilled his promise of Idahoans being in charge of health insurance within the state and keeping “the feds out of Idaho.”

“What we’ve tried to do within the federal guidelines, we tried to ‘Idahoize’ their demands on our system,” Otter replied. “Not only by requests for exemptions and by negotiations with HHS (U.S. Department of Health and Human Services), but also by some of the lawsuits that we have joined with other folks that have sought to bring lawsuits for one purpose or another against Obamacare.”

The governor conceded, however, that the Idaho exchange is something less than an Idaho exchange. “We still do not have our own system up and running because we were late to the party,” said the governor.
“The legislative leadership after the July decision by the Supreme Court, we met, and they requested and I agreed that I would not make that decision myself … had we made the decision to go forward with a state exchange we would have had another six months, seven months that we would have had; we probably could have been more up to speed with our own system.”

But is the Idaho health insurance exchange a state-based exchange? IdahoReporter.com asked the governor.

“It is a state-based exchange with the generalized information that we get off of the federal exchange,” responded Otter. “We’re using basically their fiduciary figures, we’re using their availability of the information on what policies can be offered and at what price. That part is the feds and I say again if we had started earlier we would probably have been up to speed. We didn’t start earlier. In fact, I think everybody was a little surprised how much that they did get done and get prepared. I would tell you by the end of this year it will be the Idaho state-based exchange and we won’t have the federal complex with it.”