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Questions arise as DHW funds insurance exchange startup

Questions arise as DHW funds insurance exchange startup

Idaho Freedom Foundation staff
June 12, 2013
[post_thumbnail] Sen. Dean Cameron says questions have arisen about the Department of Health and Welfare transferring funds to assist with startup of state insurance exchange.

In a move that has raised questions among some Idaho legislators, the director of the state Department of Health and Welfare (DHW) has chosen to transfer $385,000 out of the department and into the bank account of Gov. Butch Otter’s state insurance exchange, and the board of directors of the exchange has agreed to receive those funds.

“I, along with other legislators, am certainly asking questions about this,” Sen. Dean Cameron, R-Rupert, told IdahoReporter.com. “I am personally not extremely concerned about this, but it has nonetheless raised questions.” Cameron is co-chair of the Joint Finance-Appropriations Committee (JFAC) and also is chairman of the Senate Finance Committee.

According to records posted on the governor’s website, Richard Armstrong, director of DHW, announced in an April 25 meeting of the insurance exchange board’s finance subcommittee that he was prepared to “transfer” the funds to the exchange. “The grant was structured so that DHW could make these funds available to the Exchange for use in initial set-up costs for the exchange,” the meeting minutes indicate.

“The exchange was in need of operating capital,” Cameron said Tuesday. According to both Cameron and Sen. Steve Thayn, R-Emmett, the $385,000 grant was given to the state of Idaho from the U.S. Department of Health and Human Services as an award for the state having achieved certain benchmarks in enrolling Idaho children in what is known as the Children’s Health Insurance Program (CHIP), a children’s medical care program that is unaffiliated with the insurance exchange.

Earlier this year, members of both the Legislature and Otter’s staff said that federal funds would be designated specifically for the launch of the Idaho insurance exchange and that the exchange would not rely on any other types of funding belonging to other departments of state government.

On Feb. 5, speaking before the Senate Commerce and Human Resources Committee about the insurance exchange legislation, Otter’s chief of staff, David Hensley, noted that the governor had estimated the cost of creating the insurance exchange to be approximately $20 million, and that there would be “federal funds available” to cover these costs.

But, according to Cameron, the federal funding available for the insurance has to be used to reimburse the exchange for expenditures that have already been made, and cannot be used as a form of “startup capital,” putting the exchange in the awkward position of having to spend money before it can acquire the designated funding.

“I would have preferred that this reality had been brought up to us during the legislative session,” Cameron noted. “Frankly, we got so busy just getting the exchange legislation done that we didn’t have an adequate discussion about this, but it is what it is now. Many of us are asking questions about this, and we anticipate a report from the director (Director Armstrong from DHW) about it.”

IdahoReporter.com asked Cameron and Thayn if the transfer of the DHW funds was actually permissible, and whether or not the legislative members of JFAC, the committee that appropriates funds to the state’s various government agencies, should have weighed in on the matter.

“That is a question that is being considered,” Cameron responded. “Certainly the department director (Armstrong of DHW) has some broad latitude in how his department’s funds are spent, but some are asking about this.”

Thayn, on the other hand, expresses greater concern. “I think that either state or general funds are being spent on the insurance exchange, which is in complete contradiction to the way this was presented to us,” he said. “That $385,000 transferred out of DHW will have to be replaced somehow, and it will likely be replaced with Idaho funds. I think there are a lot of Idaho legislators who didn’t know what we were getting in to when we voted on this thing. And given that the DHW director apparently made this decision by himself, I think this raises the question of whether or not the exchange actually has oversight from legislators, or if it is all being driven by the executive branch.”

Cameron voted in favor of creating the insurance exchange, Thayn was a “no” vote.

According to Stephen Weeg, chairman of the board for the exchange, the only operating money that the exchange has right now is the $385,000 that DHW transferred to it. “We’ve now begun to pay some of our bills and as we spend money we’ll be able to get the federal funds that have been promised to fund the exchange,” he said.

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