Legislative leaders announced Tuesday at a lunch with reporters that lawmakers would not seek to establish a state-based health exchange to comply with federal regulations, but that doesn’t necessarily mean the issue is quite dead for the year.

On a 14-3 party-line vote Wednesday, the House Business Committee approved a nonbinding resolution to ask Idaho insurance carriers to begin their own exchange program, essentially an online portal to purchase health coverage.

Rep. Bob Nonini, R-Post Falls, backer of the nonbinding resolution in committee, said because private health carriers have shown considerable interest in establishing an exchange, he wanted the Legislature to go on record asking them to come up with their own solution.

A private system, Nonini contended, would have a better chance to bring down health care costs because it wouldn’t be burdened by government oversight, fees and taxes. “How does that make health care more affordable?” Nonini asked of the taxes needed to fund state exchange operations. “I only see that driving up the cost of health care.”

Rep. Brian Cronin, D-Boise, challenged Nonini’s argument, noting that the free market and private industries have yet to solve America’s health care crisis. “Why hasn’t the private sector solved this problem already?” Cronin questioned.

But the Idaho Freedom Foundation’s Wayne Hoffman backed up the free market proposal by arguing that government intrusion and regulation have made a mess of the health care economy and restrained the private sector. “It has done nothing to solve the problem,” Hoffman said of government intervention.

The debate has taken many directions since Gov. Butch Otter applied for $20 million in federal money last fall to build a state exchange. Otter’s Health Care Task Force outlined and approved a structural foundation for a exchange days prior to the 2012 legislative session, but legislative leaders never could garner enough support to assure its passage.

Then, Rep. Fred Wood, R-Burley, and Sen. Dean Cameron, R-Rupert, released their own draft plan of a state exchange that would have cost the state about $5 million, but it wouldn’t have been federally compliant.

The Wood/Cameron plan, too, couldn’t gain traction in the Statehouse.

Part of the driving force behind the exchange, at least for health insurance carriers, is the hefty subsidies that would come along with a federally certified program. Idaho families earning up to $88,000 annually would be eligible for subsidies and the federal government would pump millions straight into health carrier coffers.

But neither the Wood/Cameron plan nor a private health exchange would qualify for the federal insurance subsidies.
Along with concerns over a state exchange’s impact on insurance prices, the program is also opposed for ideological purposes.

Nonini also asserted that creating a state-based exchange would yield some of Idaho’s rights to the federal government. The Post Falls Republican explained that because the federal government needs to certify any state-based exchange, Idaho really wouldn’t have a say in how the program would run.

“That’s where we are releasing our sovereignty to the federal government,” Nonini urged. “We’re acquiescing to what they want.”

But House Minority Leader John Rusche, D-Lewiston, seized that point, saying it’s “mind-boggling” that Republicans lawmakers would let the federal government run a program when the state is capable of doing it. “It just doesn’t make sense,” Rusche said.

Moments later, he moved to kill the bill. “I don’t see there’s any value in encouraging this type of activity,” Rusche said.

Rep. Vito Barbieri, R-Dalton Gardens, countered, moving to pass the bill onto the House floor. Barbieri said state or federal involvement would only cloud an exchange.

The nonbinding resolution now heads to the House floor.

It is unclear what happens if Idaho opts not to establish a state exchange program. It is likely the federal government would then implement its own system using Idaho’s health carriers, but critics of that move argue that a technicality in federal law would prevent that from happening.

The federal government has set exchange certification for Jan. 1, 2013, but states have until Oct. 1 next year to bring their programs to functionality.

Several states, including Kansas and Florida, have rejected the federal call for exchanges. Kansas Gov. Sam Brownback returned the federal money allotted to his state for exchange implementation.

Note: The Idaho Freedom Foundation publishes IdahoReporter.com.