Insurance agency budget stalls in health care tiff

BOISE (AP) - Idaho House Republicans' hatred of the federal health care overhaul spurred the demise of the state Department of Insurance's $10 million fiscal year 2012 budget on Friday.

In a 50-15 protest vote, the chamber rejected the agency's spending plan starting July 1 - normally a ho-hum event - over objections that it included $2.5 million from the federal government to help develop insurance exchanges foreseen by the 2010 Patient Protection and Affordable Care Act. Under those Democrat-backed reforms, states must establish insurance exchanges offering a choice of plans under common rules to boost competition.

At the urging of Gov. Butch Otter, the state insurance regulator got federal grants worth $2.5 million for Idaho to develop a home-grown version.

But Idaho's conservative GOP lawmakers fear taking money for exchanges could lock Idaho into enacting the law - and make the state complicit in a constitutional overreach.

"I just think we need to hold back on that and not let those tentacles creep into the state while we're still litigating," said Rep. Phil Hart, R-Athol.

Republican Rep. Maxine Bell, of Jerome, said the plan now is to find other sources of state cash for the exchanges, seen by many, including Department of Insurance director Bill Deal, as a good idea.

"The issue is the source of the money," Bell said, adding she wasn't happy about the outcome.

"Number one, the bill had been vetted and worked on in committee," Bell said. "Number two, the money had come in at the behest of the (Otter administration). I felt that it was a grant with no strings that would allow us to set up a firewall against the health care act. If we don't do them (exchanges), then the feds will. But the perception was, it was part of 'Obamacare.' It seemed to me to be reasonable."

The agency's budget bill had cleared the Senate last week, but not without a heated, hour-long debate over the same issue.

Democrats objected to Friday's vote, accusing overhaul-hating Republicans of climbing atop a political pedestal at the expense of cash to help improve Idaho's insurance system.

"We run the risk by not pursuing these activities of not developing an Idaho-based exchange," said Rep. Brian Cronin, D-Boise. "The state of Utah actually got way ahead of the rest of the country developing its own state-based solution. There's no reason Idaho shouldn't do the same. This would be a good expense. It would allow us to develop a solution that's right for Idaho."

Idaho is among 27 states that have sued the federal government over the health care overhaul and provisions that would force residents to buy insurance by 2014 - or face financial penalties. That case is likely to end up being decided by the U.S. Supreme Court.

Deal, the Department of Insurance director, said it's important for Idaho to continue developing a state-based solution for an exchange that's acceptable to the federal Department of Health and Human Services before 2014, just in case Supreme Court justices rule that Congress acted constitutionally.

Even so, he's gotten the House's message loud and clear: Don't take the federal money. Deal plans to write the federal government to indicate Idaho no longer plans to use it.

In typical years, his agency collects more fees from insurance agents and companies than it needs to run its day-to-day activities, so it shifts about $1 million to the general fund to go to other agencies. Now, Deal, a former state representative from Nampa, hopes the Legislature will give his agency authority to use some of that money on the exchanges.

It probably won't be as much as the federal grants, given Idaho's budget shortfall, but it will likely be sufficient to develop something that still meets federal requirements, Deal said. And even if the Supreme Court does overturn the federal health care law, Idaho will still be able to take advantage of insurance exchanges to boost competition and transparency for customers looking to purchase protection, he said.

"Let's plan, let's be prepared," Deal said. "It's not a waste of time or a waste of money because what we find through our own due diligence is going to be helpful for Idaho."