Idaho could face penalties over health care reform
Friday , January 06, 2012 - 9:33 AM
BOISE -- Idaho Gov. C.L. (Butch) Otter cautioned lawmakers Thursday that the state could be penalized hundreds of millions of dollars if it refuses to go along with federal health care reform mandates.
The governor's comments came in a meeting with reporters four days before the start of the 2012 legislative session.
"By and large we feel there is a constant threat under the Affordable Health Care Act that -- should we not go forward with an insurance exchange -- we could see the federal-state (Medicaid matching payment) go to 50-50 instead of 70-30. The cost of that is considered upwards of $300 million to the state," Otter said.
Beginning in 2014, millions of lower-income Americans will become eligible for Medicaid services. That's one of the primary mechanisms the health care reform bill uses to improve access to health care.
In Idaho, the eligibility expansion could affect an estimated 100,000 to 200,000 people, out of the 230,000 or so who currently don't have health insurance.
The reform bill requires states to put systems in place by Jan. 1, 2013, to accommodate the expansion. That involves a variety of computer programs to verify income, check eligibility and automatically enroll participants.
Bill Deal, director of the Idaho Department of Insurance, said if the state ignores that mandate or fails to get certified, the federal government could reduce its Medicaid matching payment from 70 percent to 50 percent.
"That's the stick (to encourage compliance)," he said.
Otter cautioned that the $300 million is just an estimate, not a firm number. Moreover, despite the magnitude of the threat, he was wary of telling the Legislature what to do.
"I think I'm obligated to explain exactly what happens if we do nothing," he said. "My intent isn't to detract from the establishment of an insurance exchange or to advocate for it, but simply to lay out the pros and cons. My whole effort since the Legislature left town (last year) was to preserve every option for full consideration."
Rep. Vito Barbieri, R-Dalton Gardens, said Idaho should wait for the U.S. Supreme Court to rule on the multi-state lawsuit challenging the constitutionality of the federal reform bill before doing anything to implement the legislation.
He cited a number of concerns with the insurance exchange concept, suggesting it could cause insurers to lay off their agents, shift costs to small businesses, undermine individual liberties and "does violence to the previously established constitutional limits of government."
"It's a state-controlled exchange? That's vacuous," Barbieri said. "The feds dictate its substance and its form. We may have a few choices, but to say it's controlled by the state is a distinction without a difference.
"How does this add value to the health care system? How does it make health care more affordable or more accessible? Hundreds of rules and regulations, tired and overworked government employees serving 1.5 million Idahoans, a bureaucratic takeover of the private health care system -- and Idaho is running full on into its arms. Idaho should reject the idea of a publicly created health care exchange and allow the private sector to deal with it."
Alex LaBeau, president of the Idaho Association of Commerce and Industry, said the health reform act raised a number of important ideological considerations. From a practical standpoint, however, there's no doubt a state-run insurance exchange would be beneficial to Idaho businesses.
"If you've ever tried to compare apples to apples on various insurance products out there, for the average citizen it's an incredibly difficult process," he said. "Simplifying that process by having an apples to apples comparison on a ready-made exchange is the way to go."
Refusing to create an exchange simply because it's a federal mandate also ignores decades of past practice, LaBeau said.
"Whether it's in our transportation systems, our employment standards, environmental standards, safety standards, energy standards -- you name it, we've been doing it for years," he said.
Draft legislation that would authorize the Department of Insurance to move forward with the design of a state-based exchange will be presented to the interim Health Care Task Force this afternoon. It's expected to be one of the more contentious issues addressed during the regular session, which begins Monday.
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