Feb. 08--BOISE -- A proposal to create a state-based health insurance exchange cleared its first hurdle in unusual style Thursday, earning unanimous support from its Republican detractors, while a Democratic admirer gave it thumbs down.

The only member of the Senate Commerce and Human Resources Committee who seemed satisfied with the vote was Sen. Dan Schmidt, D-Moscow, who voted in favor of the bill.

"I hear a lot about 'acquiescence' and 'reluctance,' but I'm going to say this is an opportunity," Schmidt said. "We have a problem with health care in the country and in this state. What we need to do is have an open and honest discussion about these problems; we won't solve them if we don't. So I see this as an opportunity."

The committee voted 8-1 to recommend approval of a bill that would create a 16-member board with authority to develop and manage a state-based health insurance exchange.

Gov. C.L. (Butch) Otter introduced the legislation, saying it's the best way for Idaho to maintain some control over the health insurance marketplace, in light of federal health care reforms.

Participation in the state exchange would be voluntary. The board could not penalize anyone for refusing to buy health insurance. The exchange would have to be financially self-supporting, so the board would have authority to assess fees to pay for its operation. It could not request any state financial support.

The committee took an hour of public comment prior to the vote. About 200 people were in the audience. More than 100 signed up to testify -- split pretty evenly between supporters and opponents -- but only 16 had a chance to talk before time ran out.

Scott Leavitt, representing the Idaho Association of Health Underwriters, said refusing to build a state exchange isn't the best option for Idaho, since the default solution would be a federally run exchange.

"If we have a state-based exchange, Idahoans will have more affordable health care choices and more plan options; it will also give small businesses the ability to control health insurance costs more effectively," he said. "If we default to a federal exchange, Idahoans will lose control and the federal government will take over control of the state's insurance marketplace."

Former Senate Majority Leader Rod Beck cautioned lawmakers against creating an independent board and granting it "unlimited taxing and regulatory powers."

"As a co-equal branch of government, we (the Legislature) are to legislate, appropriate and provide oversight," he said. "That's the check we have on the other branches of government. If you look at (this bill), it creates an independent body. It's independent of you. You have no further oversight; you've lost your ability to appropriate, to regulate."

Sen. Branden Durst, D-Boise, agreed with Beck, although he supports a state-based exchange and most of the Affordable Care Act.

"In approving this legislation, I believe we are abdicating our responsibility of oversight and of appropriation," he said. "But I also believe this is an issue the full Senate needs to address We're going to let an independent body start making huge decisions about health care policy in Idaho. Is that something we're comfortable with?"

Durst said he supports moving the bill to the full Senate, but opposed giving it a favorable recommendation. Schmidt and all the committee Republicans voted in favor of the measure.

Sen. Dean Cameron, a Rupert insurance broker and outspoken opponent of the federal health care reforms, noted that the Legislature has created similar independent entities over the years. The workers' compensation insurance fund, for example, and the Idaho Housing Authority, have served Idahoans quite well, he said.

While he was hoping the U.S. Supreme Court would overturn the law or that the November election would give congressional Republicans the ability to repeal it, that didn't happen, so the state has to find other alternatives.

"Some would argue that we should do nothing, (but) in my judgment abandoning the battlefield doesn't make the federal government weaker," Cameron said. "It makes it stronger. I believe the hidden motive of the Affordable Care Act is to move us to a single-payer system, and I believe refusing to set up a state exchange empowers the federal government and allows it to move us towards that single-payer system quicker."

Having served in the Senate for 23 years now, he said he couldn't recall a time when he's been more strongly opposed to something, yet felt it was the only path forward.

"Maybe by the time we're a couple years down the road, after we see what the feds do in other states (that decline to build exchanges), we'll be able to look back and say this was a wise decision," Cameron said.

The fate of the bill remains uncertain, however. It now advances to the full Senate, after which it faces a tough test in the House.

Spence may be contacted at bspence@lmtribune.com or (208) 791-9168.

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