A private option for Idaho health insurance exchange?

Consultant Jack Grovner was asked by Gov. Butch Otter’s health insurance exchange working group to look into whether Idaho could pursue a privately run model and still meet federal requirements under the health care reform law. The answer: Yes, if it comes through a state-established private non-profit corporation. That’s a subset of the state-run exchange option; Idaho must decide whether to go with a state-run exchange, default to a federally run exchange, or go with a partnership between the two.

Rovner found that Idaho has a precedent for a private, non-profit model: Its Idaho Health Data Exchange, a non-profit created in 2008 to carry out the initiative started by President George W. Bush in 2004 to move toward a nationwide tech infrastructure for exchange of medical data. The Idaho Health Data Exchange, incorporated by state Health & Welfare Director Dick Armstrong, was designated by Otter in 2009 as the entity carrying out that initiative for the state, qualifying it to receive federal grant funds.

A similar model could be adopted for an Idaho state health insurance exchange, Rovner said; Hawaii already has gone that route. The non-profit could receive federal grant funds for set-up, but not for operations; the state could set it up so that the exchange would have to be self-sustaining through fees or assessments, and would receive no state taxpayer funding. Hawaii’s private, nonprofit exchange already has received a $62 million federal grant for set-up.

“What Idaho did on that health data exchange is really the perfect template,” Rovner said. “This is an option that will work, if you’re interested in it – it’s legal.” Rovner will make a presentation to the working group this afternoon; you can read his memo here.

Sen. John Goedde, R-Coeur d’Alene, has been promoting the idea of a private option, but possibilities he raised earlier, including “renting” an existing exchange structure, or essentially contracting out the service to a private firm, haven’t proven workable under federal requirements. Goedde called the private non-profit model “intriguing,” and said it may offer a path that’s more politically appealing in Idaho. “I think we need to take a look at every viable option we’ve got,” Goedde said. “Idaho, I think, traditionally has been a state where they feel less government is better. And if we can move something into a nonprofit arena as a viable option, certainly we need to consider that.”

Last month, hopes for a private model dimmed after State Insurance Director Bill Deal addressed lawmakers on the Health Care Task Force; but Deal said he was addressing the prospect of using an existing outside firm. “Basically what I was saying was if you go out to the marketplace today, you cannot find a not-for-profit or even a for-profit organization that has all of the pieces that could come in and hire them to run an exchange,” he said. “There’s just not one out there.”

Rovner said a private non-profit could be established by executive order, and wouldn’t necessarily require legislative action. However, Deal said, “That’s a political issue. … This has been such a controversial issue in Idaho,” that it might be better for lawmakers to weigh in. “I just think in the long haul, it would be a cleaner method of getting to a conclusion of what that exchange should look like.”

Legislation that was prepared last year, but never acted on, called for a quasi-governmental entity to oversee a state-run Idaho exchange, rather than a private non-profit. Deal said either way, a board would have to be set up and all the details determined as to how the exchange would work, and time lines are tight for that. “That isn’t going to be set up like magic no matter what,” he said. “The time line is our enemy.”

Paul King and Charlotte Hildebrandt
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