Idaho has run out of time to establish a state-run insurance exchange that’s required by President Barack Obama’s health care overhaul, meaning working with the federal government on an alternative is virtually unavoidable.

That’s according to a consultant advising a 13-member panel organized by Gov. C.L. “Butch” Otter to gather information on what Idaho should do.

But consultant Jack Rovner says it’s possible for the state to meet the deadline by opting to create a nonprofit version of a health insurance exchange that would be run by business stakeholders.

Robert Mitchell, a Denver-based consultant with KPMG LLC hired to help the state make its choice, said it’s too complicated and risky to launch a state-run exchange, like neighboring states Washington and Oregon have done.

Those states decided long ago to move ahead with their own online marketplaces for individuals and small businesses to buy insurance by 2014.

What likely remains for Idaho, Mitchell told Otter’s Health Insurance Exchange working group Tuesday, is to choose between a hybrid, state-federal exchange combination, like Arkansas and other states have opted for — or cede control of an insurance exchange to federal officials, as Texas and Louisiana are doing.

“There’s a whole bunch of deadlines that are looming,” Mitchell said. “No matter what you choose, if you go federal, if you go hybrid, you’re still going to be interacting with the federal government.”

A NONPROFIT OPTION

That view contrasted with consultant Rovner, who 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 nonprofit 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, nonprofit model: Its Idaho Health Data Exchange, a nonprofit 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 exchange, incorporated by state Health and 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 nonprofit could receive federal grant funds for set-up, but not for operations. The state could set it up so that the exchange would 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.

MOVING AHEAD

KPMG estimates that only seven or eight states will initially get their own exchanges, while the rest will be working in some fashion with the federal government.

In conservative Idaho, members of the Republican-dominated Legislature have been among the nation’s most vocal opponents of Obama’s Patient Protection and Affordable Care Act.

GOP lawmakers including House Speaker Lawerence Denney, R-Midvale, argue against doing anything. They’d been counting on a favorable U.S. Supreme Court decision, which didn’t materialize.

They’re now hoping GOP presidential candidate Mitt Romney wins on Nov. 6, then follows through on promises to block the president’s reforms.

Meanwhile, insurers like Blue Cross of Idaho have engaged a squadron of lobbyists to argue that Idaho should establish its own exchange offering insurance plans crafted by state leaders, rather than simply relying on the courts or presidential politics to intervene.

The insurers are wary of federal regulation and worry an exchange run by U.S. Department of Health and Human Services officials in the nation’s capital on behalf of multiple states, will result in coverage plans ill-suited to meet Idaho residents’ specific needs.

“This is the after-effect of dawdling for a year and a half,” said House Minority Leader John Rusche, D-Lewiston and a former insurance executive who backs a state-exchange, on Tuesday.

Rusche thinks insurance policies offered by a federal exchange could cost Idaho residents more than those offered on a state-run exchange.

Betsy Russell of The Spokesman-Review contributed.