Legislative Day 2: A closer look at ‘Ottercare’ | Idaho Statesman

Gov. Butch Otter has proposed creating a state-run and state-funded program to provide a basic health care option for the 78,000 Idaho adults who can’t obtain health insurance either under Medicaid or through insurance subsidies offered under the federal Affordable Care Act, a.k.a Obamacare. It promises to be a much-debated proposal in the session. Here’s some more detail on it:

The proposal is touted as an Idaho-grown solution and an alternative to Medicaid expansion, which is an option to states under Obamacare. Although other Republican-led states have expanded Medicaid, in some cases with waivers that make it more politically palatable, Idaho’s Legislature will not permit a bill even to be introduced.

So the Primary Care Access Program, as the governor’s inititiative is called, essentially connects individuals with primary care facilities and pays those providers $32 per month per person for doctor visits. Multiply $32 by 12 months by 78,000 people and you get just under $30 million.

The plan lets people establish relationships with a doctor and covers preventive care. It does not cover acute or chronic care, hospitalization or prescriptions.

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House Speaker Scott Bedke said lawmakers “are going to give it a look” but he could not “make any commitment on where it will go or how it will fare.”

“I think that this addresses some of the concerns that we’ve had up to this point,” he said. “This is Idaho money with Idaho rules. I think that most legislators agree that the way we deliver health care to that segment of our society is inefficient and expensive. And so if we can do anything to better that then I think that we’re interested.”

FUNDED BY TOBACCO, CIGARETTE TAXES

The proposal would be funded by a transfer of $32.4 million from tobacco and cigarette taxes. Here’s how that would work:

The state tobacco tax is a 35 percent levy on the wholesale price of tobacco products other than cigarettes. That’s estimated to bring in about $11.2 million in the fiscal year that starts July 1. The funds are currently unallocated, so all of that would be diverted to pay for the health plan.

The state cigarette tax is 57 cents per pack. It is forecast to brings in about $33.2 million in the next fiscal year. As proposed, $21.2 million of that amount would be diverted to the health coverage plan. To do this, the state is shifting some funds and closing out a few others that are scheduled to expire — or “sunset,” in government speak — in a few years.

The health program itself, as proposed, would sunset after five years. With legislative opposition blocking Medicaid expansion, the idea is at least the state program does something to provide Idaho’s poorest residents with basic preventive health care. Outside of prevention, bigger health care expenses — the kind that break the bank — will continue to be offset by the state Catastrophic Health Fund and county indigent funds.

At least it’s something, right? Well, it depends. Democrats pounced on the “Ottercare” plan for simply adding to the state burden on taxpayers. Democrats and others who support expanding Medicaid note that doing so would return to Idaho healthcare dollars state residents already contribute through their federal taxes. In fact, it’s those dollars and then some, because richer states pay more into the system.

DECLINING REVENUES, LONG-TERM VIABILITY

The Idaho plan, as structured currently, is not really a long-term solution. It can’t be, for the simple fact that revenues from cigarette taxes are expected to decline by up to 8 percent a year, or $1.5 million, over the next three years as cigarette use continues to decline. Tobacco taxes during the same period will rise slightly as wholesale prices rise, but only by about $230,000 per year. And no one would lose money betting that healthcare costs will also increase in the same period.

Sen. Dan Schmidt, D-Moscow, raised that issue Tuesday when legislative budget writers got an overview of the governor’s proposed spending from the Division of Financial Management.

If the legislature approves “Ottercare” — and that’s not certain — the program clearly will need tweaking in future years to address that potential imbalance. Beyond affordability, there is also likely to be opposition among lawmakers who dislike entitlements of any kind. So don’t schedule that doctor visit just yet.