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What Lies Beneath

How 78,000 Idahoans were right below the surface of a Statehouse scandal

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In the end, it was the most underreported story of the 2015 session of the Idaho Legislature. For all of the ink that was spilled on Uber, historic horse racing and salamanders, the issue of Medicaid redesign and its broad implications for Idaho's working class was kicked to the curb. To be sure, many Idaho reporters acknowledged that the Medicaid debate was nonexistent by the time legislators gaveled the session closed, but what remained unreported were the bizarre circumstances that torpedoed that conversation—in spite of the fact that the real story was right under the collective nose of Idaho media, lurking like an iceberg directly beneath one of the juiciest scandals of 2015.

It was a TMZ moment. Alex LaBeau, president of the powerful Idaho Association of Commerce and Industry, had long been considered one of the most influential lobbyists in the Gem State but had only been recognized, for the most part, by Statehouse insiders and political groupies. That was until Feb. 25, when an email authored by LaBeau was leaked to the media and select legislative leaders.

Reacting to Terreton Republican Sen. Jeff Siddoway's comments that he wouldn't consider lower taxes until the Legislature raised teacher salaries, LaBeau fired off an email to Idaho Power Government Affairs Director Richard Hahn, IACI Vice President Jayson Ronk and IACI Political Director Zach Hauge. Its profane contents were incendiary enough for the press corps to pounce, filling scores of column inches in newspapers across the state.

"Suckawy can eat a dick and hug a teacher," wrote LaBeau. "How fucking stupid."

What happened next was the Idaho Statehouse's own particular brand of schadenfreude, as LaBeau was tangled in his own hubris. Within hours, he offered to resign after admitting to Idaho Reports that sending his email was a lack of judgment. A few days later, LaBeau was placed on leave by the IACI board of directors (he was reinstated on April 13, two days after the 2015 Idaho Legislature adjourned sine die).

But what was not known by many was that at the height of the scandal, tucked inside LaBeau's pocket, was proposed legislation designed to introduce a public/private hybrid to rework Idaho's Medicaid system—securing health care coverage for as many as 78,000 working class Idahoans and saving the state millions of dollars.

A number of public and private sector sources confirmed to Boise Weekly that the opportunity to introduce a Medicaid redesign bill had been botched. Many of those sources asked not be named because of what they called a toxic political climate at the Statehouse, but each said the LaBeau mess, while not directly related to the Medicaid proposal, introduced too many distractions away from what they said remains the most critical issue unaddressed by the Legislature. Only LaBeau himself told BW that his scandal had little, if anything, to do with derailing the Medicaid redesign proposal.

"I don't think it had anything to do with it," said LaBeau. "With or without me, the issue is still the issue. Politics are politics."

For the record, LaBeau confirmed that there was indeed a piece of legislation on his person.

"Yes, we had crafted legislation," he said. "And yes, we were prepared to present it to the Legislature."

That proposal remains under lock and key. In a unique form of legislative privilege, it turns out that any proposed bill submitted to the Legislative Services Office does not have to be disclosed to the public if it has not been fully vetted by LSO.

In yet another twist, BW has confirmed that Richard Armstrong, director of the Idaho Department of Health and Welfare, helped to craft a second Medicaid redesign proposal in mid-March and delivered the measure to LSO. That piece of legislation didn't see the light of day either, leaving proponents of Medicaid redesign in the lurch until 2016 at the earliest.

"I can't believe it. This makes me so angry," said Michelle Gluch when BW told her of the political minefield that had kept Medicaid redesign from surfacing in 2015.

Gluch is one of the approximate 78,000 Idahoans who fall into a so-called "coverage gap" because they earn too much to qualify for traditional Medicaid but not enough to qualify for any subsidies through the Idaho health insurance exchange. The majority of the 78,000, like Gluch, are employed but are on the lower end of the wage scale, scraping to put food on the table, let alone pay any medical bills.

"I can't tell you how many times I've been told that I would be better off to quit my job and take assistance, but I want to work. I want to be a productive member of society," she said. "And now you're telling me about this mix-up at the Legislature? I'm furious."

Don't Blink

"To the great credit of the governor, he was not one of those Republican governors who said, 'Hell no, we won't go.' He wanted to look at Medicaid more closely," said Corey Surber, executive director of Community Health and Public Policy for Saint Alphonsus Health System. "Yes, he was part of the lawsuit against the Affordable Care Act, but Gov. Otter has taken on the pragmatic approach that we need to study the best way forward for the state."

Otter has been a high-profile, vocal opponent of Obamacare, but has also insisted on the creation of a state-run health insurance exchange while creating a working group to take up the issue of the "coverage gap." In late 2012, Otter appointed Health and Welfare Director Armstrong to chair that group. Armstrong, in turn, asked Surber to facilitate the proceedings. The group, which included private and public stakeholders and legislators from both sides of the political aisle, unanimously recommended to Otter to pursue an expansion of Medicaid—using federal dollars—as soon as possible.

"But the governor called the group back into session in the summer of 2014," explained Surber. "By then, there had been a number of other states proposing alternative approaches, more of a private/public hybrid but still using available federal dollars. But we had a new cast of players in the Legislature, so that time the governor asked the House Speaker [Oakley Rep. Scott Bedke] and Senate Pro Tem [Rexburg Sen. Brent Hill] to appoint new legislators to the group. This time, they were all Republicans. And honestly, I think that was a smart strategy. It allowed for some pretty tough questions. And quite impressively, three of those four legislators, as well as the rest of the group, approved the public/private hybrid recommendation."

The stage was set for Jan. 12 and Otter's State of the State address.

"The work group did its homework and deserves an opportunity to share what they have learned. I am asking you to hold hearings this session, listen to their findings, ask questions and educate yourselves on all the work they have done," read Otter from his prepared remarks. Then, in a blink-or-you'll-miss-it moment, Otter went off script.

"And then, possibly take action," he concluded.

Surber said she was surprised that Otter was, in her words, "a little more active than we expected."

"All I had hoped for is that he would mention the group," she said. "But then he took it a step further."

By then, an Idaho coalition—separate from the governor's work group and primarily comprised of proponents of Medicaid expansion—had formed, anxious to push for a full public hearing on the matter.

"It wasn't a secret that IACI was working on a bill by then. All the signs were good and, yes, we did put our eggs in their basket," said Lauren Necochea, director of the Idaho Center for Fiscal Policy and Idaho Kids Count. "If we have the opportunity to save lives, reward the working class and save the state money, isn't that a good plan for Idaho?"

Was it Really A Win-Win?

LaBeau had been working on a proposal that he said needed to please his own constituency: members of IACI, which include Idaho's most formidable business powerhouses, such as Micron, Idaho Power, Simplot and Hecla Mining.

"The issue for IACI was getting all of our members on the same page and that's a substantial undertaking," said LaBeau. "At least we got to that point."

LaBeau and everyone else that BW spoke with agreed that the economics of a public/private hybrid redesign of Medicaid "pencil out." Independent analysts had concluded that the plan would directly save Idaho $173 million in state and county funds over 10 years and could boost the state's economy another $653 million over the next decade. Additionally, the plan would essentially eliminate county-administered indigent care programs, resulting in significant tax reductions.

"Yes, the human component is critical but where we would definitely see some movement from Republicans on this issue is through the economics," said Amy Holly, Health System Integration manager for the Idaho Primary Care Association. "It makes sound fiscal sense to move this forward. It eliminates duplicative taxation. It gets people to be healthier earlier. The cost-benefit to this is win-win, no matter how you slice it."

Most everyone agreed that 2015 was the ideal year to take up the issue at the Statehouse because, put simply, this wasn't an election year.

"I agree that this is somewhat sensitive ground," said Stephen Weeg, former executive director of the Pocatello-based Health West, Inc. and current chairman of the board for Your Health Idaho, the state-run health insurance exchange. "I understand the opposition. No. 1, there is general hostility to the Affordable Care Act, and No. 2, we're talking about low-income people. It's a lot easier to generate some new funding for school kids than it is for a lot of folks making slightly above minimum wage. It's not a constituency that has a lot of political power. But honestly, I have yet to hear a legitimate, strong excuse not to do this."

The LaBeau scandal certainly didn't help matters, said Weeg.

"Yes, I do believe it created a distraction; it definitely got us off-message," he said.

The Face of Medicaid Redesign

BW sat at the kitchen table with Michelle Gluch in her Nampa home to better understand why her family may represent the most compelling reason to consider Medicaid redesign.

"I'm a mother of two, and my husband and I run a day care to make ends meet. I'm a student at Boise State, working on my master's; but my husband, Jamie, suffers from a debilitating illness," she said. "It's terrible. He's in constant severe abdominal pain. And we're told, time and again, that he needs specialists and a battery of tests for a full diagnosis, and that would bankrupt us. So, in the meantime, we end up in and out of emergency rooms because I can't deal with him suffering. I can't bear it."

A few feet away, Jamie was helping with some of the eight children in their home on the day of BW's visit.

"I've been told that I would be better off being homeless, living in a shelter. Then, they say, I could access more health care than what I'm getting now, which is nothing," Jamie said.

Michelle said she tries "not to take this personal," but "these politics are affecting thousands of people's daily lives, not just us."

Weeg, meanwhile, told BW that he remains an optimist.

"I've been talking to quite a few people around Idaho, and I truly believe there's a strong desire to push this," he said. "I can only hope."