BOISE - Financial considerations may prompt Idaho lawmakers to pursue a major restructuring of the state's health care system this year, even though there's only a few weeks left in the session.

Rep. Tom Loertscher, R-Iona, introduced two bills Thursday. One gets rid of the catastrophic health care program, which serves as a "payer of last resort" for people who can't otherwise afford medically necessary health care services.

The second accepts the optional Medicaid expansion authorized by the Affordable Care Act.

The state would save an estimated $539.6 million over the next decade by eliminating the catastrophic health care program, Loertscher said, but it would pay an additional $539.9 million in net Medicaid costs.

Counties and local property taxpayers, on the other hand, would see a financial windfall: They'd save upward of $478 million in catastrophic health care costs, without an offsetting increase in expenditures. The legislation also cuts the emergency health care levy rate counties can charge by 80 percent, so the savings would necessarily revert back to taxpayers.

"For the state, this is really a wash," said Loertscher, a member of the catastrophic health care fund board. "I offer it as a means to accomplish two goals: It arrests the spiraling costs of the (catastrophic health care) program, and it saves property taxpayers quite a bit over time."

He introduced the bills a day after the House approved the state-based health insurance exchange.

"I've had them drafted for weeks, but the powers that be said they didn't want this mixed up with the discussion about the exchange," Loertscher said.

In his State of the State address in January, Gov. C.L. (Butch) Otter said he wouldn't pursue the Medicaid expansion this year but wanted the Idaho Department of Health and Welfare to present recommendations next year.

"There's a lot more work to do, and we face no immediate federal deadline," Otter said. "We have time to do this right."

Loertscher, however, said the state will lose money if it waits another year.

The federal government will reimburse states for 100 percent of the costs of the expansion for the first three years, before gradually dropping to 90 percent by 2020. The reimbursement clock starts ticking Jan. 1.

"If you're going to do the Medicaid expansion, now's the time. Otherwise you'll lose a year's eligibility under that 100 percent reimbursement," he told the House Health and Welfare Committee.

He handed out a spreadsheet indicating that lost year of reimbursement could cost as much as $20 million, since the state will have to contribute matching funds in subsequent years.

Loertscher said he hadn't spoken with the governor's office about his proposal. Spokesman Jon Hanian did not immediately return a call regarding the governor's thoughts on pursuing the expansion this year.

House Minority Leader John Rusche of Lewiston, who also sits on the catastrophic health care fund board, said there's been lots of talk about Idaho's "screwy" system of paying for indigent health care.

"If we don't repeal (the catastrophic health care fund) and replace it with another health care program for the very poor, we'll have to come back and do some serious renovation work anyway," he said. "I think this approach (Medicaid expansion) makes the most sense The current (catastrophic health care) fund is a reimbursement program, not a health plan: We get billed for services after they're done, and they're usually done in the most expensive manner."

Rep. John Vander Woude, R-Nampa, said he was willing to have a discussion about the issue, but opposed the expansion because of the potential long-term costs.

"If we implement this, we're basically shifting the cost from local property taxes to the federal income tax," he said. "It's a shift, not a real savings."

Moscow Democratic Sen. Dan Schmidt, who sits on both the catastrophic health care fund board and the governor's Medicaid working group, said the Affordable Care Act requires states to be ready for the expansion next January, whether they approve it or not.

"Functionally, we have to be ready," he said. "We'll have done 90 percent of the work without getting the benefit, if we don't expand. In this setting, the wisdom of saying 'no' doesn't work."

However, the working group wants the expansion to be done in a way that suits Idaho. It favors a health savings account model that gives people some control over how they use their benefits, while providing incentives to use them appropriately.

"We want to emphasize personal responsibility," Schmidt said. "We want to get these new people enrolled, but we want them to be good, smart consumers who use health care in a wise fashion."

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