A special legislative committee gave Colorado the green light on Thursday to continue working on its health insurance exchange by allowing it to apply for a $43 million federal grant. But first the lawmakers had to fight about it.

(Photo by Robin Kanouse via Flickr)

The latest skirmish follows the most controversial and contentious fight of the 2011 Colorado legislative session, which was about the so-called exchange bill. The bill said Colorado should move forward with creating an Internet marketplace where people could choose health coverage plans once such insurance is mandated by the federal health care law. 

Republican Amy Stephens, the House majority leader, corralled enough Republican votes for the bill to pass the General Assembly by arguing that Colorado needed to set up its own exchange, because if it didn’t, the federal government would set one up for the state.

“Given our situation, what’s right for Colorado, what’s right from a state’s rights perspective, this is probably one of the more proactive and better positioned things that we could do for our state,” Stephens said.

The law allowed the state set up a board to create Colorado’s own exchange, using federal grant money. But Republicans gave themselves an out – creating a special legislative committee that has to OK every exchange grant application. Last week, they took issue with the state’s biggest exchange grant application to date, for $43 million.

Republican Sen. Kevin Lundberg of Larimer County said earlier this week he wanted to know how the exchange will sustain itself when the federal grants to set it up run out.

“Where are the plans to pay for this long-term?” Lundberg asked. “Where will it come from? If this was a situation of entrepreneurs coming to investors, that would be the first question. And so that is the first question.”

The exchange is supposed to be kind of like an internet travel service – you plug in your information about your age, health and income, and you get a list of options for coverage and prices. That website will need to be kept up-to-date. There will need to be a call center for people who need help and other services. The exchange is supposed to be one-stop shopping for consumers who can come to the site and find out if they are eligible for Medicaid or federal subsidies for insurance. One possible source of funding will be fees to the insurers who do business there.

Gretchen Hammer, chair of the state exchange board, says it’s still working on long-term funding options.

“We have started those discussions,” Hammer said. “We are not to the place where we have a full financial model created.”

That answer didn’t make Lundberg very happy, and several lawmakers on the review committee expressed discomfort with the many unknowns the exchange board is facing. Sen. Ellen Roberts, a Republican representing southwestern Colorado, said she was worried about trying to set up an exchange when no one is sure how many people are going to use it, given the Supreme Court’s decision that states can refuse the expansion of Medicaid called for in the federal health law.

“I’m just a little perplexed as to how you can determine the viability of this,” said Roberts, “if the line of Medicaid eligibility is somewhere floating out in the land of uncertainty.”

Senator Irene Aguilar, a Denver Democrat on the oversight committee, argued that the unknowns shouldn’t keep the exchange board from continuing its work.

“Doing nothing is really not an option,” Aguilar said. “The number of people we have who are uninsured continues to rise while our costs also continue to rise. And I think the opportunity to have our own people designing something that hopefully will conform with Colorado values is our best way out at this point in time.”

In the end, Aguilar’s position prevailed and the committee voted to allow the grant application to move forward. Still, there may be more fights to come.

“It is important to note this in no way changes my fundamental objection to Obamacare itself,” Republican Rep. Bob Gardner of Colorado Springs said in a statement issued after the approval. “I continue to join the entire House Republican caucus in its unified opposition to this monstrous assault on American health care, and we remain resolved to resist Obamacare and to press for its repeal.”

This story is part of a reporting partnership that includes Colorado Public Radio, NPR and Kaiser Health News.

Correction: An earlier version of this article misstated Amy Stephens’ title. She is the Colorado House Majority Leader.