Questions remain over legality of health insurance exchange

Intro:	Months after a quasi-governmental agency nearly requested 21 million dollars from the federal government, representatives and senators fear this exchange might hurt the state.
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Wrap: Three months ago the Missouri Health Insurance Pool applied for a federal grant to enact President Barack Obama's federal health care plan in Missouri.

Now both senators and representatives say they wonder what legalities the MHIP board has over accepting a federal grant to set up this exchange.

The exchange will set up a website where medicare and medicaid recipients will be able to compare insurance company's rates and purchase health insurance with subsidies from the federal government.

It will require companies to offer standardized policies for price comparison.

Director of the Department of Insurance says this exchange will give recipients more options.

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Description: "The exchange will then promote easy competition because there will be less transparency, comparing apples to apples."

This $21 million grant is said to be solely for IT purposes and updating the computer systems, but many members of the state legislature believe it will do much more.

Senator Kurt Schaefer says the whole exchange process should go through the legislature, not around it.

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Description: "So regardless of what your position is and what you believe on that issue, I think it is an important enough issue that it needs to be debated by those people that are actually elected and directly accountable for the citizens of the state of Missouri."

Although Representative Chris Kelly supports the idea of an exchange, he does not think a quasi-governmental agency is the one that should be in charge.

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Description: "However the exchange of information between the executive and the legislature has not been very good."

Huff says an exchange will happen in Missouri because of the Federal Affordable Care Act.

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Description: "So as the law stands today, there will be an exchange in every state in 2014. The question becomes will individual states operate the exchange or whether they'll default and the federal government will operate an exchange in their state."

Aside from political concerns about the exchange side-stepping the legislature, lawmakers are worried this exchange could have an extremely negative long term effect on the state.

Representative Ryan Silvey says if the federal government cannot hold up their end of the deal, the state will have to pay their portion of the agreement.

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Description: "Then essentially what they'll be doing is forcing us to cover 410,000 additional people and then call the rug out from under us with the funding and say you're basically stuck with the bill."

Schaefer says the board's decisions could be setting the state up for disaster.

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Description: "And I think that if we were to be locked into that committment without really having a full understanding of what the federal government can commit to. It's very problematic for the tax payers in Missouri."

Silvey says he thinks the governor's office chose this way to go about an exchange because the process is much more intense when going through the legislature.

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Description: "Again, it just looks to us like another unilateral action on the part of the administration to bypass us all together."

Four senators requested information from the MHIP board regarding the legality of the exchange, but in a letter dated October 20th, these senators were denied that information due to attorney-client privilege.

When session starts in January, Representative Chris Kelly says this will definitely be a hot topic.

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Description: "No question...absolutely."

For now Silvey along with other members of the legislature urges both the MHIP board and Department of Insurance to take a different route.

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Description: "In my opinion, they should withdraw the application for the grant that went through MHIP and instead they should resubmit the federal grant through the Department of Insurance or the Department of Social Services, one of the actual departments of the state being the grantee."

Reporting from the state Capitol, I'm Stacey Kafka.