Jacquelyn Martin, AP
In this Tuesday, Jan. 1, 2013, file photo, the dome of the Capitol is reflected in a skylight of the Capitol Visitor's Center in Washington. Gov. Gary Herbert told a Washington, D.C., think tank audience Wednesday there are "red lines" Utah will not cross in complying with the nation's new health care reform law.

SALT LAKE CITY — Gov. Gary Herbert told a Washington, D.C., think tank audience Wednesday there are "red lines" Utah will not cross in complying with the nation's new health care reform law.

The governor said he intends to maintain control over Utah's health insurance exchange, Avenue H, even as the state turns over the responsibility for running a similar exchange for individual consumers to the federal government.

"It's our exchange. We have a right to run it as we see fit. We are not taking federal money. There are no strings," Herbert said. "So we are saying there are things we will not do."

His nearly hourlong speech to the conservative American Enterprise Institute came one day after he told Health and Human Services Secretary Kathleen Sebelius that Utah was no longer interested in expanding Avenue H to include individual consumers.

There was opposition from Herbert's fellow Republicans, especially House Speaker Becky Lockhart, R-Provo, to state involvement in implementing the Affordable Care Act, known as Obamacare.

In his speech, the governor said Utah will play no role in enforcing requirements in the new law that impose tax penalties on individuals who don't have health insurance.

"We still think it's bad policy," Herbert said, "so we are not going to enforce the individual mandates. Every state should have the option to determine for themselves if a mandate makes sense. But this state, Utah, has decided that's not the right thing."

He also said Utah will not administer Medicaid through the state exchange to maintain the current private sector approach to providing insurance "as opposed to a welfare-based system."

Also, the governor said, Utah will not allow participants in the state program to use so-called premium tax credits toward the purchase of their policies because it doesn't seem to be "the fiscally prudent thing to do."

The administration has yet to sign off on Herbert's terms, but the governor said he was "cautiously optimistic" Utah and Washington can find a way to "coexist peacefully" by splitting the business and individual exchanges.

"We now are to the point where, like it or not, the Affordable Care Act is the law of the land," he said. "Utah is prepared to participate in that effort, and we believe our exchange has a role to play."

If Avenue H is not accepted by the federal government, both Lockhart and Senate President Wayne Niederhauser, R-Sandy, said they still want to keep the state exchange going, even if it has competition from Washington.

"We could continue running it as a small-business, free-market exchange," Lockhart said. "There's nothing in federal law that says we can't have one."

Niederhauser, who helped develop Avenue H and had hoped to expand it to individual consumers, said he's "very intrigued" about continuing to support the state exchange.

"We want something that fits our values and would be good for Utahns," the Senate president said. "We thought we were headed down that road before the ACA was passed."

The state spends about $600,000 annually on the state exchange, which allows small businesses to offer their employees a range of insurance plans. Unlike the new federal exchanges, employers specify the amount of money they'll contribute toward the cost.

"We're not spending a whole lot of money on this process. We're letting the private sector do the work," Herbert said in his speech. He said the exchange has the potential to grow dramatically.

"We're in our infancy. The Utah health care exchange is not as robust as I think it's capable of being," the governor said. "Part of that is the uncertainty in the marketplace."

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