Health Care Authority to spend additional $9 million on computer project

The state Health Care Authority plans to spend an additional $9 million on a computer project that the Legislature tried to cancel this year.

State officials say the move will preserve work done so far and buy another chance at continuing the project. But a key lawmaker said it contradicts what the Legislature intended.

After $5 million had been spent on early development of the computer project, lawmakers approved spending $25 million more on the BAIAS system in 2007. The computer would replace the 30-year-old system that handles public employee health insurance.

The state spent $2 million last year on the project, but Democratic lawmakers, looking to save money, pulled $14 million from the project in March.

The cut effectively ended the effort to develop the system after $7 million in taxpayer money had been spent because there wasn't enough money left to finish it. But $9 million from the original budget was still available. The agency plans to spend that money on the system in the next year.

"The reason we want to move forward and preserve this much of the project is in the hope we could secure funding next year," Health Care Authority Director Steve Hill said. He presented his plan to the Information Services Board, which controls the purse strings to large state computer projects. The proposal would spend the remaining funds to complete the next phase of the project, rather than paying off existing contracts and mothballing it immediately.

A lawmaker on the board, Rep. Ross Hunter, D-Bellevue, warned against the proposal. He said he opposed canceling the project, but had no doubt that is what the Legislature wanted to do.

State spending is expected to outstrip revenue by $2.4 billion in the next two-year budget. Hunter said it's unlikely more funding will be given to the project next year, making spending more now questionable.

But he was the lone vote against the proposal, which the board approved.

"This board has a responsibility to ensure the information technology projects brought to us are protected," Chairman Joe Dear said. "We authorized the project because the Health Care Authority made a business case to us that it will be needed."

The authority's existing computer is out of date, but still processes 33,000 transactions between public employees and their health care providers every day, said Megan Atkinson, financial services manager at the agency.

She said continuing the replacement project accomplishes two things: It will allow the agency to validate that the designs it spent $7 million on actually will fit the needs of the state, and it will let the agency plan new business practices adapted to the new system.

By completing those steps, the agency won't have to start from scratch if the project is stopped next year, Atkinson said.

Hill held out hope of finding more money, however, perhaps by issuing state bonds, rather than spending general fund money.

Sen. Dan Swecker, R-Rochester, a board member, asked what would happen if the extra spending is denied.

"The money we spent to date will be lost," Hill said. "The problem would still be in front of some future leader."

Swecker later said the argument that the additional spending will prevent the work so far from being lost was persuasive.

"To me it wasn't a waste," he said.

As for concerns about reversing the decision of the Legislature, run by the Democratic majority, Swecker said it was fair play.

"My theory is if they were trying to terminate the project, they should have cut all the money," he said.