BOISE - The state House on Wednesday approved an Idaho-based, nonprofit insurance exchange, a provision of President Barack Obama's health care overhaul that inflamed passions of lawmakers during seven hours of debate.

The vote was 41-29. All 13 Democrats but a minority of House Republicans, 28 GOP lawmakers, backed the plan pushed by Gov. Butch Otter to use about $30 million in federal grants to build Idaho's own insurance exchange.

Under the 2010 Patient Protection and Affordable Care Act, all states must have an insurance exchange by Jan. 1. They can develop their own, or have the federal version put in place.

Idaho will have the most control and least federal interference with its own online marketplace to sell insurance and sort out subsidies to individuals and small businesses, Otter and his House allies said. Rep. Fred Wood, R-Burley and the sponsor, said simple economics spoke for a state-based exchange, arguing it would employ Idaho residents wherever practical and possible.

"You think the federal government's going to do that?" Wood said. "No. And you and I both know it."

Meanwhile, Rep. Del Raybould, R-Rexburg, and others feared "faceless" federal bureaucrats in charge.

"I for one am not willing ... to turn over this size of an enterprise that's going to affect every single person in this state to a federal entity where if I have a problem, it's going to take a year or two to get straightened out," Raybould said.

Although the Senate has passed a similar bill this version must still pass that chamber.

That's due to changes demanded by representatives, including the addition of a 19-member, governor-appointed panel of directors, all with voting power, as well as privacy protections for Idaho gun owners.

Foes argued a state exchange, already rejected by 25 other GOP-led states, will make Idaho an agent of Washington, D.C. State control is a dubious mythology, they said, with Idaho doing only what U.S. Health and Human Services Secretary Kathleen Sebelius says it can.

"The only flexibility that I see is how we say, 'Yes, ma'am,' " said Rep. Reed DeMordaunt, R-Eagle.

Passing a state exchange, added House Majority Leader Mike Moyle, R-Star, only makes Idaho the federal government's "sock puppet."

Some also contend Idaho should follow Oklahoma's example; its federal lawsuit argues the Internal Revenue Service can enforce tax penalties against those that refuse to buy insurance only in states with their own exchanges, not in states with federal exchanges. The federal government is seeking dismissal.

Insurers including Blue Cross of Idaho and Regence Blue Shield lobbied vigorously for a state exchange, for fear the federal alternative would put them at a disadvantage.

Otter, a regular federal government critic, climbed aboard in December, arguing a state exchange protects Idaho's sovereignty by preserving its options. He argues it's going to be cheaper, too, with fees charged the 177,000 expected participants estimated at a third the federal version's.

On Wednesday, the 28 GOP representatives agreed, saying they abhor "Obamacare" but don't think Idaho has a choice in this matter: Come next January, the state will have an exchange, so it ought to be one run by residents at home, to the extent possible.

"Today, I stand not necessarily in favor of a state exchange, but absolutely opposed to a federal exchange," said Rep. Robert Anderst, R-Nampa.

House Minority Leader John Rusche, D-Lewiston, disputed foes' contention that the Idaho exchange's governor-appointed oversight board will be an unelected "God Squad," foisting upon Idaho residents policies contrary to their interests.

"We have lots of boards that are not elected," Rusche said, citing, among others, Idaho's workers compensation fund. "They respond to what the citizenry of Idaho needs."