Colorado Proposes $13 Million Fee to Fund Obamacare Exchange
The federal government picked up the tab for the 14 states and the District of Columbia that decided to build their own health insurance exchanges under Obamacare. The total price of the multi-state build-out ran about $3.8 billion, although it wasn't exactly a huge success: Seven of the states experienced significant problems, and in some cases total failure, with their exchanges.
Going forward, however, the feds aren't kicking in as much cash, which means that states running their own exchanges have to figure out how to fund their own operations. Trouble is, the enrollment numbers aren't working out quite the way they were expected in some places. So states are considering some additional measures—by which I mean fees—to make up the difference.
For example, Colorado is considering instituting a $13 million fee to keep its exchange fiscally afloat. Via Health News Colorado:
A $13 million fee on all Coloradans with health insurance would pay half the operating costs at the state health exchange next year and in 2016 under the newest financial projections.
The proposed fee would affect at least 875,000 people and includes Coloradans who get their insurance through their employers or outside the exchange.
Exchange managers announced earlier this week that they sold private health plans to 124,000 people through the end of March. People who buy through the exchange will get hit with two fees. They are currently paying a user fee of 1.4 percent and that fee is projected to rise as high as 3 percent by 2017. On top of the user fees, people who buy through the exchange will also pay the fee that exchange managers are calling a "general market health insurer assessment."
If the plan is approved, people who get insurance outside the exchange, as well as those who buy exchange policies, will still end up paying to keep the exchange going.
The proposed fee hasn't been put in place yet, but the state is going to have to do something. Legislators "recognized there would be a need for the assessment in the second and third year," when federal funds were no longer sufficient, Colorado's exchange CEO Patty Fontneau told The Denver Post.
Another option would be to cut expenses to match revenues. Exchange board member Eric Grossman told Health News Colorado that the exchange should "stand on its own based on revenue generate through the business."
"To be a fiscal steward of taxpayer dollars, if we have lower revenues, we have to have lower expenses," he said. "That's how you run a business." Well, a "business" that received $168 million in federal exchange grants to get started, anyway.
Colorado isn't the only state that has expressed concern about the future of its exchange finances. Washington state is also considering an insurance company tax, which would inevitably be passed on to consumers. Rhode Island wants to keep using federal funds for a little while longer, but doesn't seem to have a real idea of how to make the books add up after that. And Minnesota and Oregon, which were among the states with serious technical troubles, are looking for ways to cut down on their expenses, according to an Associated Press report from February. (Oregon may end up ditching its $303 million exchange, which was intended as a model for other states, in favor of joining the federal system.)