Colorado Now Expects 1 in 4 to Drop Obamacare Exchange Policy Next Year

The state of Colorado has doubled its expectations for the number of people who will drop or quit paying for their exchange-based health coverage next fiscal year, according to The Denver Post. At the close of Obamacare's first enrollment period in April, the state had projected a 13 percent drop rate, but that's been revised to 24 percent. Basically, a quarter of the people who get coverage through the exchange won't stick with it. 

There are two big implications for this revision. The first, which the article highlights, is that the state will generate $1 million less revenue than expected to help pay for continued operation of its exchange. The state charges a fee for each policy; more dropped policies means less money coming in to fund exchange operations. Current projections suggest that Colorado will still bring in enough revenue to pay its expenses next year, but a revision of this size suggests that other states which are less certain about how they'll pay for their exchanges now that federal grant money is running out may have trouble as well. As Vox's Sarah Kliff noted recently, Obamacare requires state-run exchanges to be self sustaining starting next year, but not all of them have clear funding strategies in place. 

The second implication here is that coverage through Obamacare may be more volatile than expected. Colorado is just one state, but what if this is the broader trend? There's some suggestion that this could be the case. One of the state's exchange finance committee members told the Post that the dropped-policy projection was revised "based on feedback we're getting from other states." 

If one in four people getting insurance through the exchanges each year stop paying or drop out for some other reason, then exchange-based coverage could turn out to be fairly unstable, and would probably end up being reshaped somewhat to serve the non-trivial segment of the exchange population that hops on each year only to quit the policy a few months down the road.