States Struggle to Pay for Health Exchanges



The federal government spent billions funding the development and implementation of state-run health exchanges under Obamacare, many of which struggled or didn't work at all during the law's first open enrollment period.

But the federal grants provided to operate the exchanges under the law are about to run out. And as the Associated Press notes, some the states running their own exchanges don't yet know how they will continue to fund ongoing operations. 

Rhode Island received high marks for the smooth rollout of HealthSource RI amid last year's stumbles by the federal government, and the agency director says the state's health care reform "revolution" has begun. But the state does not have a way to pay for the exchange's long-term operations, and some lawmakers in the state General Assembly have suggested shifting to the federal exchange.

The cost to operate Rhode Island's exchange is estimated at $17 million a year, although an earlier estimate pegged the cost at $24 million.

Vermont's exchange budget is also short. "Officials there acknowledged it could face a $20 million shortfall by year's end," the AP reports. "The state hopes pending federal grants will fill the gap."

Other states, like Colorado and the District of Columbia, are funding their exchanges through fees and taxes on health plans. The District of Columbia system taxes plans that aren't sold through the exchange, officials tell the AP, because the fee would have been too high if it only taxed plans sold in the exchange. California is holding $184 million federal money to pay for an expected shortfall, and has also instituted a $13.95 per month fee on individual plans, both of which it expects will help pay for expected budget shortfalls through 2016. After that? Harder to say, but it's going to continue to be a challenge for states to keep these exchanges afloat.