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Covered California latest state exchange to face financial uncertainty

Proposed budget for 2016 fiscal year cuts spending by 15 percent

Add Covered California to the growing list of state insurance exchanges facing financial difficulties in the first year that Affordable Care Act exchanges are supposed to be self-sufficient.

The exchange's budget for the 2016 fiscal year, due to be released today, proposes a 15 percent spending reduction, according to the Los Angeles Times. The overall $333 million budget would come from the $13.95 monthly fee for each policy sold, with the remaining $100 million coming from what's left of the exchange's $1 billion federal start-up grant, the article said.

The monthly carrier fee remains unchanged from the 2015 fiscal year, which ends June 30. Consumer advocates told the Times they would support a higher fee in order to boost Covered California's consumer outreach budget, which faces a 33 percent cut in 2016. That's the plan in Colorado, where exchange leaders have proposed a 150 percent carrier fee increase, the Denver Post reported.

Health insurers in California, however, want the exchange to keep the carrier fees flat, the Times said. These fees ultimately get passed on to consumers, and higher fees would result in higher premiums or out-of-pocket costs for consumers.

The ACA stipulates that state insurance exchanges must be financially stable by 2015. Many are not. Earlier this week, Hawaii decided to shutter its state insurance exchange and move enrollees to Healthcare.gov when enrollment reopens in November, and Vermont may follow suit, FierceHealthPayer previously reported.

With financial problems looming, state exchanges have started to get creative by proposing new fees or, in Connecticut's case, sharing its call-center strategy for a price. Other states may want to consider the offer: Connecticut reported 39 percent enrollment growth in the second year of open enrollment, the Times reported, compared to just 1 percent for California.

For more:
read the LA Times article
here's the Denver Post article

Related Articles:
Hawaii state insurance exchange to shut down
With looming financial problems, state-run exchanges get creative
State exchanges still plagued by financial challenges
Troubled state insurance exchanges face lawmakers' scrutiny
State health insurance exchanges face financial uncertainty