Solvency worries grip state health exchanges

Covered California sets aside $184 million for projected budget shortfalls

State exchanges may have trouble becoming financially self-sufficient by January, 2015 as required by the Affordable Care Act, the Associated Press reported

The federal government picked up a tab of nearly $3.8 billion to launch marketplaces run by 14 states and the District of Columbia. But since projected health plan enrollments are lower than anticipated, the insurance surcharges meant to fund state exchanges may not throw off enough income to operate them in the future, the AP noted. Moreover, fixes for underperforming state exchange websites are straining budgets and resulting in lost income as frustrated customers buy coverage elsewhere. 

States are tightening their belts in light of these problems. California's exchange, for example, is reserving $184 million in federal grant dollars to cover expected budget shortages through 2016. Rhode Island is asking for an extension to use federal grant funding through June of next year. Minnesota, Oregon and Washington are slashing exchange-related operating expenses. Washington is also considering imposing a tax increase on insurance sales, a move likely to be met with payer resistance and customer complaints if cost hikes pass into premiums, the AP noted.

Further, Rhode Island business leaders expressed concern that bailing out the state exchange will become the responsibility of those who don't use it. "Every time we try to determine how this is going to be funded, there really is no answer," Donald Nokes, board president for the Rhode Island Business Group on Health, told the AP. "We're concerned that they may start to float the idea that this is such a valuable thing, let's everybody pay for it."

The federal government's stance on new grant requests is unclear. However, a Centers for Medicare & Medicaid Services spokesperson told the AP the agency is working closely with states to support efforts to implement their marketplaces successfully.

A clearer picture of state exchanges' financial positions may emerge after the ACA's March 31 open enrollment deadline, the AP noted.             

For more:
- read the AP article

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