States crafting HIX financing

April 1, 2013 in Medical Technology

State health insurance exchanges are putting together financing and revenue sources, with many likely relying on insurer fees, as long-term state or federal support remains uncertain.

The Colorado Health Benefit Exchange is aiming to create multiple revenue streams, with the board approving a 1.4 percent premium fee and now urging lawmakers to pass legislation permitting a $1.80 per member monthly fee for up to three years.

A bill allowing the fee would also offer up to $5 million in tax credits to insurers that contribute a similar amount to the fund, similar to Colorado’s funding framework for its high risk insurance plan now being phased out.

[See also: HHS delays deadline for health insurance exchanges.]

The Colorado exchange, led by executive director Patty Fontneu, a benefits consultant and former COO of the law firm Holme Roberts Owen, is estimated to need up to $24 million annually for its operations. The exchange was awarded two federal grants totaling about $60 million, only about $15 million of which was spent as of December 2012.

Other states are adopting premium fees closer to the maximum that will be imposed by the federal exchange, 3.5 percent.

In a state with relatively high government debt, the Connecticut HIX, called Access Health CT, has been keen to note on its website that it will not be funded with state dollars (something Covered California stresses as well). The HIX is running on federal funds through 2014, and it’s likely going to have a premium fee of up to 2.8 percent.

With an estimated 360,000 uninsured residents in Connecticut, Access Health CT is going to be on the smaller side in its membership. Even so, implementation — or the pace of it, combined with the backdrop to state budget realities in Connecticut — has been such that Access Health CEO Kevin Counihan, the former chief market officer at the Massachusetts Health Insurance Connector Authority, has told the federal government the staff won’t be implementing any new federal regulations after March, until they’re sure the user interfaces are ready to work, which they’re testing in June.

[See also: Health insurance exchanges mired in political battle.]

The New York Health Benefit Exchange, meanwhile, has received about $370 million in federal funding and will be enrolling an estimated 1 million individuals and small business employees.

Created as a program of the Department of Health, with five regional advisory committees, the exchange is being built with federal funds and is required to be self-sustaining by 2015. The exchange staff is currently considering long-term financing options, as directed by its establishing law.

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