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.