Colorado Now Expects 1 in 4 to Drop Obamacare Exchange Policy Next Year

The
state of Colorado has doubled its expectations for the number of
people who will drop or quit paying for their exchange-based health
coverage next fiscal year,
according to The Denver Post. At the close of
Obamacare’s first enrollment period in April, the state had
projected a 13 percent drop rate, but that’s been revised to 24
percent. Basically, a quarter of the people who get coverage
through the exchange won’t stick with it. 

There are two big implications for this revision. The first,
which the article highlights, is that the state will generate $1
million less revenue than expected to help pay for continued
operation of its exchange. The state charges a fee for each policy;
more dropped policies means less money coming in to fund exchange
operations. Current projections suggest that Colorado will still
bring in enough revenue to pay its expenses next year, but a
revision of this size suggests that other states which are less
certain about how they’ll pay for their exchanges now that federal
grant money is running out may have trouble as well. As Vox’s Sarah
Kliff
noted recently, Obamacare requires state-run exchanges to be
self sustaining starting next year, but not all of them have clear
funding strategies in place. 

The second implication here is that coverage through Obamacare
may be more volatile than expected. Colorado is just one state, but
what if this is the broader trend? There’s some suggestion that
this could be the case. One of the state’s exchange finance
committee members told the Post that the dropped-policy
projection was revised “based on feedback we’re getting from other
states.” 

If one in four people getting insurance through the
exchanges each year stop paying or drop out for some other reason,
then exchange-based coverage could turn out to be fairly unstable,
and would probably end up being reshaped somewhat to serve the
non-trivial segment of the exchange population that hops on each
year only to quit the policy a few months down the
road.