Find an ally or switch to feds?
State-run health insurance markets face cost challenges; court ruling helps
Washington — State- run health insurance markets that offer coverage under President Barack Obama’s health law are struggling with high costs and disappointing enrollment. These hurdles could lead more of them to turn over operations to the federal government or join forces with other states.
Hawaii’s marketplace, the latest cautionary tale, was awarded $205 million in federal startup grants. It has spent about $139 million and enrolled 8,200 customers for individual coverage in 2015. Unable to sustain itself, the state marketplace is turning over sign-ups to the federal HealthCare.gov for 2016.
Twelve states and the District of Columbia fully control their markets.
Experts estimate about half face financial difficulties. Federal taxpayers invested nearly $ 5 billion in startup grants to the states, expecting that state markets would become self-sustaining.
Most of the federal money has been spent, and states have to face the consequences.
“The viability of state health insurance exchanges has been a challenge across the country, particularly in small states, due to insufficient numbers of uninsured residents,” said a statement from the office of Hawaii Democratic Gov. David Ige, announcing last month that his state’s sign-ups were being turned over to the federal government.
Now that the Supreme Court has ruled the Obama administration can keep subsidizing premiums in all 50 states through HealthCare. gov, no longer is there a downside for states turning to Washington. If the decision had gone the opposite way, state exchanges would have been a leaky lifeboat for preserving a major expansion of taxpayer-subsidized coverage under the law.
With the pressure gone, “I think you are going to see much more of a hybrid across the nation,” said Peter Lee, who heads California’s staterun marketplace. Covered California fell short of its sign-up projections this year by nearly 20 percent, but Lee says it remains “a solid business proposition.”
States are “talking a lot about shared services,” Lee said. “It’s how you get economies of scale.”
States could pool resources on functions such as labor-intensive call centers or use directors, scheduled HealthCare.gov’s technology for the end of the month in the for online enrollment. They Washington area. The two-day generally want to keep control meeting is closed to the media. over marketing, consumer education “Each state has a different and oversight of insurance set of circumstances that informs plans. their approach, and we
Sustainability is the focus will continue to support their of the administration’s annual efforts,” said Mayra Alvarez, meeting with state exchangethe federal liaison to state marketplaces.
The pendulum probably will swing toward a greater federal role in the next couple of years, said Jim Wadleigh, director of Connecticut’s Access Health. Eventually, more states will want to take the lead, he said, because it gives them greater control over health care, particularly modernizing Medicaid programs for low-income people.
In New England, there’s talk of a regional exchange.
The insurance industry would welcome consolidation.
“Our biggest concern is that you may see many states looking to enact taxes and fees, and that makes health care less affordable,” said Justine Handelman, policy chief at the Blue Cross Blue Shield Association.
Hawaii is the third state exchange going to the federal sign-up system, following Nevada and Oregon, which made the switch last year.