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Industry Observers Tell AIS They Predict Changes to Exchange User Fees, Platforms

Washington, DC (PRWEB) July 23, 2014

Low enrollment and higher-than-expected administrative costs are prompting some state-run insurance exchanges to come up with alternative means to becoming self-sustaining. Industry observers identify some of the myriad ways to accomplish this in the July 17 issue of Atlantic Information Services’s Inside Health Insurance Exchanges (HEX).

“We never expected the operating budgets would be that high” for state-run exchanges, Christopher Condeluci, an attorney at the law firm Venable LLP who served as tax counsel for the Senate Finance Committee during the crafting of the health reform legislation, tells HEX. “Maybe we were just naïve or ignorant to the fact that the exchanges — as an operating entity — would require so much money. I recognize that start-up costs are still part of the equation, but I am floored when I see the amount of money suggested for operating the federal exchanges.”

As it stands, the Affordable Care Act (ACA) outlines user fees as the only way to fund state-run exchanges. In an effort to be self-sustaining by the end of 2014, as called for by the ACA, several state-based exchanges intend to add or increase user fees that are tacked onto insurance policies sold inside — and sometimes outside — the exchanges. Another alternative, Condeluci predicts, could be for some state-run exchanges to move to the federal exchange.

Moving a state exchange to the federal model could be attractive to state lawmakers who don’t want their constituents to foot the bill to operate the marketplaces. Consumers in the state, however, will still be required to pay the user fees for the federally facilitated exchanges (FFE). It might be possible for the state to maintain control over the carriers, and their rates, in an FFE while continuing to offer the same consumer protections they have now, says Condeluci. “I don’t think a state would really give up that much control.”

Exchanges could also appeal to the state and federal governments for funds. “At that point, it might be cheaper for the feds to loan [a state exchange] some money than for them to convert them to the federal platform,” suggests Rosemarie Day, president of Day Health Strategies and former chief operating officer of the Massachusetts exchange.

Visit to read the article in its entirety, which also includes commentary from Joel Ario, former director of HHS’s Office of Health Insurance Exchanges.

About Inside Health Insurance Exchanges
Inside Health Insurance Exchanges provides hard-hitting news and strategies on the details of federal, state and private health insurance exchanges, for business planners with health plans, hospitals and health systems, medical groups, ancillary providers, suppliers, pharma companies and state health policy makers. The biweekly newsletter answers questions about this cornerstone of the health reform law — who will participate, what product designs will look like, the effect on enrollment and more. Subscribers receive reliable intelligence on how to make the most of the enormous transformation in health insurance that is about to unfold and how to succeed in the insurance marketplace of tomorrow. Visit for more information.

About AIS
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at

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