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Industry Observers Tell AIS They Predict Changes to Exchange User Fees, Platforms
Date:7/23/2014

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.
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