Open enrollment for 2016 health coverage has begun, and people across New Mexico, Nevada, Oregon, Hawaii and other states are using HealthCare.gov to search for quality health coverage that they can afford.
Already impacted by average rate increases of 11.4% in Nevada, 24% in Oregon, and 30% in Hawaii, HealthCare.gov is proposing to add a new user fee of 3% on top of existing premiums for these states.
Vendors failed to deliver, and four affected states used HealthCare.gov for free.
User fees charged on top of health plan premiums were expected to allow state marketplaces to be financially sustainable without additional federal support. But the original technology vendors in states like Oregon, Nevada and Hawaii never delivered functional exchange technology – and hundreds of millions in federal taxpayer dollars later, those states moved from their failed technology to using the HealthCare.gov platform – free of charge.
This new set of HealthCare.gov fees is likely just the beginning of new federal technology fees for states using HealthCare.gov – placing affordable plan premiums continually at risk.
HealthCare.gov user fees will need to be increased further because for the last three years, the federal government has been undercharging or not charging states at all for the costs of HealthCare.gov. Federal policy and a recent Supreme Court ruling confirm that Congress directed HealthCare.gov to be financially self-sustaining, just like state marketplaces. But the federal government has never made HealthCare.gov self-sustaining and in 2014, 2015, and 2016 has taken funding from other programs to recover its over $600 million deficit incurred from running HealthCare.gov at a loss. The only direction HealthCare.gov user fees and plan premiums can go is up.
New proposal for technology use fees in Nevada, Oregon, New Mexico and Hawaii.
Last month, hCentive sent warning letters to Insurance Commissioners in HealthCare.gov states alerting them that the federal government has declared that current fees charged to carriers do not fully support the costs of running the multibillion dollar federal healthcare exchange. Days later, the federal government announced it intends to levy hundreds of millions of dollars in new HealthCare.gov technology use fees on Oregon, Nevada, New Mexico and Hawaii – fees that could harm these states' marketplaces. The proposed new fee – 3% of premiums – is on top of existing fees states need for local marketplace operations and will hamper states' ability to ensure state specific rules and policies are enforced, and local community needs are met.
Looking to the private sector for HealthCare.gov alternatives that are better suited to states' needs.
Given these new federal rules and responsibilities for states using HealthCare.gov, it should come as no surprise that states are realizing HealthCare.gov is going to continue to increase in price, was not built with states' unique needs in mind, and therefore, many states are actively exploring other options. They are right to do so.
Technology firms like hCentive – with its pre-built State Exchange Lease offering – are well positioned to offer financially sustainable solutions to states as they consider alternatives to HealthCare.gov.
Josh Schultz (josh.schultz@hcentive.com) is the Senior Analyst for Government Solutions at hCentive. In this capacity, Josh coordinates all public policy and regulatory initiatives affecting hCentive's public sector business and works to identify new avenues for states to benefit from hCentive's financially sustainable state exchange technology. Before hCentive, Josh managed contracts with the New York State of Health Marketplace's navigator and assister programs.
Michael Sasko (michael.sasko@hcentive.com) is the Vice President of Government Solutions and Commercial Products at hCentive. Mike brings extensive health insurance exchange experience having served in leadership roles on major government projects to include Covered California and the Federal Small Business Options Program (SHOP). On the commercial side, Mike brings a strong employer focus having served as a former Director of Strategy and Innovation and as a currently licensed agent/broker.
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