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HealthCare Checkup

The Seattle Times health-care team tracks the local impact of the Affordable Care Act.

August 28, 2014 at 7:32 PM

Health-benefit exchange budget grows; will more spending mean more revenue?

Washington’s exchange will ask the state Legislature to lift its cap on allocations from the general fund, hoping for a budget that avoids cutting allocations for in-person assisters and advertising.

Because revenue generated by the exchange goes into the state’s general fund, to be doled out later by the Legislature, the $59.2 budget approved by the exchange board Thursday will require lawmakers to lift a $40 million cap established early on in the Affordable Care Act’s history.

And that revenue depends on how many people the exchange enrolls. A consultant’s report estimated the exchange would enroll about 85,000 new individuals in private health plans through the exchange for 2015 coverage, for a total of about 233,000 by the time enrollment is over in February 2015. But most board members expect those people may be harder to find and enroll than enrollees were in the exchange’s first year, and many expressed reluctance to cut activities focused on helping people get through the process.

By law, the exchange has to be self-sustaining by Jan. 1, 2015, but its budget is complicated, in part because its Healthplanfinder online marketplace also now supports enrollments for Medicaid, which is jointly paid for by the state and by the federal government. It also has some remaining federal grant funds that may be extended — or even supplemented — for 2015.

Because the majority of people who obtained health insurance for 2014 through Healthplanfinder ultimately enrolled in Medicaid, the state has agreed that Medicaid should pay a share — from 35 to 37 percent — of some of the exchange’s operating expenses, based on enrollments.

The reimbursement from Medicaid is one revenue source for the exchange, and the latest figures estimate that at the agreed formula, that would bring from $20 million to $22 million to the exchange in 2015. About $6.4 million of that would come from the state’s general fund, and the rest from the federal government, which has to sign off on the calculation.

Other revenue sources for the exchange include its share of a 2 percent tax on all insurance premiums, calculated at about $22.8 million based on estimated enrollment for next year. The Office of the Insurance Commissioner collects the tax, which goes into the state’s general fund. Then the Legislature allocates to the exchange an amount based on policies it sold.

The third revenue source is an assessment on premiums. A per-member-per-month assessment of about $4 has already been “baked into” premiums for plans in 2015, said Bob Nakahara, the exchange’s chief financial officer, and amounts to about $10.6 million.

In every case, said board member Don Conant, the revenue streams are contingent on the number of people the exchange enrolls in health plans or Medicaid for 2015 coverage. “We have got to generate this revenue if we want to see it,” he said.

The Legislature, before it really knew much about how the exchange would operate, voted to cap allocations from the general fund to the exchange at $40 million per year. Some board members grumbled that many lawmakers appeared to see the operation as “just a website,” when in fact, the exchange does much more work in the complicated business of enrolling people who may never have had insurance before.

In the end, pushed by board chair Ron Sims to come up with a budget, the board members settled on a request of $59.2 million, $6 million more than the $53 million figure staff members called a “bare-bones” budget, but one that looked likely to be covered by projected revenue.

“So we would be asking for a lift on the cap, and an additional $6 million from the general fund that is not currently budgeted?” asked board member Teresa Mosqueda. “Lift the $40 million cap and give us $6 million.”

“You’re on the right track,” answered Richard Onizuka, the exchange’s CEO.

The budget request will go to the Health Care Authority and then to the state’s Office of Financial Management for consideration in the governor’s budget.

Comments | Topics: exchange budget, Healthplanfinder, Richard Onizuka

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