The state health insurance exchange bumped up its fee levels for next year as expected on Monday, but the change won’t add enough revenue to cover costs during fiscal 2016.
Connect for Health Colorado’s $53.7 million budget, approved without dissent Monday, will generate a cash operating deficit of $4.6 million and a total deficit, after IT and other capital investment, of $13.3 million.
The goal is to be a few million in the black for the 2017 fiscal year. Right now, cash reserves stand at $28.5 million and can cover the shortfall.
The budget plan is aggressive in two areas, enrollment projections and expense control, said Gary Drews, the recently replaced interim chief executive. He stayed on to see months of financial strategizing adopted.
The board, in executive session, approved a plan to consolidate call-center services under one vendor, CGI, instead of the current three, and to renegotiate for a fixed price, integrated service center, including technology, staffing, systems and maintenance.
The move should improve service levels and shave $4 million off the 2015 call-center cost of $22 million, according to the budget. The fiscal year begins July 1.
The budget includes an increase in exchange staff size from 53 positions to 78, including 11 contractor positions that will be converted to in-house jobs. The net salary increase will be $3.5 million, but an offsetting drop in contractor costs means a net increase of $1.7 million, according to the budget.
Staff is projecting enrollment by the end of the next fiscal year, June 30, 2016, to be 217,306, of which an estimated 169,499 are expected to complete the process by paying their premiums. Lives covered through the exchange now total 123,462.
One of the biggest unknowns is how much money the exchange might be reimbursed by the federal government for costs it incurred handling Medicaid enrollees.
The fees on 2016 plans purchased through the marketplace during the next enrollment period will go from the current 1.4 percent of premiums to 3.5 percent, the same rate charged on the federal exchange. The broad market assessment charged every month on each private policy — purchased on or off the exchange — increases from $1.25 to $1.80 for 2016, its last year.
“I think this is a budget that can actually work,” board member and finance committee chair Arnold Salazar said. “I really think this is our best shot of making it work.”
The new interim CEO, Kevin Patterson, who came on board a month ago, said all the budget schemes aiming for financial sustainability, after federal grants run out in 2015, will not work if the customer experience doesn’t markedly improve over the last rocky open-enrollment period.
To that end, the budget includes $8.8 million in IT and other capital investment.
Date: June 8, 2015