The leaders at Colorado’s health insurance exchange are working to keep alive the online marketplace, even if the Affordable Care Act is repealed, while Republican state lawmakers want to shut it down now.
The contradictory approaches put Connect for Health Colorado, the state-based exchange where 175,000 residents purchased insurance in 2016, at the center of a debate that is only amplified by the efforts in Washington to repeal President Barack Obama’s signature health care law.
The national and state efforts, though separate, are fueling uncertainty in Colorado about the future of health care coverage and crystallizing the political divide after the election of President Donald Trump.
Hundreds rallied with Democratic state lawmakers at the Capitol recently to express support for the federal law, often referred to as Obamacare, and many are expected Tuesday for the first hearing on the Republican bill to repeal the state exchange.
Colorado’s exchange is one of a dozen state-based marketplaces created with federal dollars as an alternative to the national marketplace, healthcare.gov.
Even if Congress repeals the federal law, Connect for Health CEO Kevin Patterson envisions a need for a local health insurance exchange, which he said gives the state the ability to better track health care sign-ups and customer needs in real time.
“I think some were assuming that, if there’s no Affordable Care Act, there’s no health care exchange,” Patterson said in a recent interview. “And we have a position that there actually is something for us to do. There’s value in our shopping experience.”
The General Assembly authorized the exchange in 2011 in a bipartisan vote, but the program since has become a political touch point for Republicans opposed to the federal law, particularly after rates jumped 20 percent on average for 2017 and a critical federal audit in January.
Sen. Jim Smallwood, a health insurance broker, is leading the effort to repeal the state exchange, a move that would send Colorado residents to the federal marketplace to buy insurance. The bill is not expected to advance through the Democratic-led House, but the GOP is rallying to the cause.
The freshman Republican lawmaker from Parker is adamant that his bill is not a political statement or “a vendetta against President Obama.” Instead, he argues, the measure is designed to save the state money by eliminating a tax break for insurance companies and preventing future fees on health care plans.
The state needs to act now, he said, rather than wait for Washington, noting that Kentucky and Nevada recently made similar moves.
“There appear to be some obvious failures systemically within the gut of our state-based exchange, and my thought was, would the same thing happen if we were on healthcare.gov?” Smallwood said in a recent interview.
Colorado as a regional exchange hub
At present, the exchange employs 71 people and contracts with a company for up to 200 call-center workers in Colorado Springs. About 900 certified insurance brokers across the state connect customers with plans on the exchange.
Connect for Health, an independent state entity, said people often express confusion about the organization’s role, thinking that it sets insurance rates for ACA policies — it doesn’t.
Patterson said he spends significant time educating people including lawmakers that the exchange is “a shopping experience for buying on the individual market.” The organization also screens applicants for Medicaid eligibility and administers federal tax credits, or subsidies, claimed by 55 percent of those buying insurance.
More than $180 million in federal grants went into building the marketplace’s technology platform, which is owned by Connect for Health. Patterson points out that if the exchange terminates, millions of dollars in technological investment could die with it.
That prospect has caused Patterson to reach out to neighboring states to talk about even expanding Colorado’s exchange into a regional marketplace.
Colorado is the only state between the West Coast and Minnesota to have its own Affordable Care Act marketplace. All the other states in the region rely in some part on the federal exchange at healthcare.gov to offer insurance.
“There’s been some talk for years about banding together to try to build an economy of scale,” Patterson said. “And since we own our own platform, there’s an opportunity for us to provide a service to our neighboring states that are currently on the federal platform.”
All of that has Patterson optimistic in the face of a possible repeal of the exchange or the Affordable Care Act.
“As more time goes forward,” he said, “more people are beginning to understand there is light at the end of the tunnel that isn’t a train.”
Questions about financial stability
Smallwood, the sponsor of Senate Bill 3, sees the opposite. He worries about a looming train wreck, citing the rising premium costs and the fact 14 of the state’s 64 counties have only one insurer available on the exchange.
Connect for Health charged a monthly fee on all insurance policies in the state, even those not purchased on the exchange, for two years that coincided with a $755,000 deficit in fiscal year 2016. The monthly assessment fee hit $1.80 in calendar year 2016, but one is not scheduled for the current fiscal year.
Connect for Health recently downsized its operation and plans to rely on the roughly $26 million a year in revenues from the 3.5 percent fee for insurance carriers who sell plans on exchange. It also receives yearly donations from insurance companies, who in turn receive tax breaks.
Smallwood said the $5 million in tax breaks could be better spent on other budget priorities. And pointing to the narrow financial margin forecasted for the current year, he disputes whether it can continue without additional fees.
“In looking through the numbers, I’m not convinced personally that Connect for Health can continue without any other assessment,” he said. “And I don’t like the assessments.”
Still, a repeal of the exchange will also cost money as well as jobs, according to Connect for Health officials. A legislative fiscal analysis suggests that it would take an initial $2.5 million to shut it down. And Patterson warned lawmakers that when Nevada closed its state exchange, the state had to spend about $23 million to connect to the federal system.
Moreover, if Colorado were to transition to the federal exchange, it may not improve the health care market.
“I can only speak from the mind-set of working for one carrier, but I don’t see a substantial difference in being at healthcare.gov that would suddenly incent carriers to participate in Colorado simply because it was offered through healthcare.gov as opposed to Connect for Health,” said Marc Reece with Aetna and an exchange board member.
Democratic lawmakers acknowledge concerns about Connect for Health’s financial future, but argued that now is not the right time for major changes.
“There is already going to be so much chaos in the insurance market (and) that this is just going to build on the chaos the federal government is creating,” said Sen. Irene Aguilar, a Denver Democrat, physician and proponent of a single-payer system. “I think we would be wise to watch and wait … instead of just boom, cutting the legs out from under this.”
Date: February 06, 2017