State-run Obamacare exchanges face mounting financial messes. According to a recent Washington Post report, nearly half of all state-run insurance marketplace are struggling with lackluster enrollment and surging costs—a circumstance that is prompting them to raise fees or hand their system to the federal exchange. Washington State’s very own insurance marketplace happens to be one of these struggling state-run exchanges.
The Washington Health Benefit Exchange (WHBE) launched its insurance marketplace, Washington Healthplanfinder, with the help of billions of dollars in federal grants. These grants helped develop the exchange website and train workers. It’s money that was designated by the federal government for the purpose of setting up the exchange, not to keep it running. But, according to one federal agency, that’s not what the WHBE has been doing.
Last week, Daniel Levinson, the inspector general of the U.S. Department of Health and Human Services, sent a letter to the Centers for Medicare and Medicaid Services (CMS)—the agency responsible for issuing the grants. The letter warned that some states were “struggling with their exchange budget and illegally allocating federal funds to pay for operational costs.” Levinson singled out Washington State as one of the offenders.
Levinson questioned our state’s use of “$10 million in establishment grant funds to support operations” in part—as the Seattle Times reports—to “pay for printing and bank fees in the latter half of 2015.” Levinson asked CMS to “clarify what the grants can and can’t be used for to prevent their illegal use.”
According to Healthpathfinder spokesperson Michael Marchand, the exchange was merely stuck in the middle of a disagreement between two federal agencies and the problem has since been resolved. CMS “approved the grant and the exchange can use the money as planned.” Without the approval, the exchange would be in a bigger financial mess than is already faces.
As its revenue sources now stand, our state’s exchange cannot make ends meet. The Seattle Times,
“Washington has a plan to pay for its exchange through three revenue streams. First, all health-insurance premiums in Washington include a 2 percent state tax, and the revenue collected on exchange plans goes back to Healthplanfinder. Second, because Healthplanfinder is now also the portal for people to sign up for Medicaid, the exchange is reimbursed for those services with state and federal Medicaid dollars. And finally, the exchange charges insurance companies a per-month, per-person fee for everyone receiving insurance through the state’s website.”
Healthplanfinder’s revenue stream is heavily reliant on meeting its quota for healthcare enrollees—something the exchange has failed to do. During the second open enrollment period, the exchange needed 213,000 enrollees. Yet, even after extending the open enrollment period, it only cleared 170,000 enrollees. The Seattle Times,
“With the lower enrollment, the three sources come to roughly $101 million, leaving the exchange short $26 million, which would need to be made up, perhaps with a higher assessment or with money provided from the state general fund.”
Healthplanfinder’s poor enrollment performance forces it to become more reliant on the other two sources of revenue. Exchange officials asked state lawmakers for a whopping $127 million for its 2015-17 budget. Citing unresolved transparency issues, GOP lawmakers earmarked $85.9 billion in the state Senate budget. Democrats handed over $124 million in the state House spending package.
Considering the state of budget negotiations in Olympia, it is highly unlikely that exchange officials will get all the hard earned taxpayer dollars it wants. That leaves the assessment fee as the primary source of funding—a fee that “could increase from its current $4.19 per health plan to $13.66.”
Inevitably, that means an even higher premium for health care enrollees. Which, in turn, means that more people are likely to drop out of the exchange thereby exacerbating the financial problem.
Through the past two open enrollment periods, it has become clear that Washington’s state-run exchange is failing. Officials have—time and time again—made excuses for its poor performance. They have called the financial trauma inflicted on unsuspecting enrollees mere “glitches.” The latest excuse to explain their failure is to classify the exchange as a mere “start-up” that—as one official put it—faces all the problems most start-ups encounter.
Well, most start-ups don’t receive billions in federal grants during the course of two years to help them launch. If Healthplanfinder is a start-up, it’s a failed start-up—the Pets.com of Washington State, if you will.
Ben Carpenter says
“Citing unresolved transparency issues, GOP lawmakers earmarked $85.9 billion in the state Senate budget. Democrats handed over $124 million in the state House spending package.”… Shouldn’t that be $85.9 million with an M? Just checking.
Robert Zornes says
My question, too. Somebody isn’t doing a very good job of proofing copy.
The Washington HBE, not unlike other government attempts to run (or is that ruin?) a business, is doing a horrible job. I’ve worked with the system since inception and am getting a neck ache from shaking my head at the ineptness and total confusion that permeates the State Exchange. While a few thousand people are benefiting from health insurance they couldn’t afford without [substantial] help, hundreds of thousands of people are so dissatisfied they could spit. When the subsidies dry up and the premiums take a jump (some carriers are asking the OIC for 9.7% increases in 2016), you will see a weeping, wailing and gnashing of teeth.
Eastside Sanity says
Just another liberal democratic failure that throws our money down their toilet. Every time a progressive has an idea that involves government control of society for the betterment of all, we see nothing but red debt with no accountability. 40 years of this tax & spend doctrine is proof of that failure in Washington State & over 10 Trillion in the Obama years at the federal level are all the proof you need to vote the other way in 2016.
Yeah, why don’t you go find us that ten trillion dollars Bush blew on two wars and deficit financed tax cuts for the rich, moron.
Robert Zornes says
We all know what the democratic way of doing things is take little more from the state budget and then figure a way to tax us a little more to fill the short fall, Its like the way the way they want to rescind the 2% lid on property tax and make the lid 5% saying their isn’t enough tax revenue. Seem like my property value keeps going up and along with that so does my property tax.
WHATS WRONG WITH THIS PICTURE. I WOULD LIKE TO KNOW JUST HOW MUCH TAX REVENUE THESE PEOPLE THINK IS ENOUGH. NO MATTER HOW MUCH TAX MONEY RECEIVED THEY SEEM TO SPEND IT ALL AND THEN SAY WE NEED MORE
Does anyone in Olympia think how to economize so we can save money? .
Robert Zornes says
How much is enough, you ask? Go rent Little Shop of Horrors and you’ll answer your own question.
Jay Inslee is a whore…gregoire was one as well..Tax the masses to the point of extinction..i wonder why Inslee wont accept the budget that passed the senate giving the state an additional 3 BILLON dollars without raising taxes?? CMon Jay..you liberal worthless scumbag..its time you were recalled and i remember the last time a R held the office of governor..and im not talking about Dan Rino Evans. We can either vote these crooks out or just lay down and take the punishment they give…i prefer the former 😉
The state of Washington has done a piss poor job on their Obama care exchange, not a surprise we could have predicted this as it seems almost any program the state try’s to runs will be a complete mess. BUT we can be happy Washington residents that we aren’t living in Oregon as their Obama care exchange was a complete failure and they paid BIG money to have it up and running and they never did get it to work.