Health Care In The States

Colorado Sets Its Exchange Fee

By Eric Whitney

March 13th, 2013, 3:19 PM

The price of policies in Colorado’s health insurance exchange will include a 1.4 percent fee to help fund exchange operations.

The state’s exchange board voted to enact the fee Monday. Board Chairwoman Gretchen Hammer characterized it as lean compared with the 3.5 percent fee the federal government is expected to tack on to policies sold in states that are not setting up their own exchanges.

States establishing their own exchanges are getting federal grants to set them up and start operating. But that money runs out in 2015, when state exchanges are supposed to be self-sufficient.

Colorado’s exchange board estimates it will need $22 million to $24 million annually to function. It’s pitching the fee as one several “balanced revenue sources” to meet those expenses. Others could include “donations” from insurance plans in exchange for tax credits, and temporarily redirecting the fee Colorado carriers now pay to fund the state’s high risk insurance plan. The state is closing the plan in 2014, when the Affordable Care Act’s mandate that health insurers can no longer deny anyone coverage for pre-existing medical conditions goes into effect. The exchange board is also asking lawmakers for a portion of any funds remaining in the high risk plan once all claims have been paid.

The state law establishing Colorado’s exchange prohibits using any state tax money to fund its operations. The state’s high risk pool is funded by an assessment on insurance carriers, and exchange staff say using that potential revenue stream would not violate the law.

The board is also looking at selling ads on the exchange website and contracting with other states to help their exchanges enroll and serve customers to generate operational revenue.

Exactly how much revenue the fee on policies or any of the other proposed funding streams will generate is unknown, making it hard to budget for 2015. The model the state used to calculate the fee assumes 136,300 Coloradans will enroll in the exchange in 2014, generating $6.4 million, ramping up to 300,000 enrollees generating $21.2 million in fee revenue in 2017. (It’s estimated that about 800,000 of Colorado’s 5 million residents are currently uninsured.)

“It’s all a guess at this stage in the game,” said exchange CEO Patty Fontneau, referring to 2014 enrollment estimates that range from 77,000 to 240,000 people. “We have modeled it, we have looked at other states. We’ve modeled it multiple times in Colorado. You could make an argument for higher or lower. I think [the estimates] are as good a guess as I we can get at this point in time.”

Only one member of the board voted against the fee. (Three board members who are insurance company executives either did not participate in the meeting or abstained from voting). Emergency medicine physician Mike Fallon, a conservative appointee to the board, says the fee, plus redirecting carriers’ contributions to the state high risk plan, constitutes “double hitting” them.

Colorado Association of Health Plans representative Mark Reece told the board “it does look like a double dip,” but that plans also recognize they’ll benefit from Colorado having an exchange. More Coloradans with health coverage, he said, will mean less cost shifting of unpaid bills from the uninsured to policyholders.

“Looking at the cost is just one side,” said Board Chairwoman Hammer. “Plans also get a new customer base,” many of whom will get federal subsidies to help them buy policies they couldn’t afford previously, she said.

This story is part of a collaboration that includes Colorado Public Radio, NPR and Kaiser Health News.

10 Responses to “Colorado Sets Its Exchange Fee”

  1. walter says:

    Exchanges? If the idiot Congressman Paul Ryan has his way, the health exchanges will all be ended and seniors will be thrown off traditional Medicare and be forced to compete for healthcare insurance on the private market. That means healthy seniors will get a voucher to buy insurance but no voucher in the world will be worth enough money to buy seniors a healthcare policy if they have pre-existing conditions. That’s how healthcare insurance has always worked in the past before Obamacare. Before the Affordable Care Act, insurance companies have traditionally gotten to cherry-pick their customers. In the past, if you had a pre-existing condition, you could not get insurance. Paul Ryan and Republicans liked it that way. So, in his new budget, Ryan wants to repeal Obamacare and take us back to the “good-ole days” when only healthy people got the privilege of being insured. Sick people could not get insurance. That’s what’s in Paul Ryan’s latest budget.

  2. Sean Ryan says:

    People! If you wish to gain a little smarts on just what Obama care and Health refore menas to you and your family/small business do NOT listen to speculation and gossip. Feel free to email: AplanForYou2@gmail.com or call 815-793-2046 . I spoke to a licensed independent broker and got the facts and the coverage I needed for my family and my small business. A guy named Luke called me back with several different options and even went way out of his way to clear up all the hoopla about Obama-Care. Call him!

  3. Thomas says:

    As a private insurance agent for over 35 years, I can say that most health insurance brokers are looking forward to seeing what CBO estimates will be about 30 billion new subscribers paying premiums in 2014. I can’t wait to sell more insurancemand to sell meaningful insurance and not empty policies that don’t pay if you get sick. I don’t know Luke but from what I’m reading, if Luke is a health insurance broker and if Luke is honest, he’s going to see a huge increase in his client base as a result of Obamacare. That is what all brokers are expecting beginning with the enrollment period in October 2013. If brokers are honest, they will see a huge increase in the size of the nation’s risk pool that can only be positive in terms of lowering premiums while offering essential and meaningful benefits. Today, private insurers can sell you a policy that offers you nohing if you get sick. The premiums are very inexpensive for one simple reason. These policies do nothing if you get sick. Obamacare ends that! Frankly, I think Luke is a fictitious character. Frankly, I think Luke is a Republican straw man. Frankly, I think Luke is just another GOP talking point. Frankly, I think Luke is not real because If Luke was a real health insurance broker, why would he lie and say that he’s unlike me and unlike other brokers that are excited about selling more policies and are excited that the policies we sell will now be more meaningful because they will be required to include essential benefits.

  4. Sarah says:

    Doesn’t that look like an advertisement? Isn’t this a place to express opinions? Does KHN allow commercial advertisements on this blog?

  5. walter says:

    How utterly ridiculous to suggest that anyone has all the answers about Obamacare. The exchanges have not even opened yet! They will not become effective until 2014. How can anyone advise you about something that has absolutely no track record. Not one person in America has had any experience with the exchanges. Certainly, each state could have different ways to navigate. Since there will be 50 states with exchanges and each state has unique circumstances unto themselves, it cannot possibly be a one-size-fits-all situation for all 50 states. Anyone who claims they understand everything there is to know about the new law and says they know how to best navigate their way through more than 2300 pages of detail would not be someone that I would trust. As Obamacare continues to roll out, we will continue to learn new things and make corrections the old fashioned way…by trial and error. Besides, the exchanges will come with build-in navigators and government people to answer your questions as part of the service. So, why would I pay someone for advice? That’s the idea, right? To lower cost for the consumer?

  6. Sean Yolish says:

    Nothing in the ACA reduces medical inflation, the source of rising premiums. Looks like “Marketplaces” in CO will start out with a 1.4% price disadvantage. In WA it will be 2% and, as this author notes, the Federal “Marketplace” will be at a 3.5% disadvantage. While the Act does nothing to address medical costs, it very clearly has added billions of dollars in additional expenses in the form of increased regulatory compliance requirements on carriers and employers, taxes, and surcharges.

  7. walter says:

    Experts, experts, experts, experts, experts! I’ve never heard of such nonsense. Nobody can possibly know all the answers to the new healthcare reform law. First of all, the exchanges will not be effective until 1/1/2014. At best, it is guesswork for anyone to say they can steer you to buy a policy that specifically works for you. How can they steer you to anything unless the exchanges are open and functioning? Can you buy anything from the exchanges today? Huh? Can you even go online to your state exchange yet? Huh? On the first day of 2014, Obamacare starts in earnest. That’s when mandatory coverage and the state or federally administered health-insurance exchanges finally take effect nearly four years after the act was signed into law. While insurance is complicated, it turns out consumers only want to know a few simple facts about their insurance plan. Cost is important! Not the premium or deductible, but rather what a consumer can expect to spend in a given plan year. Customers usually want to know whether they can continue to see the doctor they already see. They also usually want to know how easy it will be to see providers. Foe example, will they need a referral to see a specialty doctor? Details similar to that. The Massachusetts Connector has moved very quickly in a direction that looks like what advocates hope for in Obamacare. Will Obamacare be like Massachusetts Connector? Who really knows for sure? Huh? Who has the crystal ball? Huh? Even insurance companies don’t really know. They have no experience yet. If they say they do, are you going to trust them? If they tell you that they can steer you to the “perfect” plan, are you going to trust them? Massachusetts Romneycare has been a huge success thus far. Only time will tell if Obamacare becomes as successful as Romneycare. So, tell me how anyone “today” can answer all of your questions about Obamacare? It’s simply impossible! It’s guesswork at best! I would never trust someone that says things like that.

  8. Andy says:

    The article says, “Colorado’s exchange board estimates it will need $22 million to $24 million annually to function. It’s pitching the fee as one several “balanced revenue sources” to meet those expenses. Others could include “donations” from insurance plans in exchange for tax credits, and temporarily redirecting the fee Colorado carriers now pay to fund the state’s high risk insurance plan. The state is closing the plan in 2014, when the Affordable Care Act’s mandate that health insurers can no longer deny anyone coverage for pre-existing medical conditions goes into effect. The exchange board is also asking lawmakers for a portion of any funds remaining in the high risk plan once all claims have been paid.”

    Donations? You must be joking! The private insurance companies have had it too good for far too long. If private insurers want access to a potential windfall of anywhere between 30 to 50 million new customers, they should pay the full cost for Colorado’s exchange. In fact, they should pay the full cost of running “all” of the state exchanges. For what the private insurers stand to make in an avalanche of profits, $22 million to $24 million is mere chump change. If you think that’s going to get past the AHIP lobby, you’d better think again.

  9. Andy says:

    The article says, “Only one member of the board voted against the fee. (Three board members who are insurance company executives either did not participate in the meeting or abstained from voting). Emergency medicine physician Mike Fallon, a conservative appointee to the board, says the fee, plus redirecting carriers’ contributions to the state high risk plan, constitutes “double hitting” them.”

    Insurance company executives on the board? How in the world did they let that happen? The last people in the world to be making decisions about how the exchanges should operate are insurance executives.

  10. walter says:

    It’s all a guess? Really? When I read the following I have to wonder…

    “It’s all a guess at this stage in the game,” said exchange CEO Patty Fontneau, referring to 2014 enrollment estimates that range from 77,000 to 240,000 people. “We have modeled it, we have looked at other states. We’ve modeled it multiple times in Colorado. You could make an argument for higher or lower. I think [the estimates] are as good a guess as I we can get at this point in time.”

    The last time I counted, about half the states refused to run their own health exchanges. Why? Because like most intelligent people, they don’t have a clue how those health exchanges will really operate. How can they? They aren’t even open yet! These states don’t have the rules because, so far, HHS doesn’t even know all the rules. So, if half of the states don’t know how the health exchanges will operate and if HHS isn’t able to give them any answers that might persuade them to operate their own health exchange, how in the world can private insurance companies or their agents know all the answers? Is that insane or what? Do you really trust someone that says they understand everything there is to know about Obamacare and about the health exchanges? If you do, I’ve got some ocean front property for sale in Arizona. Interested?

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