State HIXes Struggle to Find Financial Model

Most states running their own health insurance exchanges will fail to meet a deadline this month, highlighting a lack of financial planning around the president's controversial health insurance program.

by / January 14, 2015

The Patient Protection and Affordable Care Act (PPACA), also called Obamacare, is facing new financial problems at the state level.

The law requires that states running their own exchanges become financially self-sufficient this month, but many of the 16 state-run programs will continue to rely on leftover federal funds through this year. The Obama administration last year announced that some continued federal funding would be allowed with permission from the Centers for Medicare & Medicaid Services.

Any mechanism to enforce the January 2015 deadline on financial self-sufficiency has not been revealed. Despite more than $4 billion in federal grants issued for state-run exchanges, many states anticipate years of financial deficit. Colorado and Rhode Island are now considering abandoning their exchanges for financial reasons, and Oregon scrapped its plans mid-2014 after failing to enroll even one person online.

Some have proposed increasing fees to help finance the exchanges, but legislators have been reluctant to do so because higher fees could reduce enrollment and overall income. Pending Supreme Court legislation on premium subsidies could tip the financial scale in favor of states, but the future of many state-run exchanges remains uncertain.