Access Health CT sees fiscal stability while other exchanges struggle
Though the state’s health exchange soon will consider boosting insurance assessments, Access Health CT officials said Tuesday Connecticut’s program is on sound financial footing — unlike many other state exchanges.
The finance subcommittee of Access Health’s Board of Directors unanimously recommended that the full board consider two options to increase modestly its assessments on all individual and small-group insurance plans sold in the state.
The subcommittee also endorsed an $81.6 million budget proposal for the 2015-16 fiscal year, which includes $29.7 million in Access Health operating costs, $43 million in expenses that would be reimbursed by the state Department of Social Services, and $8.8 million in grants.
This plan cuts annual spending almost 25 percent as the exchange — which was launched with major federal grant assistance — seeks to be self-sustaining as those grants end.
“We’re the best positioned state in the country,” Access Health CT’s chief executive officer, Jim Wadleigh, said.
Most states rely on the federal exchange, known as HealthCare.gov, to match up consumers with health care policies. But The Washington Post recently reported that nearly half of the 17 exchanges run by states or by the District of Columbia are struggling fiscally as federal grant support shrinks.
Most of the funds Connecticut’s exchange uses to support its operations come from the insurance plan assessments. These costs often are passed on to consumers.
Access Health’s 2016 budget is based on $25.7 million in insurance plan assessments. It also includes $43 million in expenses covered by the Department of Social Services, which runs the state’s Medicaid program and reimburses the exchange for a portion of its spending related to Medicaid and the development of a new eligibility system. (A portion of DSS’ spending is then reimbursed by the federal government.) Access Health now handles signups and renewals for most Medicaid clients.
Connecticut, which Wadleigh said has the lowest rate of any state that charges an assessment, currently imposes a 1.35 percent assessment on marketplace premiums.
State officials knew they would need to raise the initial assessment rate not long after the grants wound down, said Benjamin Barnes, who is Gov. Dannel P. Malloy’s budget director and also chairman of the finance subcommittee.
This has enabled the exchange to build enough reserves to cover at least five months of operation. But Barnes noted that, unless the assessment is increased, the exchange probably would have to begin drawing down its reserves significantly over the next two years.
To avoid that, and to help build up a nine-month reserve, the finance subcommittee recommended Tuesday that the full board consider two increase options.
The first would raise the assessment in two stages, climbing to 1.5 percent in next year and to 1.65 percent in 2017. A second option would boost the assessment immediately to 1.65 percent next year.
Though detailed projections will be prepared for the full board when it meets on May 28, the exchange’s chief financial officer, Steven Sigal, said increasing the assessment from 1.35 to 1.5 percent, on a premium of $700, would yield a monthly cost increase of just over $1.
“I think it is important to keep in mind where we are comparable to the rest of the country,” board member Bob Tessier said of the potential assessment increase. “We have an exchange with a great track record.”
That track record is enhanced, subcommittee members said, by a concerted effort since the exchange began to control expenses.
Officials have pared down spending on consultants and contracts and are trying to develop new ventures that would bring in revenue.
The new budget includes $1 million for the all-payer claims database the exchange is developing. This is intended to compile information about medical claims that people can use to learn about health care costs and variations in health care prices and usage.
The exchange also has set a goal of raising $3 million next fiscal year from Access Health Exchange Solutions, the arm of the organization that markets services to other states. Maryland is already using Connecticut’s platform to run its exchange, and Wadleigh said officials have been speaking to other states about sharing services or better leveraging contracts.
“We’re having conversations with a number of other states at a much more significant level than training and consulting,” Wadleigh said.
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