The managers of the Patient Protection and Affordable Care Act (PPACA) public exchange programs are facing a tough new challenge: Figuring out how the exchange programs will earn their keep.
PPACA calls for the U.S. Department of Health and Human Services (HHS) to provide generous startup funding for the state-based exchanges, but only for one year.
In theory, most of the state-based exchanges are supposed to be self-sustaining starting as early Jan. 1, 2015, but many still have some HHS grant money or other grant money left over.
All of the exchanges that will be in operation Jan. 1 are supposed to be able to operate without federal taxpayer support by Jan. 1, 2016.
Here’s a look at exchange financial sustainability options.
1. It’s possible that the federal government could help support the exchange system
PPACA provides only temporary federal funding for public exchange system operations and Republicans who say they oppose PPACA will control both the House and the Senate in 2015.
But Republicans have supported the exchange system concept in the past, and it’s possible that they could scrape up future exchange system funding if voters and insurers seem to like the exchange system.
2. The plan sellers could pay user fees
Many state-based exchanges already impose fees on the insurers that sell qualified health plans (QHPs) through their systems, and HHS imposes a user fee on the insurers that sell QHPs through HealthCare.gov.
This year, for exchange, HHS charges QHP issuers a user fee equal to 3.5 percent of the premiums. The fee will stay the same in 2015.