Starting this month, state-run insurance exchanges are legally required by the healthcare reform law to be financially self-sustaining. But that mandate is being ignored across the country, and there do not appear to be any immediate consequences for the states.
Many of the 16 states and the District of Columbia that run their own marketplaces will continue to rely on leftover federal funds to pay for operations this year. The Obama administration issued a guidance last year that states can continue to use federal grant dollars this year if the CMS grants permission. Some uses of the funds are prohibited, such as for rent and software maintenance.
So far, the CMS has dispensed more than $4 billion in grants to help launch state-run exchanges. In December, the agency issued its final round of grants, roughly $265 million to 10 states with existing state-run marketplaces, to assist with technology development and enrollment efforts. Despite the influx of federal funds, many state-based exchanges are facing projected deficits this year and in future years.
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Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.
