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Health Care Exchange -- Do the Math!

Author: Bill Vernon Date: March 19, 2014

The amount of money spent to establish the exchange and the website in Rhode Island and the amount of money required to operate and maintain the state funded exchange in the future are prohibitive. The use of the exchange so far makes the numbers even more head shake worthy.

More than 16,000 individuals and 130 small businesses covering 800 lives signed up and paid for health insurance through HealthSource RI, the state’s exchange, as of March 8. But only 2300 of the individuals are paying the full cost of insurance. And Medicaid enrollees have surged beyond projections, now totaling near the number expected through 2015. With these disappointing enrollment numbers and the makeup of the enrollees, the cost of creating the exchange – more than $75 million in federal reimbursements -- and an estimated annual operating cost of $24 million could become a financial disaster in a state that cannot afford one.

Originally proposed as a self-sufficient “insurance company” with small transaction fees covering costs, the state exchange may become an annual drain on the state treasury.  The original projections of 127,000 Rhode Islanders enrolled in private health plans through the exchange, with 32,000 of them paying the full cost of their coverage, with no state or federal subsidies now seem wildly unrealistic. Another 77,000 people were expected to be enrolled through the business-focused component of the exchange, called the Small Business Health Options Program (SHOP). In 2013, MIT professor Jonathan Gruber and HealthSource RI Director Christine Ferguson continued to project 64,000 private enrollees, with 20,000 unsubsidized, and 1700 small businesses enrolled in SHOP. 

The surging number of Medicaid enrollees further impact the annual state operating budget as the state is responsible for an increasing share of the premium costs up to ten percent in the future. For those Medicaid recipients who would have been eligible for benefits without Medicaid expansion, the state is responsible for fifty percent of the cost.
NFIB and our partners in the business community have already stated publicly that an assessment on insurance premiums of all workers and companies is an unacceptable way to fund the HealthSource RI expense.  


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