State Obamacare Exchanges Face Rising Financial Burdens

Date: July 28, 2016

Exchange Woes Comes As Another Major Insurer Announces Withdrawal From Some Exchanges

Obamacare continues to unravel as its financial toll mounts. Now, there are fresh concerns that the 13 state-run marketplaces are having difficulty raising funds through either state funding or user fees in order to maintain operations. Congressional Quarterly reported that data show that each of the state-based exchanges used Federal funds for some of its activities during FY 2016, despite a provision in Obamacare mandating that these state exchanges be self-sufficient starting in 2015. Obama Administration officials offered states a “no-cost extension” to keep using Federal grant funds through the end of 2016, and in June extended this into 2017. This week, Federal officials are meeting with representatives from state exchanges to discuss how state exchanges can continue to operate now that an initial $5 billion in Federal grant money is nearly gone. Kaiser Family Foundation Director of State Health Reform, Jennifer Tolbert, said of the increasingly-dire financial situation for state exchanges, “The marketplaces are having to make some sort of tough choices. They’re trying to figure out how to balance all of the competing needs that they have for a well-run, well-functioning marketplace with, in some cases, some more limited dollars.”

News of the worsening financial situation of state exchanges comes at a time when another major insurer has announced plans to withdraw from most Obamacare marketplaces. The Hill reported that Humana has plans to withdraw from “all but a handful of states” in 2017, leaving it involved in “no more than” 11 state marketplaces, a decline from its involvement in 19 marketplaces in 2016. The news came as the insurer reported that it has seen “nearly $1 billion in losses” from Obamacare. UnitedHealth Group previously announced plans to withdraw from most Obamacare marketplaces due to financial losses.

What This Means For Small Businesses

It is increasingly difficult to overstate the negative impact that Obamacare has had on America. Evidence that state marketplaces are finding it difficult to continue operating without Federal handouts shows this key aspect of Obamacare is unsustainable. Additionally, insurers are seeing mounting losses from Obamacare that are prompting them to opt out of marketplaces, leaving consumers with fewer choices on exchanges. Obamacare is bad for businesses, bad for state governments, and bad for consumers.

Additional Reading

Politico also reported on Humana’s decision to cut back its marketplace participation in 2017.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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