By Katie Kerwin McCrimmon

Colorado’s health exchange managers expect to spend $4 million more on their call center than anticipated this year, a revelation that spurred a heated argument among board members on Monday.

Customers can shop for insurance as of today through Connect for Health Colorado and they can start buying plans on Nov. 15. Managers expect many more of them to need phone help instead of automatically renewing because tax credits are going down by as much as 77 percent. And more customers than expected have retained their plans this year, meaning they may need help renewing or signing up for new coverage.

Dr. Mike Fallon, an exchange board member, called on managers to make cuts elsewhere if they’re going to have major cost overruns at the exchange’s Colorado Springs call center.

Call center expenditures were supposed to top out at $13.6 million for this fiscal year, which runs through the middle of next year. Now, they’re expected to cost about $17.8 million. Eventually exchange managers had planned to operate on about $26 million a year, so a variance of $4 million could have profound implications over the long run, board members said. On top of the $4 million, board members approved an additional $3.5 million in September for additional technology licensing fees.

“I approved the budget and now the budget seems to be blown out and that’s only four months later,” said Dr. Mike Fallon, a physician who runs urgent care centers. “I want to know where the money is going to come from and reserves is not a great answer.”

Fallon pressed fellow board members to require cuts elsewhere in the budget before he was willing to approve increased spending at the call center. He noted multiple times that under Colorado law, the health exchange must be financially self-sustaining by 2015.

Board member Arnold Salazar shot back, arguing that Connect for Health has always been “underfunded.’’ As the board’s new Finance Committee chair, Salazar said that rather than cutting costs, he’d like to consider hikes in the broad market assessment, charges that hit Coloradans who buy insurance through the group and individual markets — including those who don’t get their insurance through the exchange.

“We undercapitalized this business…and we’re going to have to live with that consequence going forward,” Salazar said.

Fallon replied that spending about $200 million in taxpayer funds “to sell insurance” is hardly “undercapitalized.”

Board member Arnold Salazar thinks the health exchange is “undercapitalized.” He wants to consider higher fees.

“I suggest you show up at the Finance Committee,” said Salazar, who is new to the committee.

“I always do,” responded Fallon, a veteran member of the committee.

Board members Steve ErkenBrack and Eric Grossman joined Fallon in calling for careful spending.

“We do absolutely need to understand the impact of our expenses. We’re building a house here and we have to know if we can afford to keep the lights on,” Grossman said.

Salazar’s wife, in contrast, agreed with her husband.

Insurance Commissioner Marguerite Salazar, who is a non-voting member of the health exchange board, suggested hiking the assessment.

“When we did our budget, we were hoping we could stick to the $1.25 (assessment) but we have the opportunity to go much higher,” Marguerite Salazar said.

The legislation that authorized the fees allowed the board to charge up to $1.80 per member per month on all insurance carriers in both the group and individual markets. Board members set the fee at $1.25. (Click here to see House Bill 13-1245.)

Fallon countered that voters sent a clear message during last week’s mid-term elections that they are hardly in the mood for higher fees.

“The political climate has changed a bit,” he said. “The appetite for increased assessments, fees and taxes is different….It’s not always the answer to charge someone a lot more.”

Ultimately, board members approved $875,000 to allow trained call center staffers to work extra hours right away. Callers may still have to wait 30 minutes to get help at peak times.

Fallon voted against the measure while the other board members approved the expenditure. Even holding the additional expenses to $875,000 now, managers expect to go over the budgeted allotment for the call center by $4 million.

Grossman called on exchange managers to produce some proposals for cuts elsewhere in the budget by next week’s Finance Committee meeting.

Exchange spokesman Luke Clarke said the exchange can pay for cost overruns with reserves if necessary. He also said that managers could not have predicted that they would need to beef up the call center staff.

Exchange managers have known for months that the open enrollment for 2015 would last three months compared to six months for 2014. But they only learned a couple of weeks ago that lower rates overall in Colorado would also dramatically decrease tax credits for customers. That has prompted them to predict that the call center will have to handle 60,000 more calls than anticipated. The first month between now and Dec. 15 is expected to be the busiest since people who need insurance by Jan. 1 must buy by Dec. 15 and pay by Dec. 25.

Interim CEO Gary Drews called for better long-term planning so board members and staffers won’t have to make drastic changes at the last minute.

“Obviously we’re going through a huge learning curve at this point,” Drews said. “Helping people enroll, that’s our primary job at the moment.”